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Rebecca Zisser /Axios

For months, Snapchat has been challenging the narrative that slower user growth is due to Facebook adopting copycat features, like Stories and Stickers. Snap will have another copycat headache to explain to investors tomorrow on its second earnings call — Facebook is building a product that could rival Discover, its successful video content platform.

Why it matters: As Axios reported earlier this week, video content has performed incredibly well on Discover, but Snapchat has yet to break out to investors how much revenue that platform drives.

  • Expect analysts and investors to ask how Snapchat plans to cash in on Discover, and retain user attention and engagement once Facebook's rival feature is live.
  • Expect Snapchat to say its platform is uniquely positioned to serve younger audiences because it's mobile-first, while Facebook's is based on desktop and mobile consumption.

Snapchat's platform also focuses on hard news and politics, as opposed to influencer and viral publisher content, which seems to be Facebook's strategy by launching with partners like ATTN and Seeker.

The other big number: Average revenue per user (ARPU) — Snapchat, like Facebook and other U.S. social/tech companies, makes most of its revenue from users in North America, though most of its user base is elsewhere around the world (breakdown below). Expect Snapchat to tout its major investments in advertising technology, like its newly-launched self-serve ad platform, during Thursday's earnings call, and expect investors to react to how those investments affect ARPU.

Revenue breakdown: 42% of Snapchat's daily active users (DAUs) come from North America, and they accounted for 86% of Snapchat's total revenue last quarter. The ARPU in North America is 952% higher than in the rest of the world. This disparity exists within most data-based advertising companies, because the U.S. ad market is so much more lucrative and because access to cheap data in the U.S. fosters higher user loyalty.

Expand chart
Data: Snapchat 2017 Earnings Report; Chart: Andrew Witherspoon / Axios

Users: Wall Street will expect to see continued user growth and increased engagement despite Snap's arguments that it's prioritizing quality over quantity. However, user growth looks grim for Snapchat, which has seen stagnant growth in recent quarters since Instagram launched a copycat "Stories" feature. Expect Snapchat to instead focus on user loyalty, especially among younger users. (The average Snapchat user opens the app 18x per day and spends over 30 minutes on the platform daily.)

Nearly half of Snapchat's U.S. audience is younger than 34. Per comScore (U.S. June 2016):

  • Persons 18-24 — 24%
  • 25-34 — 24%
  • 35-44 — 18%
  • 45-54 — 16%
  • 55-64 — 13%
  • 65+ — 4%

Profit: Snapchat had a $160 million net loss on around $150 million in revenue during Q1. Expect the losses to continue, especially since Snap has invested in so many advertising and product tech updates. However, as a long-time Snap investor told Axios in January, unprofitable companies need to show discipline and a path to profitability once they're public.

Advertising: A large piece of Snap's IPO pitch was its ability to continue to drum up ad dollars, going from $0 to ~$400 million in ad revenue from 2014-2016. The company has made huge strides in beefing up its ad program over the past several months, including launching a self-serve ad platform in May that will allow Snap to compete with Facebook and Instagram for small business dollars. Analysts estimate that these investments will help Snap continue to significantly grow its ad revenue, by far its largest revenue stream. eMarketer predicts Snap will grow ad revenue by 158% this year, and by 66% and 73% in 2018 and 2019.

Stock: Snap's stock has had a rocky few months since debuting on the NYSE. On Wednesday its stock sat at $13.56, around three-and-a-half dollars lower than when it went public.

Go deeper

Updated 1 hour ago - Health

COVID cases and deaths keep falling

Expand chart
Data: N.Y. Times; Cartogram: Kavya Beheraj/Axios

America’s coronavirus outbreak is rapidly improving as the Delta wave recedes, and vaccines for kids — which could become available within weeks — will help the situation improve even further.

By the numbers: Nationwide, the U.S. is now averaging about 79,000 new cases per day — a 22% drop over the past two weeks.

Felix Salmon, author of Capital
Updated 1 hour ago - Economy & Business

How the pandemic caused a corporate rebound

Illustration: Sarah Grillo/Axios

WeWork becomes a public company today worth more than $9 billion — a vindication of the expensive turnaround strategy employed after it spectacularly imploded in 2019. Like many companies that find themselves at death's door, that which didn't kill them made them stronger.

Why it matters: Hertz, Alamo Drafthouse, Airbnb, and Toast are among the currently-thriving companies that were shaken to the core in the early days of the pandemic — providing further evidence for the theory that, in the words of former Fast Company editor Bill Taylor, "companies can't be great unless they've almost failed."

Roku tells customers it is unable to strike a deal with YouTube

Photo: Igor Golovniov/SOPA Images/LightRocket via Getty Images

Roku on Thursday told customers via a post on its corporate blog that it has still not been able to strike a distribution agreement with YouTube TV, which has been removed from Roku's channel store for five months.

Why it matters: It's the first time Roku has directly acknowledged the issue to its customers. Roku says YouTube TV parent Google has made anti-competitive demands in distribution negotiations, which still haven't been resolved.