If you are looking for insight into the state of the Facebook economy and whether it’s able to weather the slowing U.S. economy, look no further than SNAP Interactive (OTC: STVI). The company which is behind the popular “Are YOU Interested?” and “Meet New People” applications has filed their quarterly report. The numbers are looking pretty good.
For the three months ending September 30, 2008, the company had a Net Income of $410,283 on revenues of $871,324. If we consider that all of their revenue comes from advertising, we can calculate approximately how much each user is worth. According to company reports, they have around 17 million users, 14 to 15 million of which are Facebook users. If we take an average of 15 million users across the three months ending September 30, that results in $0.005 per user, not a lot of money.
The company also receives around 1.4 million visits per day, which would amount to around 126 million visits for three months. That would amount to around $0.007 per visit. These numbers don’t really paint a clear picture though as the majority of users are much less active, and therefore bring in substantially less revenue than the more active users.
If you think about the business on a user acquisition basis, there is very little incentive for pushing new users to this application. Contrast that with offer-based advertising which can generate upwards of $100 for a converted user, and you quickly realize that SNAP has a ways to go in converting visitors into money. Also of interest is that the company was able to increase their revenue while experiencing a more than 25 percent decrease in their traffic due to Facebook’s profile redesign.
SNAP Interactive doesn’t stand alone when it comes to troubles with revenue conversion. Facebook has billions of weekly page views but they can only generate $300 million a year. Then again, with 120 million active users (and an average around 90 million users for the year), the company is generating over $3 per user per year. That’s far better than the $0.02 SNAP Interactive is able to generate per user on an annual basis.
The calculations done in this article are in no ways scientific though and what it really means is that SNAP Interactive has a huge opportunity to more effectively monetize their traffic. Considering their revenue has been growing quarter-over-quarter, there’s a good chance that they will be able to keep up the growth despite the slowing global economy.
Below is a copy of the company’s 10-Q published earlier this week.
