Snap Inc. has attracted more than 3 million users to its Snapchat+ subscription service, a $3.99-a-month offering that provides early access to features like its new artificial intelligence chatbot.
The growth has exceeded the company's expectations and includes the addition of about a million paying users in the past 11 weeks, Snap said Wednesday at its annual partner summit, held in its hometown of Santa Monica, California. The service launched last year but got a boost in February when the company added exclusive access to a chatbot, called My AI, that's powered by OpenAI's GPT technology.
Snap shares gained as much as 3.3% following the announcement. They were up 23% this year through Tuesday's close.
"We never expected that we could grow to 3 million subscribers," Snap Chief Executive Officer Evan Spiegel said in an interview. "What we essentially see is that when we release new features, that gets more people excited about signing up or trying Snapchat+. We definitely saw some nice momentum with My AI."
Snap will soon be opening the My AI features to all users - not just subscribers, the company said Wednesday.
The numbers suggest Snap is making headway in a challenging area for social media companies: getting users to pay. At Twitter, owner Elon Musk has struggled to attract subscribers to the company's Blue service. Meta Platforms, meanwhile, began testing a subscription bundle on Instagram and Facebook in February and has yet to disclose paid user figures.
Customers can also get the Snapchat+ service through Verizon Communications' +play platform. In addition to offering the AI features, the subscription lets users customize the look and feel of the app.
Like its social media peers, Snap is looking to offset a deceleration in ad revenue. The company's overall sales growth stalled at the end of last year, and revenue is expected to decline in the first half of 2023.
Snap is coping with the slump by cutting jobs and culling projects that are no longer seen as a priority. That's meant refocusing on efforts that increase user numbers and revenue, as well as augmented reality technology.
Snap launched Snapchat+ in June, making it available to a handful of countries, including the U.S., U.K., Germany and United Arab Emirates. Even with the recent growth, it remains a small part of Snap's revenue - and its user base.
At about $4 a month, 3 million users would generate less than $150 million. Snap reported a total of $4.6 billion in revenue last year and has 750 million users.