Snap surged and soared, yet America continues to move away from Snapchat.

      Snap had a strong quarter, and the market responded positively, treating it like a rescue. After the company exceeded estimates, shares surged after hours, rising up to 13%. However, it's important to note that this rally starts from a stock that is nearing its all-time lows, having dropped around 37% this year.

      The headline figures were indeed impressive. Revenue increased by 19% to $1.6 billion, surpassing expectations, bolstered by a surge in World Cup advertising. The net loss decreased to $164 million, free cash flow turned positive at $121 million, and adjusted earnings exceeded forecasts by a significant margin. Snap also guided expectations higher for the current quarter.

      Upon closer inspection, though, the growth appears uneven. Advertising revenue, which is the foundation of Snap's business, grew by only 9%, significantly lagging behind larger competitors. The striking figure was an 85% increase in "other" revenue to $316 million, generated from subscriptions, storage, and paid lenses. Snap is earning more from its existing user base rather than significantly increasing sales of its main product.

      The real issue lies with the audience, and the revenue distribution clearly illustrates it. Daily users reached 493 million, a 5% increase, but the growth was entirely international. Daily users in North America decreased by 7% to 92 million, while Europe saw a 2% decline. Only the rest of the world experienced growth. This is significant because a North American user has an estimated value of around $10 per quarter, compared to just $1 for a user from other regions.

      However, there is a silver lining. North American revenue still grew by 15%, as remaining users are spending more, with revenue per user increasing by 23% due to stronger ad prices. Snap is deriving more revenue from a smaller, wealthier user base. The drawback is that raising prices cannot continue indefinitely with a shrinking audience.

      Still, this does not indicate a resurgence in overall growth. The positive cash flow stemmed from cost management: adjusted profit rose to $250 million from $41 million the previous year. Snap made significant cuts to its workforce this year and is aiming for $500 million in annual savings. This company is no longer in a state of decline, but it isn't in a growth phase either.

      CEO Evan Spiegel has plans for the funds generated from this turnaround, but they do not involve Snapchat. Instead, he is focusing on Specs, Snap's $2,195 augmented-reality glasses, which will be available after a launch event in Los Angeles on September 16. Spiegel describes them as Snap’s “largest long-term opportunity,” and he is investing heavily in this initiative.

      Investors, however, expressed skepticism. During the call, they questioned Spiegel about competing independently against Apple, Meta, and Alphabet, and whether this strategy is feasible given Snap's current scale.

      When directly asked about pre-order numbers, Spiegel only mentioned "a huge amount of interest" without providing specific figures, suggesting that demand might be weaker than hoped. He was clear about the timeline, stating that mass-market adoption wouldn't happen until the end of the decade.

      This brings us to the day's overall impression. The earnings beat was genuine, the relief was palpable, and the stock's rise was significant. However, this does not address the more challenging question: How will Snap attract its next wave of valuable users in the markets where it is currently losing ground? A leaner cost structure and a World Cup advertising boost have only provided temporary relief; neither solves the issue of regaining the North American market.