Snap’s Comeback: Soaring Revenue, Growing Users
LA News Center reported Thursday that Snap, the parent company of Snapchat, delivered a smashing first-quarter performance, outshining analysts’ predictions and marking a triumphant return to double-digit revenue growth. Following this announcement, Snap’s shares soared an impressive 23% in after-hours trading.
Key Highlights
- Earnings per share: 3 cents adjusted, outperforming the expected loss of 5 cents.
- Revenue: .19 billion, exceeding projections of .12 billion.
- Global daily active users (DAUs): 422 million, surpassing estimates of 420 million.
- Average revenue per user (ARPU): .83, outpacing expectations of .67.
Revenue Resurgence
Snap’s first-quarter revenue surged by 21% compared to 9 million in the same period last year. This marks a significant acceleration in growth after six consecutive quarters of single-digit growth or declining sales.
The company attributes this resurgence to improvements in its advertising platform and the growing demand for its direct-response advertising solutions. According to Snap’s investor letter, revenue growth was primarily driven by these factors.
Advertising Brilliance
Snap finance chief Derek Andersen revealed during the company’s quarterly call with investors that Snap benefitted from an improved operating environment.
“We saw a much more robust brand environment, which played out in all of our regions in Q1,” Andersen stated.
Advertising revenue soared to .11 billion in the first quarter, while Snap’s “Other Revenue” category, driven by Snapchat+ subscribers, surged by an impressive 194% year over year, reaching million. Notably, Snap reported over 9 million Snapchat+ subscribers for the period.
Exceeding Expectations
Adjusted EBITDA for the first quarter stood at a hefty million, far surpassing the expected loss of million. Snap attributed this triumph to operating expense discipline and accelerating revenue growth.
“Given the progress we have made with our ad platform, the leadership team we have built, and the strategic priorities we have set, we believe we are well positioned to continue to improve our business performance,” Snap proclaimed in its investor letter.
Outshining Meta
While Snap’s growth was indeed impressive, it remained behind that of Meta, which reported a remarkable 27% growth in its first-quarter earnings. However, it is important to note that Meta shares dipped after the company provided a cautious forecast and raised concerns about long-term investments.
Path to Progress
Snap narrowed its net loss for the quarter to 5.1 million, translating to a loss per share of 19 cents, from 8.7 million or 21 cents per share in the prior year.
For its second quarter, Snap projects revenue between .23 billion and .26 billion, surpassing analysts’ expectations of .22 billion. Additionally, Snap anticipates adjusted EBITDA to range between million and million, aligning with Wall Street’s forecast of .5 million.
