Snap shares soar 23% as company beats on earnings, shows strong revenue growth

Snap released first-quarter numbers on Thursday, exceeding analyst expectations and returning to double-digit revenue growth. Shares rose by more than 23% in extended trading.

Here’s how the company performed:

Earnings per share: 3 cents adjusted, compared to LSEG’s estimated loss of 5 cents.
Revenue: $1.19 billion, compared to the $1.12 billion projected by LSEG
According to StreetAccount, global daily active users are 422 million, compared to 420 million projected.
According to StreetAccount, the average revenue per user is $2.83, compared to the predicted $2.67.

Snap’s revenue in the first quarter grew 21% from $989 million in the same period previous year. Following six consecutive quarters of single-digit growth or sales reductions, the company is now expanding at a faster rate.

Snap has been fighting to restore its advertising business since the digital ad market crashed in 2022, and it’s beginning to pay off. In its investor letter, Snap stated that revenue growth was primarily driven by enhancements to the company’s advertising platform and demand for its direct-response advertising solutions.

During Snap’s quarterly investor call, finance chief Derek Andersen stated that the company benefited from improvements in the overall operating environment.

“I think more broadly, we saw a much more robust brand environment, which played out in all of our regions in Q1,” Andersen said in a statement.

Advertising revenue totaled $1.11 billion in the first quarter. Snap’s “Other Revenue” category, which is mostly driven by Snapchat+ subscribers, reached $87 million, up 194% year on year. Snap reported over 9 million Snapchat+ subscribers throughout the period.

Adjusted EBITDA for the first quarter was $46 million, greatly exceeding the $68 million loss predicted by experts, according to StreetAccount. In its investor letter, Snap stated that adjusted EBITDA “exceeded our expectations” and was primarily driven by operating expenditure discipline and faster 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,” the company noted in its letter.

Snap’s growth accelerated, but it still lags behind Meta, which posted 27% growth in its first-quarter results on Wednesday, above expectations. Meta shares fell nonetheless after the business presented a cautious projection and alarmed investors with mention of long-term spending.

Snap’s net loss for the quarter fell to $305.1 million, or 19 cents per share, from $328.7 million, or 21 cents per share, the year before.

Snap forecasts second-quarter revenue of $1.23 billion to $1.26 billion, up from analysts’ expectations of $1.22 billion, according to StreetAccount. Snap expects adjusted EBITDA to fall between $15 million and $45 million, compared to Wall Street’s projection of $15.5 million.

Snap claimed 422 million daily active users (DAUs) in the first quarter, a 10% increase year over year. The business plans to report approximately 431 million DAUs in the second quarter, up from StreetAccount’s estimate of 430 million.

The corporation also forecasted its full-year 2024 cost structure. Snap stated that quarterly infrastructure costs per DAU will decline between 83 and 85 cents for the remainder of the year.

“We will continue to assess our infrastructure investment levels based on what is in the best long-term interest of our business,” he said.

Snap stated that the amount of time users spend watching content increased year over year, owing mostly to interaction with Spotlight and Creator Stories. According to the corporation, time spent watching Spotlight, which aggregates user material, has climbed by 125% year over year.

In February, Snap said that it would lay off 10% of its global staff, or approximately 500 people. The company announced Thursday that headcount and human costs will “grow modestly” for the remainder of the year.