break report First quarter results On Thursday, that beat analysts’ expectations and showed revenue growth returned to double digits. Shares soared more than 23% in after-hours trading.
Here’s what the company does:
- Earnings per share: Adjusted 3 cents, while LSEG expected a loss of 5 cents
- income: US$1.19 billion, compared with US$1.12 billion expected by LSEG
- Global daily active users: 422 million vs. 420 million expected, according to StreetAccount
- Average revenue per user: Expected $2.83, expected $2.67, according to StreetAccount
Snap’s first-quarter revenue grew 21% from $989 million in the same period last year. The company previously reported six consecutive quarters of single-digit growth or sales declines, but is now accelerating.
Snap has been working to rebuild its ad business after the digital ad market tanked in 2022, and it’s starting to pay off. Snap said in its investor letter that revenue growth was primarily driven by improvements to the company’s advertising platform and demand for its direct-response advertising solutions.
Snap Finance Chief Derek Andersen said on a quarterly conference call with investors that the company also benefited from an improvement in the broader operating environment.
“I think from a broader perspective, we’re seeing a stronger brand environment and that’s reflected in all of our regions in the first quarter,” Anderson said.
Advertising revenue in the first quarter was $1.11 billion. Snap’s “other revenue” category, driven primarily by Snapchat+ subscribers, reached $87 million, a 194% increase from the same period last year. Snap reported more than 9 million Snapchat+ subscribers during the period.
First-quarter adjusted EBITDA was $46 million, far exceeding analysts’ expectations of a $68 million loss, according to StreetAccount. Snap said in its investor letter that adjusted EBITDA “exceeded our expectations,” driven primarily by operating expense discipline and accelerated revenue growth.
“Given the progress we have made on our advertising platform, the leadership team we have built, and the strategic priorities we have set, we believe we are well positioned to continue to improve the performance of our business,” Snap wrote in the letter.
Even as Snap’s growth accelerates, it still lags behind YuanOn Wednesday, the company reported first-quarter results that grew 27%, beating expectations. Meta’s stock price plummeted anyway after the company issued a loose forecast and spooked investors with its talk of long-term investments.
Snap’s net loss for the quarter narrowed to $305.1 million, or 19 cents per share, from $328.7 million, or 21 cents per share, a year earlier.
Snap expects second-quarter revenue to be between $1.23 billion and $1.26 billion, higher than analysts’ expectations of $1.22 billion, according to StreetAccount. Snap said adjusted EBITDA would fall $15 million to $45 million, compared with Wall Street expectations of $15.5 million.
Snap reported 422 million daily active users (DAU) in the first quarter, a 10% increase from the same period last year. The company expects daily active users in the second quarter to be about 431 million, higher than StreetAccount’s forecast of 430 million.
The company also provided a full-year 2024 cost structure forecast. Snap said quarterly infrastructure costs per DAU will fall by 83 cents to 85 cents for the remainder of the year.
“We will continue to evaluate our level of infrastructure investment based on the best long-term interests of our business,” Snap said.
Snap said that the time users spend watching content has grown year over year, mainly due to the participation of Spotlight and Creator Stories. The company said time spent watching Spotlight, which aggregates user content, increased 125% year over year.
In February this year, Snap announced that it would lay off 10% of its global workforce, approximately 500 employees. The company said on Thursday that headcount and personnel costs would “increase slightly” during the remainder of the year.
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