Atmosphere of Snap Partner Summit 2023 held at Barker Hangar in Santa Monica, California on April 19, 2023.
Joe Scarnici Getty Images Entertainment | Getty Images
snap Shares rose 28% on Friday after the company surprised Wall Street by reporting a profit and higher revenue and user numbers than analysts expected.
The stock rose $3.15 to close at $14.55, its biggest gain since 2022. Even after the rally, the stock is down 14% for the year, including a 31% plunge in February.
LSEG said first-quarter sales rose 21% to $1.19 billion from $989 million in the same period last year, beating analysts’ expectations for sales of $1.12 billion.
The company reported adjusted earnings per share of 3 cents, while analysts had expected a loss of 5 cents. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was $46 million, compared to analysts’ expectations for a loss of $68 million.
Snap said its adjusted EBITDA “exceeded our expectations” and was driven primarily by operating expense discipline and accelerated revenue growth.
Snap has been working to rebuild its advertising business after the digital advertising market slumped in 2022. That investment is starting to pay off. The company said in a letter to investors that the revenue growth was primarily driven by improvements to its advertising platform and demand for its direct response advertising solutions.
“More broadly, I think we saw a stronger brand environment across all regions in the first quarter,” CFO Derek Andersen said on the earnings call.
User growth also exceeded expectations. According to StreetAccount, Snap reported 422 million daily active users (DAU) in the first quarter, up 10% year-over-year and beating analysts’ average estimate of 420 million. Ta.
Snap announced in February that it would lay off about 500 people, or 10% of its global workforce. The company said Thursday that headcount and labor costs will increase “moderately” throughout the year.
Advertising revenue for the first quarter was $1.11 billion. Snap’s “other revenue” category, dominated by Snapchat+ subscribers, grew 194% year-over-year to $87 million. Snap reported more than 9 million Snapchat+ subscribers during the period.
Snap’s growth was its fastest since March 2022, but fell short of Meta, which reported 27% growth in better-than-expected first-quarter results on Wednesday. Regardless, Meta stock plummeted after the company announced a light outlook and surprised investors with talk of long-term investment.
According to Street accounts, Snap expects second-quarter revenue to be between $1.23 billion and $1.26 billion, beating analysts’ expectations of $1.22 billion.
clock: Watch the full interview with Snap CEO Evan Spiegel on CNBC.
