Snap revealed its first-quarter results on Thursday, exceeding analysts’ expectations and marking a return to double-digit revenue growth, prompting a surge of more than 23% in its shares during extended trading.
Here’s a breakdown of Snap’s performance:
- Earnings per share: Adjusted to 3 cents, surpassing the anticipated loss of 5 cents by LSEG.
- Revenue: $1.19 billion, exceeding the expected $1.12 billion by LSEG.
- Global daily active users: 422 million, slightly surpassing the anticipated 420 million according to StreetAccount.
- Average revenue per user: $2.83, higher than the expected $2.67 according to StreetAccount.
Snap experienced a notable 21% increase in revenue for the first quarter, compared to $989 million in the corresponding period last year. This growth marks a significant acceleration after six consecutive quarters of either single-digit growth or sales declines.
The company has been diligently rebuilding its advertising business following a stumble in the digital ad market in 2022, and these efforts are yielding results.
Snap attributed its revenue growth primarily to enhancements in its advertising platform and the demand for its direct-response advertising solutions.
During its investor call, Snap’s finance chief, Derek Andersen, highlighted the company’s benefit from improvements across the broader operating environment, noting a stronger brand environment in all regions during Q1.
Advertising revenue reached $1.11 billion in the first quarter, while Snap’s “Other Revenue” category, driven mainly by Snapchat+ subscribers, surged by 194% year-over-year to $87 million, with more than 9 million Snapchat+ subscribers reported for the period.
Adjusted EBITDA for the first quarter soared to $46 million, significantly surpassing analysts’ expectations of a $68 million loss, according to StreetAccount.
Snap attributed this success to disciplined operating expense management and accelerating revenue growth.
Looking ahead, Snap is optimistic about its business performance, buoyed by progress in its ad platform, strong leadership, and strategic priorities.
Although Snap’s growth accelerated, it trailed behind Meta, which reported 27% growth in its first-quarter results. However, Meta’s shares plummeted following a conservative forecast and discussions about long-term investments.
Snap’s net loss for the quarter narrowed to $305.1 million, or a loss of 19 cents per share, compared to $328.7 million, or a loss of 21 cents per share, in the previous year.
For the second quarter, Snap anticipates revenue between $1.23 billion and $1.26 billion and adjusted EBITDA ranging from $15 million to $45 million.
Snap reported 422 million daily active users (DAUs) in the first quarter, up 10% year over year. It expects to reach around 431 million DAUs in the second quarter.
The company also provided a full-year 2024 cost structure forecast, expecting quarterly infrastructure costs per DAU to range between 83 cents and 85 cents for the rest of the year, with ongoing assessments based on long-term business interests.
Snap noted an increase in user engagement, particularly with Spotlight and Creator Stories. Time spent watching Spotlight content rose by 125% year over year.
In February, Snap announced a 10% reduction in its global workforce, with approximately 500 employees affected. The company indicated that headcount and personnel costs will experience modest growth throughout the remainder of the year.
