Snap Inc. Reports Strong First Quarter Results, Beats Analyst Expectations

On Thursday the first-quarter result of Snap was reported which turned out better compared to the analysts’ expectations. The company’s revenue showed a return to strong growth, and its shares rose by over 23% in extended trading.

Here’s a breakdown of how Snap performed:

  • Earnings per share:  3 cents (adjusted) compared to an expected loss of 5 cents by LSEG.
  • Revenue: $1.19 billion compared to an expected $1.12 billion by LSEG.
  • Global daily active users: 422 million, slightly more than the expected 420 million.
  • Average revenue per user: $2.83, higher than the expected $2.67.

Snap’s revenue for the first quarter increased by 21% from the same period last year, reaching $1.19 billion. This growth is significant, especially after six quarters of slow growth or even sales declines.

Snap Inc
Daily active users grew 10% year over year, reaching 422 million in Q1. (Credits: Snap Inc.)

The company has been focusing on improving its advertising business, and it seems to be paying off. Snap mentioned that the revenue growth was mainly because of better advertising platforms and increased demand for its advertising solutions.

During its call with investors, Snap’s finance chief Derek Andersen mentioned that the company also benefited from improvements in the widespread business environment.

Advertising revenue for Snap was $1.11 billion in the first quarter. Another revenue category, driven by Snapchat+ subscribers, reached $87 million, up by 194% compared to last year.

Adjusted EBITDA for the first quarter was $46 million, surpassing the expected loss of $68 million. Snap attributed this to better control over operating expenses and faster revenue growth.

Looking ahead, Snap is optimistic about its performance. Despite its accelerated growth, it still lags behind Meta, which reported 27% growth in its first-quarter results.

Adjusted EBITDA surpassed expectations at $46 million, driven by revenue growth and cost control. (Credits: Snap Inc.)

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, the previous year.

For the second quarter, Snap expects revenue between $1.23 billion and $1.26 billion, higher than analysts’ expectations. Adjusted EBITDA is expected to be between $15 million and $45 million.

Snap reported 422 million daily active users in the first quarter, up 10% from last year. For the second quarter, it expects around 431 million DAUs.

Regarding costs, Snap expects quarterly infrastructure costs per DAU to be between 83 cents and 85 cents for the rest of the year.

The company also noted an increase in the time users spend watching content, particularly on Spotlight and Creator Stories. Time spent watching Spotlight content increased by 125% year over year.

In February, Snap announced layoffs affecting around 10% of its global workforce or about 500 employees. The company mentioned that its headcount and personnel costs will “grow modestly” for the rest of the year.

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
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