Snap shares rocket 28% after company reports unexpected profit, better-than-expected revenue

Snap shares
surged
28%
on
Friday
after
the
company
surprised
Wall
Street
by

showing
a
profit
and
reported
sales
and
user
numbers
that
exceeded
analysts’
estimates.

The
stock
climbed
$3.15
to
close
at
$14.55,
its
biggest
percentage
gain
since
2022.
Even
after
the
rally,
the
stock
is
down
14%
for
the
year
due
to
a
31%
plunge
in
February.

Revenue
in
the
first
quarter
increased
21%
to
$1.19
billion
from
$989
million
a
year
earlier,
topping
analysts’
estimates
for
sales
of
$1.12
billion,
according
to
LSEG.

The
company
reported
adjusted
earnings
per
share
of
3
cents,
while
analysts
were
expecting
a
5-cent
loss.
Adjusted
EBITDA
(earnings
before
interest,
taxes,
depreciation
and
amortization)
was
$46
million,
compared
to
analysts’
expectations
for
a
loss
of
$68
million.

Snap
said
adjusted
EBITDA “exceeded
our
expectations”
and
was
primarily
driven
by
operating
expense
discipline,
as
well
as
accelerating
revenue
growth.

Snap
has
been
working
to
rebuild
its
advertising
business
after
the
digital
ad
market
stumbled
in
2022.
Its
investments
are
starting
to
pay
off.
The
company
said
in
its
investor
letter
that
revenue
growth
was
primarily
driven
by
improvements
in
the
advertising
platform,
as
well
as
demand
for
its
direct-response
advertising
solutions. 

“I
think
more
broadly,
we
saw
a
much
more
robust
brand
environment,
which
played
out
in
all
of
our
regions
in
Q1,” CFO
Derek
Andersen
said
on
the
earnings
call.

User
growth
was
also
better
than
expected.
Snap
reported
422
million
daily
active
users
(DAUs)
in
the
first
quarter,
up
10%
year
over
year
and
topping
the
average
analyst
estimate
of
420
million,
according
to
StreetAccount.

In
February,
Snap
announced
it
would lay
off 10%
of
its
global
workforce,
or
around
500
employees.
The
company
said
Thursday
that
headcount
and
personnel
costs
will “grow
modestly”
through
the
rest
of
the
year. 

Advertising
revenue
came
in
at
$1.11
billion
in
the
first
quarter.
Snap’s “Other
Revenue”
category,
which
is
primarily
driven
by
Snapchat+
subscribers,
reached
$87
million,
an
increase
of
194%
year
over
year.
Snap
reported
more
than
9
million
Snapchat+
subscribers
for
the
period.

Though
Snap’s
growth
was
its
fastest
since
March
2022,
it
still
fell
behind
that
of Meta,
which
reported
27%
growth
in
its
better-than-expected
first-quarter
results
on
Wednesday. Meta
shares
plunged
anyway
after
the
company
issued
a
light
forecast
and
spooked
investors
with
talk
of
its
long-term
investments.

For
the
second
quarter,
Snap
expects
to
report
revenue
between
$1.23
billion
and
$1.26
billion,
up
from
the
$1.22
billion
expected
by
analysts,
according
to
StreetAccount.

WATCH:

Watch
CNBC’s
full
interview
with
Snap
CEO
Evan
Spiegel