- Snap, the parent company of Snapchat exceeded Wall Street expectations with its first-quarter results.
- The company saw $US320 million in revenue for the quarter.
- Snap had 190 million daily active users.
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Snap, the parent company of the photo-sharing app Snapchat, defied analysts’ expectations in the first quarter of the year – as its better-than-expected revenues and earnings per share briefly sent its stock soaring after it reported its results.
But investors appeared to have second thoughts as they contemplated the company’s stalled user-growth numbers, and Snap shares quickly gave back most of the gains.
The company saw $US320 million in revenue for the quarter, besting consensus estimates of $US307.4 million and growing 39% year-over-year. And it enjoyed 190 million daily active users, versus a 186.8 million prediction.
The results are welcome news for the company, which has struggled as it faces sustained pressure from the Facebook-owned Instagram and has suffered in the wake of a widely criticised redesign in 2018. But even before Tuesday’s results, Snap’s stock had been making a comeback: Before market close, it was hovering around $US12 a share – up more than 100% from lows of less than $US5 in December 2018.
Snap’s stock initially leaped as much as 12% in after-hours trading after the news, but it has since receded. As of writing, it was up about 2.5%.
CEO Evan Spiegel hailed the company’s growth in daily users and revenues in a statement and said the company’s new Android app – long promised as a key to unlocking future growth – was yielding “promising early results.”
Here are the key numbers, as well as what Wall Street was expecting (estimates via Bloomberg):
- Earnings per share (adjusted): minus $US0.10 (minus $US0.12 predicted)
- Revenue: $US320 million ($US307.4 million predicted)
- Daily Active Users: 190 million (186.8 million expected)
- Q2 revenue guidance: $US335 million to $US360 million, versus $US348 million expected by analysts
- Q2 adjusted EBITDA guidance: negative ($US150 million) to negative ($US125 million).
In a copy of his prepared remarks released ahead of Snap’s earnings call with investors, Spiegel emphasised the company’s reach with young people: “We have achieved significant reach with Millennials and Gen Z in key markets like the United States, where we now reach 75 per cent of all 13-34 year-olds. As of March, our ads can now reach more 13-34 year-olds than Instagram in the United States.”
That said, the company’s user growth, while not declining as much as feared, appears to be stalled, as the chart below shows:
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