Snap Shares rose 28% on Friday after the corporate surprised Wall Street with a profit and reported revenue and user numbers above analysts' estimates.
The stock rose $3.15 to shut at $14.55, its biggest percentage gain since 2022. Even after the rally, the stock is down 14% for the yr resulting from a 31% plunge in February.
LSEG said first-quarter revenue rose 21% to $1.19 billion from $989 million a yr earlier, beating analysts' estimates for revenue of $1.12 billion.
The company reported adjusted earnings per share of three cents, while analysts had expected a lack of 5 cents. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $46 million, compared with analysts' expectations of a lack of $68 million.
Snap said adjusted EBITDA “exceeded our expectations” and was primarily resulting from operating expense discipline and accelerated revenue growth.
Snap has been working to rebuild its promoting business after the digital promoting market stalled in 2022. The investments are beginning to repay. The company said in its letter to investors that the revenue growth was driven primarily by improvements to its promoting platform in addition to demand for its direct response promoting solutions.
“I think broadly we saw a much more robust brand environment that was evident across all of our regions in the first quarter,” CFO Derek Andersen said on the earnings call.
User growth was also higher than expected. Snap reported 422 million each day energetic users (DAUs) in the primary quarter, up 10% yr over yr and beating the typical analyst estimate of 420 million, in response to StreetAccount.
In February, Snap announced it could lay off 10% of its global workforce, or about 500 employees. The company said Thursday that headcount and personnel costs will “increase moderately” over the rest of the yr.
Advertising revenue was $1.11 billion in the primary quarter. Snap's Other Revenue category, which is primarily generated by Snapchat+ subscribers, reached $87 million, up 194% year-over-year. Snap reported greater than 9 million Snapchat+ subscribers in the course of the period.
Although Snap's growth was the fastest since March 2022, it still lagged that of Meta, which reported 27% growth in its better-than-expected first-quarter results on Wednesday. Meta shares still tumbled after the corporate gave weak guidance and spooked investors with talk of its long-term investments.
According to StreetAccount, Snap expects second-quarter revenue between $1.23 billion and $1.26 billion, up from the $1.22 billion expected by analysts.
REGARD: Watch CNBC's full interview with Snap CEO Evan Spiegel
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