Shares of Snap, Inc. (SNAP) experienced a notable uptick during Wednesday’s premarket trading session after the social media giant reported better-than-expected fiscal year 2024 fourth-quarter results. The parent company of Snapchat posted non-GAAP earnings per share (EPS) of 0.16, surpassing the year-ago figure of 0.08 and the consensus estimate of $0.14, according to Yahoo Finance.
On a GAAP basis, Snap reversed its fortunes, reporting a net income of 9millioncomparedtoanetlossof248 million in the same quarter last year. Adjusted EBITDA also saw a significant improvement, rising to 276 million from 159 million year over year.
Revenue for the quarter climbed 14% YoY to 1.56 billion, slightly exceeding the consensus estimate of 1.55 billion. Snap CEO Evan Spiegel highlighted the company’s progress in 2024, stating, “We made significant progress on our core priorities of growing our community and improving depth of engagement, driving top-line revenue growth and diversifying our revenue sources, while building toward our long-term vision for augmented reality.”
Operating cash flow and free cash flow also showed strong growth, reaching 231 million and 182 million, respectively, up from 165 million and 111 million in the prior year. User metrics were equally impressive, with daily active users (DAU) increasing by 9% year over year to 453 million. Snap attributed this growth to its direct response products and the expansion of its small—and medium-sized business advertiser base.
Looking ahead, Snap CFO Derek Andersen provided optimistic guidance for the first quarter of 2025, forecasting revenue between 1.325 billion and 1.36 billion, assuming DAU will rise to 459 million. This outlook aligns closely with the consensus estimate of 1.35 billion. Andersen also projected adjusted EBITDA to range between45 million and $75 million.
The sell-side reaction to Snap’s earnings was mixed. Wells Fargo downgraded the stock to ‘Equal Weight’ from ‘Overweight’ and lowered its price target to 11 from 15, citing concerns over the company’s app redesign timeline and advertising growth lagging behind industry standards. Conversely, BofA analyst Justin Post raised his price target to 14.50 from 14, maintaining a ‘Neutral’ rating. He highlighted Snap’s improved ad growth and traction with its Snapchat+ subscription service as key drivers for the upward revision.
CWEB analyst noted that Snap’s strong Q4 performance and optimistic guidance reflect the company’s ability to navigate a competitive social media landscape while capitalizing on emerging augmented reality and advertising opportunities. However, challenges remain, particularly in sustaining user engagement and ad revenue growth in a rapidly evolving market.
As Snap continues to innovate and expand its offerings, investors will be closely watching how the company balances growth with profitability in the quarters ahead.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult a financial advisor before making investment decisions.
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