Snap reported first-quarter results that exceeded analyst expectations and marked a return to double-digit revenue growth, causing shares to rise by over 25% in extended trading. The company reported earnings per share of 3 cents adjusted, compared to a loss of 5 cents expected by analysts, as well as revenue of $1.19 billion, surpassing the $1.12 billion expected. Snap also exceeded projections for global daily active users and average revenue per user. The company’s revenue for the quarter increased by 21% from the same period the previous year.
Snap has been focusing on rebuilding its ad business, which has started to pay off with revenue growth primarily driven by improvements in its advertising platform and demand for its direct-response advertising solutions. Advertising revenue for the quarter reached $1.11 billion, while the “Other Revenue” category, driven by Snapchat+ subscribers, increased by 194% year over year to $87 million. Adjusted EBITDA for the quarter was $46 million, exceeding expectations and driven by operating expense discipline and accelerating revenue growth.
Despite its accelerated growth, Snap still trailed behind Meta, which reported 27% growth in the first quarter. Snap’s net loss for the quarter narrowed, and for the second quarter, the company expects revenue between $1.23 billion and $1.26 billion, as well as adjusted EBITDA between $15 million and $45 million. Snap reported 422 million daily active users in the first quarter, with expectations to reach around 431 million in the second quarter.
Snap also provided a forecast for its full-year 2024 cost structure, stating that quarterly infrastructure costs per DAU will fall between 83 cents and 85 cents. The company mentioned that user engagement, particularly with Spotlight and Creator Stories, increased year over year. In February, Snap announced layoffs of around 10% of its global workforce, and it anticipates headcount and personnel costs to grow modestly through the rest of the year.
Snap’s investor letter expressed confidence in the company’s progress with its ad platform, leadership team, and strategic priorities, leading to continued improvement in business performance. Despite the positive results, Snap’s growth still lags behind Meta, and the company emphasized its focus on long-term investments and infrastructure to drive future growth. Snap will hold its quarterly call with investors to discuss the results and future plans in more detail.
