Snap Inc. surprised investors with robust fourth-quarter results, boosting its shares in extended trading on Tuesday. The social media company reported a 14% increase in revenue from the previous year, reaching $1.56 billion, surpassing the expected $1.55 billion according to LSEG. Earnings per share also exceeded projections, with an adjusted figure of 16 cents compared to the anticipated 14 cents. These promising results come despite prior challenges, including a net loss of $248 million in the same quarter last year.
Snap's growth is further underscored by a significant increase in daily active users. Globally, the company reported 453 million daily active users, surpassing StreetAccount's expectation of 451.1 million. The company expects this upward trend to continue into the first quarter, projecting 459 million daily active users, which exceeds analysts' expectations of 458.3 million.
Looking ahead to the first quarter of 2024, Snap forecasts adjusted earnings between $40 million and $75 million, slightly below analysts' estimates of $78.5 million. This cautious outlook is attributed to Snap's strategic investment plans for the upcoming quarter. The company anticipates a rise in adjusted operating expenses by 11% to 12% year over year, driven by hiring initiatives, legal-related costs, and a shift in marketing expenses.
"Investment plans for 2025 reflect this optimism, alongside a strong commitment to make further financial progress towards profitability as we scale." – Snap
Snap continues to make strides with its Snapchat+ service, which now boasts 14 million subscribers, up from 12 million in the previous quarter. The service's expansion is part of Snap's broader strategy to increase its revenue streams, contributing to the company's annualized revenue run rate of well over $500 million.
In another strategic move, Snap announced Ajit Mohan as its new chief business officer. Previously serving as president of the Asia-Pacific region, Mohan is expected to bring valuable insights and leadership to the company's business operations.
Snap is also taking steps to support its community and employees affected by recent events. The company committed $5 million to assist those impacted by the Los Angeles wildfires and plans to make further contributions in the future.
Despite these positive developments, Snap faces ongoing challenges. The New Mexico attorney general has raised concerns about the platform's potential risks.
"openly foster and promote illicit sexual material involving children and facilitate sextortion and the trafficking of children, drugs, and guns." – New Mexico attorney general
The company remains focused on addressing these issues while continuing its growth trajectory.