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SNAP Gearing Up to Report Q2 Earnings: What's in the Cards?

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Snap SNAP is set to report second-quarter 2021 results on Jul 22.

The Zacks Consensus Estimate for revenues is currently pegged at $838.2 million, indicating 84.5% growth from the year-ago reported figure.

In the last reported quarter, its subscriber growth — reflected by Daily Active Users (DAUs) — increased 51 million on a year-over-year basis and 15 million sequentially. DAUs at the end of the first-quarter were 280 million.

The Zacks Consensus Estimate for global DAUs is currently pegged at 291 million, indicating growth of 22.3% from the year-ago quarter.

The consensus mark for the bottom line has remained steady at a loss of 2 cents per share in the past 30 days, which indicates an improvement from loss of 9 cents reported in the year-ago quarter.

Let’s see how things have shaped up for the upcoming announcement.

Snap Inc. Price and EPS Surprise

Snap Inc. Price and EPS Surprise
Snap Inc. Price and EPS Surprise

Snap Inc. price-eps-surprise | Snap Inc. Quote

Factors to Consider

Snap has been benefiting from a spike in the usage of Snapchat. The growing adoption of Snapchat among Gen Z (13-24 years) is expected to have driven DAUs. It is a larger platform than Facebook FB, Instagram and Twitter TWTR among this demography.

In the first quarter, Snap released a report in partnership with Oxford Economics that looks at the role of Gen Z in driving post-pandemic recovery and digital economy across six markets — Australia, France, Germany, the Netherlands, the United Kingdom and the United States. Per the report, Gen Z is expected to become a dominant force in the workplace with the number in work across the six markets trebling to 87 million by 2030. Moreover, they are expected to support $3.1 trillion of consumer spending in these markets in 2030.

The company has been focused on continuously adding a set of innovative features like Lens Studio 2.0, Camera Kit, Snap Minis and Bitmoji for Games, which is making Snapchat more attractive for users and advertisers.

In the second quarter, the company announced new partnerships and developer products across its Snap Kit, Games, Minis and Bitmoji platforms. The company introduced Map Layers, a new way for partners to bring their services to the Snap Map.

Snap introduced its next generation of Spectacles, built for augmented reality creators in the to-be-reported quarter. The company also announced new augmented reality tools and camera experiences for Snapchatters, creators, and businesses.

In addition to strong adoption of AR Lenses, Discover content and Shows are expected to have driven user growth.

The Zacks Consensus Estimate for second-quarter ARPU is pegged at $2.90, suggesting an increase of 51.8% from the year-ago reported figure.

A recovering ad-spending environment is expected to reflect on Snap’s second-quarter top-line growth. Advertising has been the only source of revenues for Snap, which has been facing significant competition from the likes of Twitter, Facebook, Google and Pinterest for ad dollars.

In the to-be-reported quarter, Snap launched Creator Marketplace, which integrates Creators directly into Snap’s advertising ecosystem for businesses to connect with Lens Creators, Lens Developers, Lens Partners, and eventually Snap Stars to help elevate their marketing presence on Snapchat.

This Zacks Rank #3 (Hold) company’s partnership with cross-platform game engine, Unity Software U to extend the reach of Unity’s Ad supply to Snapchat advertisers is expected to have attracted ad revenues in the to-be-reported quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, a persistent decline in price per ad impression is likely to have hurt advertising revenues.

Key Development in Q2

On Jun 24, Snap announced that the company has signed a multiyear global agreement with Universal Music Group that will let Snapchat’s users incorporate UMG’s catalog of recorded music and content into creative tools, including Sounds on Snapchat and augmented reality Lenses.

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