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Snap Q4 earnings, sales top estimates as user growth soars, but guidance misses expectations

Emily McCormick
·Reporter
·3 min read
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Snap (SNAP) reported fourth-quarter results that topped expectations, with its flagship app Snapchat benefiting from a rebound in internet advertising at the end of last year and a jump in users during the pandemic.

However, the company forecasted a first-quarter adjusted EBITDA loss, whereas a profit was expected. Shares fell more than 9% in late trading before paring some declines.

Here’s what the company reported in its fiscal fourth-quarter results compared to consensus estimates compiled by Bloomberg, as well as its results for the fourth quarter of fiscal 2019:

  • 4Q Revenue: $911.3 million vs. $856.1 million expected and $560.9 million year-over-year

  • 4Q Adjusted earnings per share: 9 cents vs. 7 cents expected and 3 cents year-over-year

  • Daily active users: 265 million vs. 257.9 million expected and 218 million year-over-year

Snap posted fourth-quarter revenue growth of 62%, its fastest pace reported since the company went public in 2017, as advertisers stepped up spending after pulling back during the worst points of the pandemic last year. The company also eked out its first full-year profit on an adjusted EBITDA basis.

Daily active users grew 22% to 265 million, also topping estimates. And Snap’s average revenue per user grew even faster, or by 33% to $3.44.

However, Snap’s guidance for the first quarter was mixed, with the tech company forecasting a first-quarter adjusted EBITDA loss between $50 million and $70 million. Consensus analysts were looking for a profit of $17.5 million. Snap’s revenue forecast of between $720 million and $740 million for the first quarter topped expectations for about $705 million, however.

Results from other major tech companies already pointed to strong overall internet advertising trends for the fourth quarter, as a strong holiday shopping season and reduced uncertainty around the COVID-19 pandemic made marketers more apt to spend. Facebook’s (FB) advertising revenue jumped 31% to a record more than $27 billion in the fourth quarter, and Alphabet’s (GOOG, GOOGL) core Google ad revenue grew more than 22% to $46 billion.

These strong results, however, also set a high hurdle for Snap to cross to wow Wall Street. And the stock had already more than doubled since its last earnings report in October.

Aside from growing its advertiser base, Snap’s key to growth going forward will require continued engagement with its core users. While Snap saw a surge in user engagement during the pandemic, maintaining that momentum once travel restrictions ease and consumers can venture out of their homes and away from their devices will be key. To that end, Snap has been investing heavily in building out new features in the app, including with updated augmented reality filters and new content partnerships with publishers.

“As we look towards the future, we’re excited to build on our investments in augmented reality, mapping, and content to drive our ongoing growth,” CEO Evan Spiegel said in a statement Thursday.

Shares of Snap have risen 208% over the past 12 months, and 17% so far in 2021.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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