SNAP's Q4 Earnings Decline Y/Y, Revenues Miss Estimates
Snap SNAP reported fourth-quarter 2022 earnings of 14 cents per share, beating the Zacks Consensus Estimate by 40% but declining 36.4% year over year.
Revenues climbed 0.2% year over year to $1.30 billion but missed the Zacks Consensus Estimate by 0.32%.
Daily active users (DAU) at the end of the reported quarter were 375 million, up 17.6% year over year. Snap added 56 million DAU on a year-over-year basis.
Geographically, revenues from North America (67.7% of revenues) decreased 5.6% year over year to $880 million. Revenues from Europe (16.8%) increased 4.8% to $219 million. Rest of the World (“ROW”) revenues were $201 million, up 28% year over year.
Snap Inc. Price, Consensus and EPS Surprise
Snap Inc. price-consensus-eps-surprise-chart | Snap Inc. Quote
The average revenue per user (“ARPU”) decreased 14.5% year over year to $3.47. On a year-over-year basis, North America, Europe, and ROW ARPUs decreased 8.5%, 6.3%, and 1.8%, respectively.
User Engagement Improves in the Fourth Quarter
North America DAU was 100 million, up 3.1% year over year. Europe DAU was 92 million, up 12.2% year over year. ROW DAU was 183 million at the end of the reported quarter, up 30.7% year over year.
Snap is benefiting from improved user engagement. Total time spent watching Spotlight content grew over 100% year over year, while 17 content partners reached more than 50 million global viewers each in the fourth quarter.
The Snapchat+ subscription service reached more than 2 million paying subscribers in fourth quarter. Snap launched new features such as Custom Story Expiration and Custom Notification Sounds, providing subscribers with more than 12 exclusive features.
In the quarter under review, the cost of revenues on a non-GAAP basis increased 5.9% year over year to $ 468 million.
Adjusted operating expenses were $599 million, up 13.2% year over year.
Sales and marketing expenses increased 14.8% year over year to $217 million while general and administrative expenses increased 7.1% year over year to $151 million. Research and development expenses rose 16.1% year over year to $231 million.
Adjusted EBITDA was $233 million, down 28.6% from the year-ago quarter.
Balance Sheet and Cash Flow
As of Dec 31, 2022, cash and cash equivalents and marketable securities were $3.9 billion compared with $4.4 billion as of Sep 30, 2022.
Operating cash flow was $125.3 million in the fourth quarter compared with cash flow of $56 million in the year-ago quarter.
Free cash flow was $78.4 million in the fourth quarter of 2022 compared with $18 million in the previous quarter.
Zacks Rank & Stocks to Consider
Snap currently carries a Zacks Rank #4 (Sell).
Snap’s shares tumbled 77% compared with the Zacks Computer and Technology sector’s decline of 36% in the past year.
Investors interested in the broader sector can consider better-ranked stocks like Cambium Networks CMBM, Amtech ASYS and RingCentral RNG in the broader sector. While Cambium sports a Zacks Rank #1 (Strong Buy), both Amtech and RingCentral carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cambium shares have declined 13.9% in the past year. CMBM is set to report its fourth-quarter 2022 results on Feb 16.
Amtech shares have gained 19.2% in the past year. ASYS is set to report its first-quarter fiscal 2023 results on Feb 8.
RingCentral shares have declined 78.7% in the past year. RNG is set to report its fourth-quarter 2022 results on Feb 15.
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