Snap shares surge on strong earnings and first-ever quarterly net profit

Shares in Snap Inc. surged in after-hours trading today after the company smashed estimates on earnings, revenue and user growth in its fourth-quarter earnings report and reported its first-ever quarterly net profit.

For the quarter ending Dec. 31, Snap reported non-generally accepted accounting principles earnings of 22 cents per share, up 135% compared to the same quarter in 2020. Revenue came in at $1.298 billion, up 42% year-over-year.

Analysts had expected earnings per share of 10 cents on revenue of $1.2 billion.

Daily active users on Snap grew to 319 million, up 54 million or 20% year-over-year and the fifth straight quarter of DAU growth of 20% or more. Analysts had expected a figure of 316.9 million.

Highlights in the quarter included 18 New Year’s Eve Lens generating more than 7 billion impresses, several enhancements and new features to Lens Studio and the launch of a product called Food Scan that can understand different food and ingredients to suggest recipes.

Snap further invested in its content offerings in the quarter, including renewing partnerships with NBCUniversal, ViacomCBS and Disney. Twenty-five different Discover partners each reached over 50 million unique Snapchat users globally during the quarter.

Full the full year 2021, Snap reported non-GAAP earnings per share of 50 cents – up 895% year-over-year on revenue of $4.117 billion, up 64%

“2021 was an exciting year for Snap and we made significant progress growing our business and serving our global community,” Evan Spiegel, chief executive officer of Snap, said in a statement. “The strength of our core business has enabled us to accelerate our investments in augmented reality, transforming the way that the Snapchat community experiences the world through our camera.”

Looking forward, Snap said that it expected revenue of $1.03 billion to $1.08 billion in the first quarter with DAUs of between 328 million and 330 million. Analysts had been estimating revenue of $1.01 billion on DAUs of 327.8 million. Snap did not provide financial guidance for earnings in the quarter ahead.

Investors liked the numbers but it was a day of contrasts fror Snap that ended with the pleasant surprise of the company’s earnings report.

Snap shares were down 23.53% in regular trading to be sitting at $24.50 as of 4 p.m. due to the fallout from Meta Platform Inc.’s worse-than-expected results yesterday. The earnings report dropped after the bell and the share price turnaround was remarkable. Snap’s share price surged by us much as 62% before settling to be up 59.18% to $39 per share as of 8 p.m. EST.

Photo: Unsplash