We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
SNAP Q2 Earnings Match Estimates, User Growth Drives Revenues
Read MoreHide Full Article
Snap (SNAP - Free Report) reported second-quarter 2024 earnings of 2 cents per share, which was in line with the Zacks Consensus Estimate. The company had incurred a loss of 2 cents in the year-ago quarter.
Revenues increased 15.8% year over year to $1.23 billion but missed the Zacks Consensus Estimate by 1.29%.
Geographically, revenues from North America (62.1% of revenues) increased 11.8% year over year to $767.5 million. Revenues from Europe (18.6% of revenues) increased 26.2% to $229.8 million. Revenues from Rest of the World (ROW) were $239.4 million, up 20.5% year over year.
The average revenue per user (ARPU) increased 6.3% year over year to $2.86. On a year-over-year basis, the ARPU of North America, Europe and ROW climbed 12.3%, 22.3% and 4.1%, respectively.
The Uptick in User Engagement Boosts Second-Quarter Sales
In the second quarter, Snap introduced Map Reactions that enable Snapchatters to send their favorite emojis to friends on the Snap Map to start conversations. The company also launched Editable Chats, which allow Snapchatters to edit messages up to five minutes after sending them, and My AI Reminders that give Snapchatters the ability to ask for a reminder for an upcoming deadline.
The results of these initiatives are reflected in Snap’s global community reaching 432 million daily active users (DAU) in the second quarter, up 8.8% year over year. Snap added 10 million DAU on a quarter-over-quarter basis.
North America’s DAU was 100 million, down 1% year over year. Europe’s DAU was 97 million, up 3.2% year over year. ROW’s DAU was 235 million at the end of the reported quarter, which jumped 16.3% year over year.
Markedly, approximately 80% of Snapchatters are above the age of 18. In the reported quarter, global content viewers increased 12% year over year, and global time spent watching content rose 25% year over year, driven by strong growth in total time spent watching Spotlight and Creator Stories.
In the second quarter, the company continued to make progress in unifying the ranking models between Spotlight and Stories to a single backend stack that ranks all content types to deliver the most engaging content to the community, regardless of format. These efforts contributed in part to the number of creators submitting Spotlight content growing more than 20% year over year in the reported quarter.
Global impression volume grew approximately 13% year over year, driven in large part by expanded advertising delivery within Spotlight.
In the second quarter of 2024, the number of Snapchatters sharing AR Lens experiences with their friends increased 12% year over year, driven by the popularity of innovative generative AI Lenses and improved ranking and optimization of Snap’s AR experiences. For example, ML Scribble World Lens, which enables Snapchatters to transform into artistic, cartoon-style versions of themselves, was viewed over one billion times in the second quarter, and the 90s AI Lens was viewed by more than 20% of the U.S. Snapchatters.
The Snapchat+ subscription service reached more than 11 million paying subscribers in the second quarter. The company made considerable progress in diversifying revenues with Snapchat+, ARES and sponsored AR advertising.
Operating Details
Adjusted cost of revenues increased 19.3% year over year to $586 million.
In the quarter under review, adjusted operating expenses were $596 million, down 3% year over year. Sales and marketing expenses decreased 4.2% year over year to $206 million, and general and administrative expenses jumped 8.9% year over year to $184 million. Research and development expenses contracted 10.4% year over year to $206 million.
Adjusted EBITDA was $55 million, up 42.9% from the year-ago quarter.
Balance Sheet and Cash Flow
As of Jun 30, 2024, cash and cash equivalents and marketable securities were $3.08 billion compared with $2.9 billion as of Mar 31, 2024.
Operating cash outflow was $21 million compared with an outflow of $82 million in the prior year.
Free cash outflow was $73.4 million compared with an outflow of $118.8 million reported in the year-ago quarter.
The company repurchased 7 million shares at a cost of $76 million in the second quarter, reflecting an average share repurchase price of $11.06.
Guidance
For third-quarter 2024, Snap expects total revenues between $1.335 billion and $1.375 billion, implying year-over-year growth of 12-16%. Adjusted EBITDA is expected between $70 million and $100 million.
DAU is projected to be 441 million in the third quarter.
Image: Bigstock
SNAP Q2 Earnings Match Estimates, User Growth Drives Revenues
Snap (SNAP - Free Report) reported second-quarter 2024 earnings of 2 cents per share, which was in line with the Zacks Consensus Estimate. The company had incurred a loss of 2 cents in the year-ago quarter.
Revenues increased 15.8% year over year to $1.23 billion but missed the Zacks Consensus Estimate by 1.29%.
Geographically, revenues from North America (62.1% of revenues) increased 11.8% year over year to $767.5 million. Revenues from Europe (18.6% of revenues) increased 26.2% to $229.8 million. Revenues from Rest of the World (ROW) were $239.4 million, up 20.5% year over year.
The average revenue per user (ARPU) increased 6.3% year over year to $2.86. On a year-over-year basis, the ARPU of North America, Europe and ROW climbed 12.3%, 22.3% and 4.1%, respectively.
Snap Inc. Price, Consensus and EPS Surprise
Snap Inc. price-consensus-eps-surprise-chart | Snap Inc. Quote
The Uptick in User Engagement Boosts Second-Quarter Sales
In the second quarter, Snap introduced Map Reactions that enable Snapchatters to send their favorite emojis to friends on the Snap Map to start conversations. The company also launched Editable Chats, which allow Snapchatters to edit messages up to five minutes after sending them, and My AI Reminders that give Snapchatters the ability to ask for a reminder for an upcoming deadline.
The results of these initiatives are reflected in Snap’s global community reaching 432 million daily active users (DAU) in the second quarter, up 8.8% year over year. Snap added 10 million DAU on a quarter-over-quarter basis.
North America’s DAU was 100 million, down 1% year over year. Europe’s DAU was 97 million, up 3.2% year over year. ROW’s DAU was 235 million at the end of the reported quarter, which jumped 16.3% year over year.
Markedly, approximately 80% of Snapchatters are above the age of 18. In the reported quarter, global content viewers increased 12% year over year, and global time spent watching content rose 25% year over year, driven by strong growth in total time spent watching Spotlight and Creator Stories.
In the second quarter, the company continued to make progress in unifying the ranking models between Spotlight and Stories to a single backend stack that ranks all content types to deliver the most engaging content to the community, regardless of format. These efforts contributed in part to the number of creators submitting Spotlight content growing more than 20% year over year in the reported quarter.
Global impression volume grew approximately 13% year over year, driven in large part by expanded advertising delivery within Spotlight.
In the second quarter of 2024, the number of Snapchatters sharing AR Lens experiences with their friends increased 12% year over year, driven by the popularity of innovative generative AI Lenses and improved ranking and optimization of Snap’s AR experiences. For example, ML Scribble World Lens, which enables Snapchatters to transform into artistic, cartoon-style versions of themselves, was viewed over one billion times in the second quarter, and the 90s AI Lens was viewed by more than 20% of the U.S. Snapchatters.
The Snapchat+ subscription service reached more than 11 million paying subscribers in the second quarter. The company made considerable progress in diversifying revenues with Snapchat+, ARES and sponsored AR advertising.
Operating Details
Adjusted cost of revenues increased 19.3% year over year to $586 million.
In the quarter under review, adjusted operating expenses were $596 million, down 3% year over year. Sales and marketing expenses decreased 4.2% year over year to $206 million, and general and administrative expenses jumped 8.9% year over year to $184 million. Research and development expenses contracted 10.4% year over year to $206 million.
Adjusted EBITDA was $55 million, up 42.9% from the year-ago quarter.
Balance Sheet and Cash Flow
As of Jun 30, 2024, cash and cash equivalents and marketable securities were $3.08 billion compared with $2.9 billion as of Mar 31, 2024.
Operating cash outflow was $21 million compared with an outflow of $82 million in the prior year.
Free cash outflow was $73.4 million compared with an outflow of $118.8 million reported in the year-ago quarter.
The company repurchased 7 million shares at a cost of $76 million in the second quarter, reflecting an average share repurchase price of $11.06.
Guidance
For third-quarter 2024, Snap expects total revenues between $1.335 billion and $1.375 billion, implying year-over-year growth of 12-16%. Adjusted EBITDA is expected between $70 million and $100 million.
DAU is projected to be 441 million in the third quarter.
Zacks Rank & Stocks to Consider
SNAP currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader Computer and Technology sector are DigitalOcean (DOCN - Free Report) , Shopify (SHOP - Free Report) and Analog Devices (ADI - Free Report) . While DigitalOcean sports a Zacks Rank #1 (Strong Buy), Shopify and Analog Devices carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DigitalOcean’s shares have plunged 15.9% year to date. DOCN is set to report second-quarter 2024 results on Aug 8.
Shopify’s shares have plunged 27.3% year to date. SHOP is set to report its second-quarter 2024 results on Aug 7.
Analog Devices’ shares have gained 7.8% year to date. ADI is set to report third-quarter fiscal 2024 results on Aug 21.