Snap Q2 2022 Earnings Report Recap

SNAP missed on EPS and matched on revenue

Key Takeaways

  • Average daily active users beat analyst estimates by close to 3 million users.
  • The more daily active users Snap can attract and retain, the more appealing its platform is to potential advertisers. Selling ad space is how the company generates most of its revenue.
  • Due to operating environment uncertainties, Snap did not provide revenue guidance for Q3 FY 2022.
Snap Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted EPS Miss -$0.02 $0.04
Revenue  Match $1.1B $1.1B
Average Daily Active Users  Beat 347.0M 344.1M

Source: Predictions based on analysts' consensus from Visible Alpha

Snap (SNAP) Financial Results: Analysis

Snap Inc. (SNAP) reported mixed results in its Q2 FY 2022 earnings report. The company reported an adjusted loss per share, while analysts had predicted adjusted earnings per share (EPS) of $0.02. Net losses widened considerably year-over-year (YOY). Revenue expanded 13% YOY, matching analyst forecasts. However, this marks the slowest pace of revenue growth in at least the last 14 quarters. Snap's average daily active users (DAUs) came in well above expectations.

SNAP Daily Active Users

Snap reported 347 million DAUs for Q2 FY 2022, besting analyst predictions by nearly 3 million. Snap's average DAUs rose 18% YOY, which marks a slowdown compared with the prior-year quarter's rate of growth. The company said that DAUs grew both sequentially and YOY in North America, Europe, and the rest of the world.

DAUs are defined as any registered Snapchat user who opens the Snapchat app at least once during a 24-hour period. Average DAUs for any specific quarter are calculated by summing the number of DAUs on each day of that quarter and dividing the total by the number of days in the quarter.

The metric provides a snapshot of the size of Snap's total user base. The bigger that user base is, the more attractive the platform is to advertisers, and the more Snap will be able to generate revenue from selling ad space.

SNAP Outlook and Stock Performance

Citing operating environment uncertainties, Snap declined to provide any guidance for revenue or adjusted EBITDA for Q3 FY 2022.

Snap shares fell precipitously in extended hours trading Thursday following the earnings release, dropping by more than 25%. The company's stock has significantly lagged the market in the last year, providing 1-year trailing total returns of -74.2% compared with -9.2% for the S&P 500.

Snap's next earnings report (for Q3 FY 2022) is expected be released on Oct. 25, 2022.

Article Sources
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