Snap Q1 2021 Earnings Report Recap

SNAP beat earnings and revenue forecasts

Snap Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted EPS Beat $0.00 -$0.06
Revenue Beat $769.6M $742.1M
Average Daily Active Users Beat 280.0M 275.6M

Source: Predictions based on analysts' consensus from Visible Alpha

Key Takeaways

  • Average daily active users surpassed analyst expectations by about 4.4 million.
  • 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.
  • Q1 was the first quarter ever that Snap has generated positive free cash flow as a public company.

Snap (SNAP) Financial Results: Analysis

Snap Inc. (SNAP) reported Q1 FY 2021 earnings that beat analyst expectations. Adjusted earnings per share (EPS) came in at zero for the quarter, better than the adjusted loss per share forecast by analysts. Revenue also exceeded analyst estimates. Snap's average daily active users (DAUs) came in at 280 million for the quarter, surpassing expectations. The company's shares were up more than 2% in after-hours trading. Over the past year, Snap's shares have provided a total return of 235.4%, well above the S&P 500's total return of 47.7%.

SNAP Daily Active Users

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 it is to advertisers and the more Snap will be able to generate revenue from selling ad space.

"We began 2021 by achieving our highest year-over-year revenue and daily active user growth rates in over three years during the quarter" said CEO Evan Spiegel in the company's earnings report. Snap's DAUs rose 22% compared to the same three-month period a year ago. Average revenue per user (ARPU), the amount of revenue Snap is able to generate for each of its users, was up 36% compared to the year-ago quarter.

SNAP Free Cash Flow

Snap also noted that it was its first ever quarter that, as a public company, it generated positive free cash flow (FCF), which came in at $126 million. FCF is an income measure that represents the amount of cash available to a company for repaying creditors, servicing debt, or paying dividends to shareholders.

SNAP Forward Guidance

Snap offered guidance for Q2 FY 2021, estimating that revenue would be between $820 million and $840 million. That represents an estimated increase of between 81% and 85% compared to Q2 FY 2020. Adjusted earnings before interest, depreciation, and amortization (EBITDA) is expected to be between -$20 million and breakeven. CFO Derek Andersen said in prepared remarks that the company expects DAUs to rise 22% YOY to about 290 million in Q2.

Snap's next earnings report (for Q2 FY 2021) is estimated to be released on July 19, 2021.

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  2. TradingView. "Price Chart: SNAP and S&P 500."

  3. Snap Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 4.

  4. Snap Inc. "Q1 2021 Earnings Prepared Remarks," Page 10.

  5. Yahoo! Finance. "Earnings Calendar: SNAP."

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