Snap Q1 2022 Earnings Report Recap

SNAP missed on earnings and matched on revenue

Key Takeaways

  • Average daily active users beat analyst estimates by more than 1 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.
  • Snap expects revenue to grow between 20% and 25% year over year in Q2 FY 2022.
Snap Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted EPS Miss -$0.02 $0.01
Revenue Match $1.1B $1.1B
Average Daily Active Users Beat 332M  330.6M

Source: Predictions based on analysts' consensus from Visible Alpha

Snap (SNAP) Financial Results: Analysis

Snap Inc. (SNAP) reported mixed results in its Q1 FY 2022 earnings report. The company reported an adjusted loss per share. Analysts were expecting adjusted earnings per share (EPS) of $0.01. Revenue expanded 38.1% year over year (YOY), matching analyst forecasts but slowing from the previous quarter's pace of growth. Snap's average daily active users (DAUs) came in above expectations.

The company's shares were down as much as 8% at one point in extended trading following the release. The stock price then recovered and rose as much as 8%. Over the past year, Snap's shares have provided a total return of -49.5%, well below the S&P 500's total return of 6.9%.

SNAP Daily Active Users

Snap's average DAUs rose 18.6% YOY, slowing from the previous quarter's pace of growth. Snap's average DAUs growth was broad based, with increases coming from 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's Chief Financial Officer (CFO) Derek Andersen said in prepared remarks that advertisers across a wide range of industry groups reported that they were concerned about the macro operating environment. Some of the issues raised included supply chain disruptions, inflation, rising interest rates, and geopolitical risks due to the war in Ukraine. He added that the company's operating environment could become even more challenging, which could result in more advertisers pausing their ad campaigns or reducing their ad budgets.

SNAP Outlook

Snap expects revenue in Q2 FY 2022 to rise between 20% and 25% YOY. It expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be between breakeven and $50 million.

Snap's next earnings report (for Q2 FY 2022) is anticipated to be released on Aug. 10, 2022.

Article Sources
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