Snap Exceeds Expectations in First Quarter, Shares Surge 25%

Snap (SNAP.N) surpassed Wall Street’s projections for quarterly revenue and user growth on Thursday, propelled by faster-than-expected results from enhancements to its advertising platform. Following the earnings report, Snap shares surged by 25% to $14.32 in after-hours trading. The company behind the photo messaging app Snapchat has been focused on refining its advertising targeting capabilities and streamlining user interaction with ads over the past year. Historically, Snap has faced challenges in competing with larger rivals such as Meta Platforms (META.O) for digital ad revenue. Revenue for the first quarter, ending March 31, reached $1.2 billion, marking a 21% increase from the same period last year and surpassing analysts’ consensus estimate of $1.12 billion based on LSEG data. In a shareholder letter, Snap highlighted that its business performance was outpacing expectations, driven by enhancements to its advertising platform and increased demand for features facilitating brand sales and website engagement. Emarketer senior analyst Max Willens commented, “Years of dedicated effort are starting to yield results for Snap’s advertising business,” suggesting a promising outlook for the company in the coming year. Snap provided an optimistic outlook for the second quarter, projecting revenue in the range of $1.23 billion to $1.26 billion, surpassing analysts’ expectations of $1.22 billion. The number of daily active users on Snapchat climbed to 422 million during the first quarter, exceeding analysts’ projections of 419.6 million. On Tuesday, the U.S. Senate approved a bill that grants Chinese tech firm ByteDance up to one year to divest its highly popular video app TikTok, failing which the app would face a ban in the U.S. Snap introduced its TikTok-like feature called Spotlight in 2020, and industry experts have indicated that Snap stands to benefit from diverted marketing budgets if TikTok becomes unavailable.