Snap's Q4 Results Show Growth But Disappointing Outlook

Snap's recent Q4 results featured a revenue of $1.56 billion and adjusted earnings surpassing estimates. However, its disappointing first quarter guidance led to an 8% post-announcement stock drop, raising concerns for investors about future performance.

Date: 07-02-2025

AI Rating: 5

Analysis of Snap's Q4 Performance

Snap (NYSE: SNAP) has reported its Q4 earnings revealing reported revenue of $1.56 billion, which constitutes a 14% year-over-year increase. This increase is largely attributed to the growth in its paid subscriber base, which now stands at 14 million Snapchat+ members, compared to 12 million in the previous quarter. Additionally, Snap's daily active users (DAU) grew to 453 million, a 9% increase, aligning well with market expectations.

Another key highlight is the average revenue per user (ARPU), which increased by 4.6% year-over-year, reaching $3.44. Moreover, the adjusted EBITDA margin improved significantly by 600 basis points to 18%, showcasing the company's operational efficiency and growth potential.

The adjusted earnings per share (EPS) were reported at $0.16, doubling from $0.08 during the same quarter last year, indicating strong profitability. While these results exceeded street estimates, particularly the revenue and EPS metrics, the company’s guidance for the upcoming quarter was less favorable.

For Q1, Snap projected revenue at approximately $1.34 billion, which slightly exceeds analysts' expectations of $1.33 billion. However, the projected adjusted earnings of $57.5 million are below the consensus estimate of $78.5 million, a factor that likely influenced the post-earnings stock decline.

Overall, despite the positive performance in Q4, the negative sentiment surrounding the guidance for Q1 contributed to an 8% drop in Snap’s stock shortly after the announcement. This direction in outlook indicates a potential volatility in the stock's performance going forward, especially in a challenging macroeconomic environment.

Stocks: SNAP