From Nasdaq: 2024-05-05 09:10:00

Snap’s stock soared 28% after Q1 earnings beat estimates, with revenue up 21% to $1.19 billion and adjusted earnings tripling to $0.03 per share. Competition from TikTok and Meta Platforms’ Instagram caused revenue growth to stall in 2023. But Q1 2024 saw recovery, with DAUs growing 10%, ARPU up 10%, and revenue up 21%.

Snapchat ended Q1 with 422 million DAUs, with 100 million in North America, 96 million in Europe, and 226 million worldwide. ARPU in North America grew 17%, while it grew 20% in Europe and 13% in the rest of the world. Snap expects second-quarter revenue growth of 15%-18% and DAUs to grow 9% year over year to 431 million.

Despite showing signs of growth, Snap remains unprofitable based on GAAP. Its adjusted EBITDA margin stayed positive, with second-quarter adjusted EBITDA expected to be $15 million to $45 million. Analysts expect Snap’s adjusted EBITDA margin to more than double for the full year. Snap’s goal is to achieve meaningful adjusted EBITDA profitability and positive free cash flow long term.

Snap, with a negative trailing-12-month free cash flow of $31 million, still has $2.9 billion in cash and cash equivalents. Its adjusted EBITDA trades at 56 times this year’s compared to Meta’s 11 times. Snap is making progress but needs to narrow losses and improve free cash flow. Stick with leaders like Meta for now.



Read more at Nasdaq: Is Snap Stock a Buy Now?