Snap (SNAP)

Snap (SNAP) Financial Results: Analysis

When Snap announced second-quarter results that fell short of analysts' already lower expectations and the firm gave no guidance for the third quarter, the stock fell more than 25% in after-hours trade.

In its first quarterly letter to investors, the social messaging and content app business also stated that it would "substantially slow our rate of hiring, as well as the rate of operational expense increase." We will refocus our investments' objectives and push for an increased focus on productivity.

The business reported $1.11 billion in revenue, an increase of 13%, and a $422 million net loss (an adjusted net loss of 2 cents per share).

The firm surpassed its previous estimate with 347 million average daily active Snapchat users in the period, up 15 million sequential and 18% from the same time last year. However, DAUs in North America only increased by 4% from the previous year to a total of 99 million in the quarter.

In its Q2 FY 2022 earnings report, Snap Inc. (SNAP) showed a range of results. While experts had expected adjusted earnings per share (EPS) of $0.02, the company recorded a loss per share. Net losses significantly increased year over year (YOY). Revenue increased by 13% YoY, in line with analyst estimates. The rate of revenue growth, though, has not been this slow in at least the past 14 months. The average number of daily active users (DAUs) on Snap far outperformed expectations.

SNAP Daily Active Users

In Q2 of FY 2022, Snap recorded 347 million DAUs, above analyst estimates by about 3 million. Average DAUs for Snap increased 18% YOY, a slower pace of growth than in the comparable period last year. According to the corporation, DAUs increased in North America, Europe, and the rest of the world both sequential and year over year.

Any registered Snapchat user who accesses the app at least once in a 24-hour period is described to as a DAU. By adding up the DAUs for each day of a month and dividing the total by the number of days in the quarter, the average DAUs for that quarter can be calculated.

The figure gives a quick overview of Snap's total customer base. The more users a platform has, the more attractive it is to advertisers, and the more money Snap can make from selling ad space.

SNAP Outlook and Stock Performance

Snap declined to give any revenue or adjusted EBITDA forecasts for Q3 FY 2022, citing the volatility of the operating environment.

Following the release of the earnings, Snap shares dropped sharply in after-hours trading on Thursday, falling by more than 25%. In the past year, the company's stock has significantly outperformed the market, with 1-year trailing total returns of -74.2 percent vs -9.2 percent for the S&P 500.

  • On October 25, 2022, Snap is expected to release its next earnings report (for Q3 FY 2022).
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