Snap (SNAP - Free Report) reported fourth-quarter 2023 earnings of 8 cents per share, which beat the Zacks Consensus Estimate by 14.29% but declined 42.9% year over year.
Revenues increased 4.7% year over year to $1.36 billion and missed the Zacks Consensus Estimate by 1.84%. The top-line growth was driven by the company’s focus on investing in direct-response business to deliver increased return on ad spend for advertising partners.
The brand-oriented advertising business declined 3% year over year, while the direct-response advertising business grew 3% year over year. Other revenues, which were driven primarily by Snapchat+, surged more than 200% year over year in the fourth quarter.
Daily active users (DAU) at the end of the reported quarter were 414 million, up 10.4% year over year. Snap added 39 million DAU on a year-over-year basis. Monthly active users (MAU) increased more than 8% year over year and surpassed 800 million in the fourth quarter.
Geographically, revenues from North America (66.1% of revenues) rose 2.2% year over year to $899.5 million. Revenues from Europe (17.5%) increased 9% to $238.3 million. Rest of the World (ROW) revenues were $223.5 million, up 11.3% year over year.
The average revenue per user (ARPU) decreased 5.2% year over year to $3.29. On a year-over-year basis, the ARPUs of North America and Europe increased 2.2% and 4.6%, respectively, while the ARPU of ROW decreased 6.4%.
User Engagement Improves in the Fourth Quarter
North America’s DAU was 100 million, flat year over year. Europe’s DAU was 96 million, up 4.3% year over year and ROW’s DAU was 218 million at the end of the reported quarter, up 11.3% year over year.
In the fourth quarter, overall time spent watching content globally grew on a year-over-year basis, driven primarily by strong growth in total time spent watching Spotlight. Total time spent watching Spotlight content increased more than 175% year over year and the average MAU watching Spotlight increased more than 35% year over year.
More creators posted content to Snapchat, with total Public Stories posted by Snap Stars growing more than 125% year over year in fourth-quarter 2023 in the United States.
In the fourth quarter, Snap signed a new publisher deal with Spotify (SPOT - Free Report) in the United States, which will bring shorter-form highlights from Spotify’s podcasts to Spotlight and Stories.
Snap continued to diversify its revenue base with Snapchat+, which reached more than seven million subscribers in the reported quarter.
The company also announced new artificial intelligence (AI)-powered features for Snapchat+ subscribers, giving them the ability to enhance their Snaps and create as well as send AI-generated images based on a text prompt.
Operating Details
In the quarter under review, the adjusted cost of revenues increased 31.4% year over year to $615 million.
Adjusted operating expenses were $587 million, down 2% year over year.
Sales and marketing expenses decreased 11.1% year over year to $193 million, while general and administrative expenses increased 11.3% year over year to $168 million. Research and development expenses contracted 2.2% year over year to $226 million.
Adjusted EBITDA was $159.1 million, down 31.8% from the year-ago quarter.
Balance Sheet and Cash Flow
As of Dec 31, 2023, cash and cash equivalents and marketable securities were $3.5 billion compared with $3.6 billion as of Sep 30, 2023.
Operating cash flow was $164.5 million in the fourth quarter of 2023 compared with $125.2 million in the year-ago quarter.
Free cash flow was $110.85 million in the fourth quarter of 2023 compared with $78.36 million in the year-ago period.
The company repurchased 18.4 million shares at a cost of $189 million in the fourth quarter, reflecting an average share repurchase price of $10.28.
Zacks Rank & Stocks to Consider
Snap currently carries a Zacks Rank #3 (Hold).
Shares of SNAP have lost 29.6% against the Zacks Computer and Technology sector’s return of 5.9% in the year-to-date period.
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Arista Networks (ANET - Free Report) and Semtech (SMTC - Free Report) , sporting a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Arista Networks shares surged 110.5% in the past year. The long-term earnings growth rate for ANET is projected at 19.77%.
Shares of Semtech have lost 42.8% in the past year. The long-term earnings growth rate for SMTC is projected at 15%.
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This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
Snap (SNAP - Free Report) reported fourth-quarter 2023 earnings of 8 cents per share, which beat the Zacks Consensus Estimate by 14.29% but declined 42.9% year over year.
Revenues increased 4.7% year over year to $1.36 billion and missed the Zacks Consensus Estimate by 1.84%. The top-line growth was driven by the company’s focus on investing in direct-response business to deliver increased return on ad spend for advertising partners.
The brand-oriented advertising business declined 3% year over year, while the direct-response advertising business grew 3% year over year. Other revenues, which were driven primarily by Snapchat+, surged more than 200% year over year in the fourth quarter.
Daily active users (DAU) at the end of the reported quarter were 414 million, up 10.4% year over year. Snap added 39 million DAU on a year-over-year basis. Monthly active users (MAU) increased more than 8% year over year and surpassed 800 million in the fourth quarter.
Geographically, revenues from North America (66.1% of revenues) rose 2.2% year over year to $899.5 million. Revenues from Europe (17.5%) increased 9% to $238.3 million. Rest of the World (ROW) revenues were $223.5 million, up 11.3% year over year.
The average revenue per user (ARPU) decreased 5.2% year over year to $3.29. On a year-over-year basis, the ARPUs of North America and Europe increased 2.2% and 4.6%, respectively, while the ARPU of ROW decreased 6.4%.
User Engagement Improves in the Fourth Quarter
North America’s DAU was 100 million, flat year over year. Europe’s DAU was 96 million, up 4.3% year over year and ROW’s DAU was 218 million at the end of the reported quarter, up 11.3% year over year.
In the fourth quarter, overall time spent watching content globally grew on a year-over-year basis, driven primarily by strong growth in total time spent watching Spotlight. Total time spent watching Spotlight content increased more than 175% year over year and the average MAU watching Spotlight increased more than 35% year over year.
More creators posted content to Snapchat, with total Public Stories posted by Snap Stars growing more than 125% year over year in fourth-quarter 2023 in the United States.
In the fourth quarter, Snap signed a new publisher deal with Spotify (SPOT - Free Report) in the United States, which will bring shorter-form highlights from Spotify’s podcasts to Spotlight and Stories.
Snap continued to diversify its revenue base with Snapchat+, which reached more than seven million subscribers in the reported quarter.
The company also announced new artificial intelligence (AI)-powered features for Snapchat+ subscribers, giving them the ability to enhance their Snaps and create as well as send AI-generated images based on a text prompt.
Operating Details
In the quarter under review, the adjusted cost of revenues increased 31.4% year over year to $615 million.
Adjusted operating expenses were $587 million, down 2% year over year.
Sales and marketing expenses decreased 11.1% year over year to $193 million, while general and administrative expenses increased 11.3% year over year to $168 million. Research and development expenses contracted 2.2% year over year to $226 million.
Adjusted EBITDA was $159.1 million, down 31.8% from the year-ago quarter.
Balance Sheet and Cash Flow
As of Dec 31, 2023, cash and cash equivalents and marketable securities were $3.5 billion compared with $3.6 billion as of Sep 30, 2023.
Operating cash flow was $164.5 million in the fourth quarter of 2023 compared with $125.2 million in the year-ago quarter.
Free cash flow was $110.85 million in the fourth quarter of 2023 compared with $78.36 million in the year-ago period.
The company repurchased 18.4 million shares at a cost of $189 million in the fourth quarter, reflecting an average share repurchase price of $10.28.
Zacks Rank & Stocks to Consider
Snap currently carries a Zacks Rank #3 (Hold).
Shares of SNAP have lost 29.6% against the Zacks Computer and Technology sector’s return of 5.9% in the year-to-date period.
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Arista Networks (ANET - Free Report) and Semtech (SMTC - Free Report) , sporting a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Arista Networks shares surged 110.5% in the past year. The long-term earnings growth rate for ANET is projected at 19.77%.
Shares of Semtech have lost 42.8% in the past year. The long-term earnings growth rate for SMTC is projected at 15%.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
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