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Why Is Snap (SNAP) Down 2.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Snap (SNAP - Free Report) . Shares have lost about 2.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Snap due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
SNAP's Q4 Earnings Decline Y/Y, Revenues Miss Estimates
Snap reported fourth-quarter 2022 earnings of 14 cents per share, beating the Zacks Consensus Estimate by 40% but declining 36.4% year over year.
Revenues climbed 0.2% year over year to $1.30 billion but missed the Zacks Consensus Estimate by 0.32%.
Daily active users (DAU) at the end of the reported quarter were 375 million, up 17.6% year over year. Snap added 56 million DAU on a year-over-year basis.
Geographically, revenues from North America (67.7% of revenues) decreased 5.6% year over year to $880 million. Revenues from Europe (16.8%) increased 4.8% to $219 million. Rest of the World (“ROW”) revenues were $201 million, up 28% year over year.
The average revenue per user (“ARPU”) decreased 14.5% year over year to $3.47. On a year-over-year basis, North America, Europe, and ROW ARPUs decreased 8.5%, 6.3%, and 1.8%, respectively.
User Engagement Improves in the Fourth Quarter
North America DAU was 100 million, up 3.1% year over year. Europe DAU was 92 million, up 12.2% year over year. ROW DAU was 183 million at the end of the reported quarter, up 30.7% year over year.
Snap is benefiting from improved user engagement. Total time spent watching Spotlight content grew over 100% year over year, while 17 content partners reached more than 50 million global viewers each in the fourth quarter.
The Snapchat+ subscription service reached more than 2 million paying subscribers in fourth quarter. Snap launched new features such as Custom Story Expiration and Custom Notification Sounds, providing subscribers with more than 12 exclusive features.
Operating Details
In the quarter under review, the cost of revenues on a non-GAAP basis increased 5.9% year over year to $ 468 million.
Adjusted operating expenses were $599 million, up 13.2% year over year.
Sales and marketing expenses increased 14.8% year over year to $217 million while general and administrative expenses increased 7.1% year over year to $151 million. Research and development expenses rose 16.1% year over year to $231 million.
Adjusted EBITDA was $233 million, down 28.6% from the year-ago quarter.
Balance Sheet and Cash Flow
As of Dec 31, 2022, cash and cash equivalents and marketable securities were $3.9 billion compared with $4.4 billion as of Sep 30, 2022.
Operating cash flow was $125.3 million in the fourth quarter compared with cash flow of $56 million in the year-ago quarter.
Free cash flow was $78.4 million in the fourth quarter of 2022 compared with $18 million in the previous quarter.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -47.41% due to these changes.
VGM Scores
At this time, Snap has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Snap has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Snap is part of the Zacks Internet - Software industry. Over the past month, Aspen Technology (AZPN - Free Report) , a stock from the same industry, has gained 3.8%. The company reported its results for the quarter ended December 2022 more than a month ago.
Aspen Technology reported revenues of $242.84 million in the last reported quarter, representing a year-over-year change of +41.7%. EPS of $0.35 for the same period compares with $1.20 a year ago.
For the current quarter, Aspen Technology is expected to post earnings of $1.66 per share, indicating a change of +20.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.
Aspen Technology has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Why Is Snap (SNAP) Down 2.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Snap (SNAP - Free Report) . Shares have lost about 2.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Snap due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
SNAP's Q4 Earnings Decline Y/Y, Revenues Miss Estimates
Snap reported fourth-quarter 2022 earnings of 14 cents per share, beating the Zacks Consensus Estimate by 40% but declining 36.4% year over year.
Revenues climbed 0.2% year over year to $1.30 billion but missed the Zacks Consensus Estimate by 0.32%.
Daily active users (DAU) at the end of the reported quarter were 375 million, up 17.6% year over year. Snap added 56 million DAU on a year-over-year basis.
Geographically, revenues from North America (67.7% of revenues) decreased 5.6% year over year to $880 million. Revenues from Europe (16.8%) increased 4.8% to $219 million. Rest of the World (“ROW”) revenues were $201 million, up 28% year over year.
The average revenue per user (“ARPU”) decreased 14.5% year over year to $3.47. On a year-over-year basis, North America, Europe, and ROW ARPUs decreased 8.5%, 6.3%, and 1.8%, respectively.
User Engagement Improves in the Fourth Quarter
North America DAU was 100 million, up 3.1% year over year. Europe DAU was 92 million, up 12.2% year over year. ROW DAU was 183 million at the end of the reported quarter, up 30.7% year over year.
Snap is benefiting from improved user engagement. Total time spent watching Spotlight content grew over 100% year over year, while 17 content partners reached more than 50 million global viewers each in the fourth quarter.
The Snapchat+ subscription service reached more than 2 million paying subscribers in fourth quarter. Snap launched new features such as Custom Story Expiration and Custom Notification Sounds, providing subscribers with more than 12 exclusive features.
Operating Details
In the quarter under review, the cost of revenues on a non-GAAP basis increased 5.9% year over year to $ 468 million.
Adjusted operating expenses were $599 million, up 13.2% year over year.
Sales and marketing expenses increased 14.8% year over year to $217 million while general and administrative expenses increased 7.1% year over year to $151 million. Research and development expenses rose 16.1% year over year to $231 million.
Adjusted EBITDA was $233 million, down 28.6% from the year-ago quarter.
Balance Sheet and Cash Flow
As of Dec 31, 2022, cash and cash equivalents and marketable securities were $3.9 billion compared with $4.4 billion as of Sep 30, 2022.
Operating cash flow was $125.3 million in the fourth quarter compared with cash flow of $56 million in the year-ago quarter.
Free cash flow was $78.4 million in the fourth quarter of 2022 compared with $18 million in the previous quarter.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -47.41% due to these changes.
VGM Scores
At this time, Snap has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Snap has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Snap is part of the Zacks Internet - Software industry. Over the past month, Aspen Technology (AZPN - Free Report) , a stock from the same industry, has gained 3.8%. The company reported its results for the quarter ended December 2022 more than a month ago.
Aspen Technology reported revenues of $242.84 million in the last reported quarter, representing a year-over-year change of +41.7%. EPS of $0.35 for the same period compares with $1.20 a year ago.
For the current quarter, Aspen Technology is expected to post earnings of $1.66 per share, indicating a change of +20.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.
Aspen Technology has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.