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Twitter vs. Snap: Which Social Media Stock Had Better Earnings?

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Shares of Twitter (TWTR - Free Report) skyrocketed over 20% Thursday after the social media firm posted its first-ever GAAP quarterly profit in the company’s public history. Twitter’s strong fourth-quarter comes just two days after rival Snap (SNAP - Free Report) reported the strongest quarter in its young history, prompting the question: which of these often-scrutinized social media powers performed better in Q4?

Earnings Surprise

Twitter reported fourth-quarter GAAP net income of $91 million and adjusted EBITDA of $308 million. The company also posted adjusted Q4 net income of $141 million, or $0.19 per share, which topped the Zacks Consensus Estimate of $0.14 per share. This marked a 72.7% year-over-year jump.

Snap reported a narrower than expected adjusted loss of $0.13 per share in the fourth-quarter, coming in above our estimate that called for a loss of $0.15 per share. The company reported a quarterly loss of $0.19 per share in the year-ago period.

Revenues

Twitter’s sales jumped just 2% in the fourth quarter to $732 million. But quarterly gains were 8% when excluding the roughly $40 million impact of the winding down of its TellApart business. The company also saw its advertising revenues climb 7% year-over-year.

Snap’s Q4 revenues skyrocketed 72% from the year-ago period to $285.7 million. On top of that, the company’s sales popped 104% to $824.9 million for the full-year.

User Growth

During the fourth-quarter, Twitter grew its daily active user base by 12% year-over-year. This marked the fifth consecutive quarter of double-digit, year-over-year growth in this category.

Twitter also grew its monthly active user based by 4% to 330 million. However, user growth remained flat sequentially. The San Francisco-based company closed the quarter with 68 million domestic MAUs, which marked a 2% year-over-year jump. Yet Twitter’s U.S. monthly user totals fell by 1 million quarter-over-quarter.

Snapchat added 28.8 million DAUs, which marked an 18% year-over-year jump to close the quarter with 187 million. Maybe more impressively, the company added 8.9 million sequentially, representing the highest net adds since Q3 2016.

It should be noted that Snapchat did not report monthly active user figures and Twitter only reported the percentage increase of daily active users. The two social media companies clearly operate different business models in terms what user metric matters the most. For reference, Twitter launched in 2006, while Evan Spiegel founded Snapchat in 2010.

Looking Ahead

Twitter announced in its fourth-quarter earnings release that it expects to become GAAP profitable for the full year 2018. The company seems poised to focus on its bottom-line after years of sustained losses. This quarter, Twitter cut expenses by 28% year-over-year.

Twitter is projected to see its adjusted earnings reach $0.45 per share in fiscal 2018, which would mark 13.39% year-over-year growth, based on our current Zacks Consensus Estimates. Twitter is also projected to see its top-line expand by 7.41% to reach $2.58 billion. Looking even farther down the road, Twitter is projected to expand its EPS figure at an annualized rate of 21.50% over the next three to five years. 

Snap is expected to remain unprofitable next year, as the company is projected to report a full-year loss of $0.37 per share. Nevertheless, this projection does represent year-over-year growth of 33.33%. Investors should also be happy to note that the company’s sales are expected to surge over 54% to reach $2.06 billion.

The Winner Is…

At the moment, the winner seems to be Twitter. The company is currently a Zacks Rank #2 (Buy) and is projected to grow its bottom-line in 2018 while counting to post profits. On top of that, its platform will remain highly important in terms of news-gathering and distribution for years to come.

On the other hand, Snap’s first year as a public firm, like Twitter, has been marked by massive stock price fluctuations. However, it should be noted that Snapchat is expected to inch very close to Twitter in terms of full-year 2018 sales expectations, despite being a much younger company. Snap’s growth should not be understated.

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