Social media company Snap released its fourth-quarter earnings report Thursday, recording its first-ever quarterly net profit. The company was also able to beat average analysts' estimates for the period, sending its shares upward.
Social media stocks were mostly down this week following the release of Facebook parent company Meta's quarterly earnings and its disappointing forecast for the coming quarter. Before it released its earnings, Snap's stock price was down by 23.6% Thursday. Following the release, the stock surged by as much as 62% after hours, which then corrected right after. The stock eventually ended the day up by around 52%.
For its fourth quarter last year, the company reported earnings per share of 22 cents. The figure was higher than the 10 cents per share expected by Wall Street. Snap reported revenue of $1.3 billion for the quarter, higher than the $1.2 billion forecasted.
Snap said its global daily active users increased to 319 million for the period. The company added that its average revenue per user also increased to $4.06 during the three-month period.
The camera and social media company also updated its guidance for its first quarter this year. The company said it expects revenue for the coming quarter to be within $1.03 billion to $1.08 billion, higher than the $1.01 billion expected by analysts. Snap said it expects its daily active users to increase to between 328 million to 330 million for the first quarter.
Like other social media and tech companies, Snap is expected to face the same scrutiny and regulatory issues. Meta said during its earnings call that it expects to spend at least $10 billion this year owing to Apple's privacy changes and regulatory restrictions imposed in the global advertising market.
Snap, which also distributes its platform through Apple's operating systems, said its direct response advertising business was able to recover from the recent changes to the Cupertino giant's privacy policies. Snap CFO Derek Anderson said their recovery was "quicker than we anticipated." Anderson said the company would be fully mindful of its policies to adhere to the changes. He added that it would likely take a few more quarters before advertising partners regain their confidence.
In her prepared remarks, Chief Business Officer Jeremi Gorman stated that the sales staff is assisting advertisers in navigating the changes. Advertisers that focus on lower-funnel objectives like in-app purchases have been the most impacted, and some have switched to mid-funnel goals such as installations or clicks, which have more exposure despite the iOS changes.
