Snap posted a surprise profit and better-than-expected 14% increase in revenue for the fourth quarter, the Snapchat parent company said late Tuesday. Snap stock jumped, as investors shrugged off a mixed outlook for the current quarter.
Snap said that it earned 1 cent per share on sales of $1.56 billion for the December-ended quarter. Analysts polled by FactSet projected the Santa Monica, Calif.-based company would post a loss of 4 cents per share on sales of $1.55 billion.
On an adjusted basis, Snap said it earned 16 cents per share. That also beat expectations of 14 cents adjusted EPS, according to FactSet.
For the same period a year earlier, Snap posted a loss of 15 cents per share on sales of $1.36 billion.
For the current quarter, Snap guided for sales of $1.34 billion at the midpoint of its range, through a letter to investors. Prior to the company posting its results, analysts were projecting Snap would tally $1.33 billion in sales for the March-ending quarter, according to FactSet.
However, Snap's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) forecast came in lower-than-expected. The company expects the core-profit metric to reach $57.5 million in Q1, based on the midpoint of its range. Analysts were projecting $79 million for Snap's Q1 adjusted EBITDA prior to the report.
Still, investors shook off the mixed outlook. On the stock market today, Snap stock jumped more than 7% to 12.52 in after-hours action.
Snap Q4 By The Numbers
Daily active users for Snapchat increased 9% year over year to 453 million, ahead of expectations for 451 million, according to FactSet.
"In 2024 we made significant progress on our core priorities of growing our community and improving depth of engagement, driving top line revenue growth and diversifying our revenue sources, while building toward our long-term vision for augmented reality," Snap Chief Executive Evan Spiegel said in a news release.
Snap's adjusted EBITDA came in at $276 million for Q4, the company said. That beat estimates of $248 million.
The company said its profit outlook for the March quarter reflected "investment plans for the quarter ahead."
"As we look ahead to 2025, we see additional opportunities to invest productively in scaling our business given the foundational improvements we have made to our ad platform and the momentum we have established in our go-to-market initiatives, particularly the (small and midsize business) segment," Snap's investor letter said. "Our investment plans for 2025 reflect this optimism, alongside a strong commitment to make further financial progress towards profitability as we scale."
Snap Stock Technical Rating
Prior to its report, Snap stock gained 3.9% in regular trading Tuesday. Shares are up 8% year to date but down 30% from 12 months ago.
Meanwhile, Snap stock has an IBD Composite Rating of 60 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Snap's IBD Relative Strength Rating is a weak 19 out of 99. The RS Rating means that Snap has outperformed just 19% of stocks in IBD's database over the past year.
