Snap shares gain 25% after release of quarterly earnings 💡

The shares of Snap (SNAP.US), a U.S.-based company that creates social media app Snapchat, are gaining nearly 25% before the opening of this week's last trading session. The reason for such sharp increases is twofold. First, Q1 results came in better than expected, and second, the company's Q2 forecasts were also revised significantly upward. 

Morgan Stanley analysts point out that the key measure driving optimism on the company's shares is the significant increase in demand from advertisers. No less important is the fact that the number of active app customers has increased. 

SECOND QUARTER FORECAST

• Revenues expected to be between $1.23 billion and $1.26 billion, with an estimate of $1.21 billion
• Adjusted Ebitda of $15 million to $45 million, an estimate of $10.6 million
• Daily active users at 431 million, estimated 429.06 million

FIRST QUARTER RESULTS

• Revenues $1.19 billion, +21% y/y, $1.12 billion estimate
• Revenues in North America $743.1 million, +16% y/y, estimate $707.4 million
• Revenues in Europe $195.8 million, +24% y/y, $179.6 million estimate
• Revenues in the rest of the world $255.8 million, +34% y/y, $223.3 million estimate
• Adjusted EPS $0.03 vs. $0.01 a year ago, estimated loss of $0.05
• Adjusted Ebitda $45.7 million vs. $0.81 million y/y, estimated loss of $67.6 million
• Daily active users 422 million, +10% y/y, estimated 419.83 million
• North America - 100 million daily active users vs. 100 million y/y, estimated 100.34 million
• Europe - 96 million daily active users, +3.2% y/y, estimated 96.96 million
• Rest of the world - 226 million daily active users, +19% y/y, 222.91 million estimate
• Average revenue per user $2.83, +9.7% y/y, $2.66 estimate
• North America average revenue per user $7.44, +17% y/y, estimate $7.08
• Europe average revenue per user $2.04, +20% y/y, estimate $1.87
• Rest of world average revenue per user $1.13, +13% y/y, $1.00 estimate
• Free cash flow $37.9 million, -63% y/y, estimate $105.9 million
• Number of employees 4,835, -7% y/y, estimate 5,021

OTHER KEY COMMENTS:

• Adjusted operating expenses for the fiscal year are expected to range from $2.425 billion to $2.525 billion
• "We see limited opportunities to productively reduce adjusted operating expenses below this range, and if we can sustain higher revenue growth in the second half of 2024, we will invest prudently to support this growth," the company reported

The current estimated movement at the opening of the session is more than 5 standard deviations of the daily volatility on the company's shares observed since the beginning of 2020. Source: Author's own study

The current valuation of the company's shares before the opening of the session on Wall Street. Source: xStation