Snap Inc reported better-than-expected fourth quarter revenue and user growth on Thursday, and provided a first quarter outlook that surpassed analyst estimates, sending its shares up 30% in trading after the bell.
The results indicate Snap has avoided additional damage from Apple Inc’s privacy changes, which were introduced last year and allow users to prevent apps from tracking their online activity for advertising purposes.
Snap forecast first quarter revenue between $1.03 billion to $1.08 billion, and daily active users to be between 328 million to 330 million. The guidance for both metrics surpassed analyst estimates, according to IBES data from Refinitiv.
That was good news for a tech sector hammered since yesterday on gloomy outlooks.
Shares of Facebook owner Meta Platforms Inc fell 26% on Thursday in what could be the largest single-day wipeout in market value for a U.S. company, a day after it said the impact from Apple’s privacy changes could be “in the order of $10 billion” this year.
Meta said the Apple updates hurt advertisers’ ability to target ads to potential customers and measure the effectiveness of ads.
A large portion of Snap’s advertisers began using new ad measurement tools by the end of the fourth quarter, and parts of Snap’s advertising business began to recover from the Apple changes “quicker than we anticipated,” said Snap Chief Financial Officer Derek Andersen, in prepared remarks released ahead of the earnings call with analysts.
However, global supply chain disruptions and labor shortages hurt advertising demand from consumer packaged goods and restaurant brands, he added.
Snap’s revenue for the fourth quarter ended Dec. 31 was $1.3 billion, an increase of 42% from the prior-year quarter. The figure beat analyst expectations of $1.2 billion, according to IBES data from Refinitiv.
Daily active users on Snapchat rose 20% year-over-year to 319 million, beating consensus estimates of 316.5 million.
The Santa Monica-based company has worked to attract and retain young Snapchat users by rolling out more augmented reality features, which can overlay computerized images onto photos and videos of the real world. It has also developed a strategy to attract new users across Latin America, Europe and Asia.
The company reported its first quarter of positive net income since its initial public offering, with net income of$22.5 million in the fourth quarter, compared with a net loss of $113 million in the prior-year quarter.
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