Main Highlights:
- Snapchat revealed its first-quarter financial results for 2022, indicating that it is growing faster in the United States than Facebook (now Meta) and Twitter.
- Meta reported its first quarterly decrease in daily active users (DAUs), whereas Twitter reported a 2% gain in monetizable DAUs in the US and a 15% increase internationally.
- Snap, Snapchat’s parent company, raised its DAUs by 18% year over year to 332 million but had already risen by more than 20% in the previous five quarters.
- The company reported that it was on track to grow 44 percent year over a year beginning in Q1 2021. Still, it noted that several marketers paused advertising following Russia’s invasion of Ukraine on February 24.
- While most advertisers resumed their campaigns within ten days, the outage harmed Snap’s quarterly revenue.
Snap recently announced its first-quarter financial figures for 2022, confirming that it is expanding faster than Facebook (now Meta) and Twitter in the United States. Meta revealed its first quarterly decline in daily active users (DAUs), whereas Twitter’s monetizable DAUs increased by 2% in the United States and 15% globally.
Snap, the parent company of Snapchat, increased its DAUs by 18 percent year over year to 332 million but had grown by more than 20% in each of the preceding five quarters. On the other hand, Snap is more concerned with revenue, which rose 38 percent year over year to $1.06 billion. The firm stated that it was on track to expand 44 percent year over year since Q1 2021 but highlighted that many marketers suspended their ads following Russia’s invasion of Ukraine on February 24. Although most advertisers restarted their campaigns within ten days, the disruption had a detrimental impact on Snap’s quarterly income.
They feel the war in Ukraine has had a significant influence on input costs, marketing expenditures, and general economic competence. It is impossible to forecast its impact in the future, Andersen said during Snap’s earnings call.
Snap also fell short of revenue targets in Q3 2021, blaming Apple’s significant iOS privacy update. When iOS users were given the option to opt-out of off-app monitoring, the majority elected not to provide further personal data to their apps, which hurt Snapchat’s and Facebook’s ad businesses. The corporation claimed that it is still adjusting to Apple’s curveball in ad income.
When it comes to the product itself, Snap (along with Niantic!) relies heavily on augmented reality experiences. According to the firm, 250 million Snapchatters used augmented reality capabilities daily, accounting for a significant portion of its overall 332 million DAUs. Snap upgraded its augmented reality purchasing experience this quarter and community-generated augmented reality experiences for local landmarks.
Snap’s annual Snap Partner Summit takes place next week, and according to CEO Evan Spiegel, the business plans to reveal many new products and services at the event.
How did Snapchat become profitable?
Earlier this year, Snapchat became profitable; that does not mean good-adjusted EBITDA, profitable adjusted operating income, or even successful non-GAAP net income. It is genuinely lucrative. Snap reported $1.3 billion in sales in the fourth quarter of 2021 (up 42% year over year), a $25.1 million operating loss, and a $22.6 million GAAP net income.
Except for a single, minor $63.2 million caveat. How did the corporation generate a positive net income with a negative operational income? What is the company’s “other income” that enabled it to turn a Q4 2021 operational loss into a profit? We have no idea. No, not yet. It is not clarified in the earnings announcement, the company’s presentations, or its prepared remarks. However, Snap’s quarter was exceptional, and investors are ecstatic. After a disastrous day of regular trading (down 23.53 percent), the company’s shares are going up dramatically after the statistics fell (up 40.90 percent ).
In summary, it looks as though Apple’s privacy rules affecting various firms are working well at Snap. As the business expressly referenced Apple’s new privacy rules in its Q3 2021 earnings notes, this is surprising.
