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Finance

Snap beats profit estimates on advertising platform strength

Published by Global Banking and Finance Review

Posted on February 4, 2025

Featured image for article about Finance

By Jaspreet Singh

(Reuters) -Snap beat analysts' estimates for quarterly profit on Tuesday, benefiting from improvements to the Snapchat parent's advertising platform, sending its shares up 7% in extended trading.

The company has been investing in artificial intelligence and machine learning tools in recent years to help create more personalized ads.

Snap has also been focusing on direct response ads that are designed to prompt specific actions like app downloads or website visits, at a time when the company grapples with weakness in brand awareness ads.

That has helped Snap tap small-and mid-sized businesses, making them the largest contributor to the company's ad revenue growth in 2024.

The company will roll out Sponsored Snaps - video ads that appear in users' inboxes - and Promoted Places, a feature that highlights business locations on Snap Map, to additional markets.

"Snap's diligent work on its ad platform and in diversifying its revenue streams through subscriptions have paid off, resulting in a strong finish to the year, and putting it in a prime position as we enter 2025," said Jasmine Enberg, principal analyst at eMarketer.

The company also said it would grow its fulltime headcount by 8% to 10% this year.

Snap reported adjusted earnings per share of 16 cents for the fourth quarter ended Dec. 31, beating analysts' average estimate of 14 cents, according to data compiled by LSEG.

Daily active users of Snapchat increased 9% to 453 million, beating estimates of 450.8 million.

The company forecasts first-quarter revenue of $1.33 billion to $1.36 billion, the mid-point of which was slightly above estimates $1.33 billion.

It also expects adjusted EBITDA of $40 million to $75 million in the quarter, below expectations of $78.1 million.

Revenue in the fourth quarter jumped 14% to $1.56 billion, marginally beating the average estimate of $1.55 billion.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Maju Samuel)