Snap Inc. shares slumped 10% in extended trading Thursday after the social-media company announced mixed results but warned a change in Apple Inc.’s forthcoming operating system could present a risk for advertising.
Snap
SNAP,
-1.60%
reported a net loss of $113.1 million, or 8 cents a share, against expectations of a loss of 7 cents a share, according to analysts polled by FactSet. Snap’s revenue soared 62% to $911 million, beating estimates of $852 million.
The company did announce an adjusted quarterly profit of 9 cents a share, and achieved its goal of adjusted EBITDA profit ($45 million) in fiscal 2020. FactSet analysts had expected an adjusted profit of 7 cents a share in Q4. Snap also announced its first-ever investor day on Feb. 23.
“As the global health crisis is addressed and the world begins to reopen, we see opportunities to help strengthen the bonds of the Snapchat community all over the world,” Snap Chief Executive Evan Spiegel said in a statement announcing the results.
Snap’s TikTok competitor, Spotlight, had 100 million users in January, just two months after it launched.
Another key metric, Snap’s average daily active users (DAUs), which measures user growth that helps the company determine how much it is able to charge for advertising, outperformed estimates. Snap reported DAUs jumped 22% to 265 million, compared to the 257.8 million forecast by FactSet.
DAUs are especially important since advertising accounts for nearly all of Snap’s revenue.
Snap, like Facebook Inc.
FB,
-0.06%
before it, and Twitter Inc.
TWTR,
+3.54%,
which reports on Tuesday, benefited from a surge in digital ad revenue.
“[Snap’s] ad revenue growth continued strongly, and we are especially enthused by the growth in daily active users, which happened in all of Snap’s regions, including North America and Europe, where TikTok has come on strong,” eMarketer analyst Debra Aho Williamson said.
That could be threatened, though, by Apple’s
AAPL,
+2.58%
upcoming iOS 14 release, which is expected to tighten privacy restrictions and allow users to opt out of some ad tracking. Facebook Inc.
FB,
-0.06%
had a similar complaint last week when it reported quarterly results in an escalating war of words with Apple. On Thursday, Pinterest Inc.
PINS,
+0.91%
and Unity Software Inc.
U,
+1.00%
voiced concerns over the impact of the forthcoming Apple OS during earnings statements.
“It is not clear yet what the longer term impact of those changes may be for the topline momentum of our business, and this may not be clear until several months or more after the changes are implemented,” Snap Chief Financial Officer Derek Andersen said in prepared remarks.
Snap offered first-quarter revenue guidance of $720 million to $740 million, compared to the $700 million estimated by FactSet.
Sparked by October’s unexpectedly strong earnings report, Snap shares have spiked 243% over the past 12 months. The S&P 500 index
SPX,
+1.09%
is up 16% over the past year.
