A look at what to expect when Snap (SNAP) reports Q1 earnings results

Shares of Snap Inc. (NYSE: SNAP) were down over 2% on Wednesday. The stock has gained 10% year-to-date. The social media company will report its first quarter 2023 earnings results on Thursday, April 27, after market close. Here’s a look at what to expect from the earnings report:

Revenue

Analysts are projecting revenue of $1.01 billion for Snap in the first quarter of 2023, which would reflect a decline of 5% from the same period a year ago. In Q4 2022, the company reported revenue of $1.3 billion, which was relatively flat compared to the year-ago period.

Earnings

The consensus estimate is for a loss of $0.01 per share in Q1 2023 which compares to an adjusted loss of $0.02 per share in Q1 2022. In Q4 2022, adjusted EPS fell 38% year-over-year to $0.14.

Points to note

Snap’s top line performance in Q4 was impacted by a challenging environment caused by macroeconomic headwinds, platform policy changes, and increased competition. Against this backdrop, the company saw a decline in its advertising business which in turn took a toll on revenue. Taking these factors into account, the company anticipates a 2-10% YoY decline in revenue for the first quarter of 2023.

Snap is focused on the growth of its global community. In Q4, the company saw daily active users (DAUs) grow across all its geographic regions to end the quarter at 375 million. Q4 DAUs were up 17% YoY. The company’s launch of new Snapchat+ features helped drive engagement during the quarter. It also benefited from the popularity of Stories and Spotlight. These trends are likely to have continued into the first quarter. Snap expects DAUs to range between 382-384 million in Q1 2023.

Another area of significant opportunity and investment is augmented reality (AR). In its Q4 report, the company said over 250 million Snapchatters engage with AR every day on average. Snap continues to invest significantly in this space with tools like Lens Studio and Camera Kit driving engagement. AR also has vast opportunity in areas like advertising and shopping.