Shares of Snap Inc. (NYSE: SNAP) jumped 30% on Friday, a day after the company delivered strong results for the first quarter of 2024. Revenue and earnings increased year-over-year and surpassed market estimates. The social media platform benefited from growth in advertising revenue and daily active users. Here are four noteworthy points from the earnings report:
Better-than-expected quarterly results
Snap’s revenue in Q1 2024 increased 21% year-over-year to $1.19 billion and exceeded estimates. The top line growth was driven by improvements made to the company’s advertising platform and a rise in demand for its direct-response (DR) advertising solutions. Snap delivered adjusted EPS of $0.03 for the quarter, which was up from $0.01 in the year-ago period and above expectations.
The company recorded double-digit revenue growth across all its geographic regions during the first quarter. Revenue in North America increased 16% YoY to $743 million while in Europe, it rose 24% to $196 million. Revenue from Rest of World climbed 34% to $256 million. The regional performance benefited from a pickup in DR-related advertising revenue growth during the quarter.
User growth and engagement
In Q1, Snap’s daily active users (DAUs) grew 10% YoY to 422 million. DAUs in North America remained flat while DAUs in Europe grew 4%. Rest of World DAUs rose 19%. The company also saw a 10% growth in global average revenue per user (ARPU) in Q1. It recorded double-digit increases in ARPU across all its geographies.
Snap witnessed a rise in engagement levels during the first quarter, driven mainly by Spotlight and Creator Stories. Total time spent watching Spotlight content increased over 125% YoY in Q1.
Strength in advertising
Snap’s advertising revenue grew 16% YoY to $1.11 billion in Q1. Direct-response advertising revenue increased 17%, helped by a pickup in demand and an improved operating environment. The number of small and medium-sized advertisers on Snapchat increased 85% YoY in Q1. Brand-oriented advertising revenue rose 12% YoY, helped by strong demand for Takeover products.
Outlook
For the second quarter of 2024, Snap expects revenues to range between $1.22-1.25 billion, indicating a year-over-year growth of 15-18%. DAUs are estimated to be approx. 431 million in Q2.