Snap (SNAP): Here’s a look at some of its strong points

Shares of Snap Inc. (NYSE: SNAP) were down 2% on Friday. The stock has gained 3% over the past three months. The technology company delivered strong revenue and earnings growth for its most recent quarter on the back of user growth and engagement. Its investments in its advertising business are also yielding gains. Here’s a look at some of the strong points in its business performance:

Solid top and bottom line performance

Snap saw strong growth in revenue and profits in the fourth quarter of 2024. Revenue grew 14% year-over-year to $1.55 billion. Adjusted earnings per share rose to $0.16 in Q4 from $0.08 in the prior-year period.

Geographic revenue growth

Snap recorded revenue growth across all its geographic regions during the fourth quarter. Revenues in North America grew 8% YoY to $969 million while revenues in Europe rose 20% to $287 million. The highest growth came from the Rest of World division, where revenue increased 35% to $301 million, driven by progress with the direct-response (DR) advertising platform and investments in go-to-market operations.

Steady international user growth

Snap has been seeing a steady growth in users, driven mainly by its international markets. In Q4 2024, its average daily active users (DAU) grew 9% YoY to 453 million. DAU in North America stood at 100 million, relatively unchanged from the prior-year quarter, and comparatively stagnant over the past five quarters.

DAU in Europe was 99 million, up 4% YoY but flat sequentially. The user growth rate over the past five quarters has been relatively slow in this region. On the other hand, DAU in Rest of World grew 17% YoY to 254 million. This region has seen stable growth in users over the past five quarters.

Despite the DAU trends, Snap’s average revenue per user (ARPU) is seeing robust growth across all regions. In Q4, global ARPU grew 5% YoY to $3.44. ARPU in North America rose 9% to $9.73. In both Europe and Rest of World, ARPU increased 16% to $2.89 and $1.19, respectively.

Advertising strength

Snap is seeing healthy growth in its advertising business. In Q4, advertising revenue grew 10% YoY to $1.41 billion. This growth was mainly driven by a 14% increase in its DR ad revenue. Brand-oriented advertising revenue dipped 1% YoY, due to continued weakness concentrated among a small group of large clients focused largely in North America.

Outlook

For the first quarter of 2025, Snap expects total revenue to range between $1.32-1.36 billion. DAU is estimated to be approx. 459 million in Q1, which indicates a YoY growth of around 9%.