SNAP's Q1 Earnings Match Expectations, Revenues Increase Y/Y

Snap SNAP reported first-quarter 2025 earnings of 4 cents per share, in line with the Zacks Consensus Estimate. The figure increased 33.33% from the year-ago quarter. 

Revenues rose 14.1% year over year to $1.36 billion and beat the Zacks Consensus Estimate by 1.15%.

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Top-line Details of SNAP

Geographically, revenues from North America (61% of total revenues) rose 11.9% year over year to $831.7 million. Revenues from Europe (16.4% of revenues) jumped 14.4% to $224.02 million. Revenues from Rest of the World (ROW) were $307.5 million, up 20.2% year over year.

The average revenue per user (ARPU) increased 4.6% year over year to $2.96. On a year-over-year basis, the ARPU of North America, Europe and ROW climbed 13%, 10.8% and 3.5%, respectively.

Snap Inc. Price, Consensus and EPS Surprise

Snap Inc. price-consensus-eps-surprise-chart | Snap Inc. Quote

Steady User Engagement of SNAP Aids Q1 Sales

Snap’s global community reached 460 million daily active users (DAU) in the first quarter, up 9% year over year. Snap added 7 million DAU on a quarter-over-quarter basis. 

North America’s DAU was 99 million, which decreased 1% year over year. Europe’s DAU was 99 million, up 3.1% year over year. ROW’s DAU was 262 million at the end of the reported quarter, which jumped 15.9% year over year. Snap reached more than 900 million monthly active users in the first quarter.

Snap’s Advertising Details

In the first quarter, the number of advertisers with strong signal setups increased 29% for large advertisers and 48% for mid-sized advertisers, laying the groundwork for improved performance. In addition, the number of advertisers that have adopted Conversions API (CAPI) continued to grow, with more than 60% of all DR ad revenues having now completed CAPI integrations.

Snap’s Operating Details

Adjusted cost of revenues increased 11.7% year over year to $636.6 million.  

In the first quarter, adjusted operating expenses were $618.2 million, up 6.7% year over year. Sales and marketing expenses decreased 1.3% year over year to $195.8 million, while general and administrative expenses jumped 8.2% year over year to $190 million. Research and development expenses rose 13.2% year over year to $232.4 million.

Adjusted EBITDA was $108.4 million, up 137.5% from the year-ago quarter, reflecting higher revenues and operating expense discipline.

Balance Sheet and Cash Flow

As of March 31, 2025, cash and cash equivalents and marketable securities were $3.2 billion compared with $3.37 billion as of Dec. 31, 2024.

Operating cash flow was $152 million compared with $88 million in the prior year.

Free cash flow was $114 million compared with $38 million reported in the year-ago quarter.

Guidance

For second-quarter 2025, Snap expects infrastructure costs per DAU per quarter between 82 cents and 87 cents. Adjusted operating expenses are expected to be between $2.65 billion and $2.7 billion. 

Zacks Rank & Stocks to Consider

SNAP currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector are Chegg CHGG, ACI Worldwide ACIW and Aviat Networks AVNW, each carrying a Zacks Rank #2  (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Chegg have lost 58.1% year to date. CHGG is set to report first-quarter 2025 results on May 12.

Shares of ACIW have risen 3.1% year to date. It is slated to report first-quarter 2025 results on May 8.

Shares of AVNW have gained 0.1% year to date. It is set to report third-quarter fiscal 2025 results on May 6.

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This article originally published on Zacks Investment Research (zacks.com).

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