Snap shares rocket as much as 62% on first-ever quarterly net profit - CNBC

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Snap reported its first quarterly net profit on Thursday, and beat analyst estimates for the fourth quarter on earnings, revenue and user growth.

The report comes a day after Facebook parent Meta delivered disappointing guidance for the first quarter that dragged down several social media stocks with it. Snap fell 23.6% Thursday prior to its own earnings announcement but popped as much as 62% after hours, before settling up about 52%.

Here are the key numbers:

• Earnings per share: 22 cents, adjusted vs 10 cents expected, according to a Refinitiv survey of analysts
• Revenue: $1.3 billion vs $1.2 billion, according to Refinitv
• Global Daily Active Daily Users (DAUs): 319 million vs 316.9 million, according to StreetAccount
• Average Revenue per User (ARPU): $4.06 vs $3.79, according to StreetAccount

It also provided a Q1 guidance range of $1.03 billion to $1.08 billion, higher than the $1.01 billion analysts anticipated, according to Refinitiv. It expects daily active users between 328 million and 330 million in the first quarter, beating analyst estimates of 327.8 million, according to StreetAccount.

Snap has to contend with similar headwinds as Meta, which warned that it anticipates a $10 billion revenue hit in 2022 resulting from Apple's privacy changes on iOS that make it harder to target consumers with advertiser content.

Snap also distributes its app on Apple iPhones and serves advertising content to monetize its business. But Snap's direct response advertising businesses experienced a recovery from the iOS changes "quicker than we anticipated," according to prepared remarks for CFO Derek Anderson for the company's analyst call.

During the Q&A period, Andersen said that Snap has been mindful to make privacy inherent to its products and as a result, the changes caused by the iOS changes are "likely to be experienced differently for our business than perhaps for others."

Still, Anderson said in his opening comments that Snap still thinks "it will take at least a couple more quarters for our advertising partners to build full confidence in our new measurement solutions."

Chief Business Officer Jeremi Gorman said in her prepared remarks that the sales team is helping advertisers transition through the changes. Gorman said advertisers who tend to focus on "lower funnel goals" like in-app purchases have been most impacted and some have migrated to "mid-funnel goals" like installs or clicks, where there's greater visibility despite the iOS changes.

Andersen also pointed to macroeconomic forces like supply chain disruptions and labor challenges impacting advertisers and impacting Snap's brand advertising sector, specifically.

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