Snap (NYSE:SNAP) Misses Q4 Revenue Estimates, Stock Drops 14.2%

Kayode Omotosho /
2023/01/31 4:15 pm EST

Social network Snapchat (NYSE: SNAP) missed analyst expectations in Q4 FY2022 quarter, with revenue flat year on year at $1.29 billion. Snap made a GAAP loss of $288.4 million, down on its profit of $22.5 million, in the same quarter last year.

Is now the time to buy Snap? Access our full analysis of the earnings results here, it's free.

Snap (SNAP) Q4 FY2022 Highlights:

  • Revenue: $1.29 billion vs analyst estimates of $1.3 billion (0.61% miss)
  • EPS (non-GAAP): $0.14 vs analyst estimates of $0.12 (15.9% beat)
  • Free cash flow of $78.3 million, up from $18.1 million in previous quarter
  • Gross Margin (GAAP): 62.9%, down from 65.3% same quarter last year
  • Daily Active Users: 375 million, up 56 million year on year

“We ended a challenging 2022 with 375 million Daily Active Users, 12% year-over-year annual revenue growth, and positive full year Free Cash Flow," said Evan Spiegel, CEO.

Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network.

Businesses must meet their customers where they are, which over the past decade has come to mean on social networks. In 2020, users spent over 2.5 hours a day on social networks, a figure that has increased every year since measurement began. As a result, businesses continue to shift their advertising and marketing dollars online.

Sales Growth

Snap's revenue growth over the last three years has been impressive, averaging 42.9% annually. The initial impact of the pandemic was positive for Snap's revenue, but growth rates subsequently normalized.

Snap Total Revenue

This quarter, Snap reported a rather lacklustre 0.14% year on year revenue growth, falling short of Wall St expectations. Snap has not provided guidance for the next quarter.

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Usage Growth

As a social network, Snap can generate revenue growth by increasing user numbers, and by charging more for the ads each user is exposed to.

Over the last two years the number of Snap's daily active users, a key usage metric for the company, grew 20.2% annually to 375 million users. This is a strong growth for a consumer internet company.

Snap Daily Active Users

In Q4 the company added 56 million daily active users, translating to a 17.5% growth year on year.

Key Takeaways from Snap's Q4 Results

With a market capitalization of $17.8 billion, more than $3.93 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

It was great to see that Snap’s user base is growing. That feature of these results really stood out as a positive. On the other hand, it was less good to see that the revenue was flat and that the company has not provided any guidance. Overall, this quarter's results were not the best we've seen from Snap. The company is down 14.5% on the results and currently trades at $9.87 per share.

Snap may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.