The parent company of Snapchat, Snap Inc., reported results for the fourth quarter that exceeded expectations as gains from its advertising platform and subscription services rose sharply. The company’s stock gained 7% in extended trading following the report.
Earnings per share stood at 16 cents for Snap in the period ending December 31, 2024, above the estimates of 14 cents. In terms of revenues, it experienced a 14% year-on-year growth up to $1.56 billion, surpassing the estimated growth of $1.55 billion. Daily active users grew to 453 million, which was 9%, above the set estimates of 450.8 million.
The commercial success of the company is augmented by the injection of investment into AI and machine learning, thus personalizing the advertising experience. The areas of focus included direct response advertising, which stimulated user engagement within real-time app downloads and visits to websites, meaning small and mid-sized businesses contributed the most to ad revenue in 2024.
Snap is adding more markets to its ad offerings, which include Sponsored Snaps—video ads appearing in users’ inboxes—and Promoted Places, which highlight business locations on Snap Map. Both initiatives are geared toward increasing the reach of advertisers and engagement of users.
Subscription services have also grown significantly. Premium subscription Snapchat+ contributed substantially to revenue, and Other Revenue, consisting mostly of subscriptions, increased by 131% year-over-year in 2024. Service went into the year well over $500 million on an annualized revenue run rate.
Snap is looking ahead for first-quarter revenue between $1.33 billion and $1.36 billion, matching the market expectation. The company expects adjusted EBITDA to range from $40 million to $75 million in that timeframe.
To further this growth pattern, Snap will add 8% to 10% to its full-time employees this year, signifying confidence in its strategic direction.
Analysts view Snap’s performance as indicative of its evolving business model. Jasmine Enberg, principal analyst at eMarketer, said: “Snap’s hard work on its ad platform and diversifying its revenue streams through subscriptions have finally paid off in a great finish to the year and putting it in a prime position as we enter 2025.”
In summary, Snap Inc. reported strong earnings for the fourth quarter, validating its investments in advertising technology and subscription services. The company continues to be a strong player in the changing dynamics of social media.
