The company's total Daily Active Users or DAUs increased by +20% YoY from 265 million in the fourth quarter of 2020 to 319 million in the recent quarter, and its ARPU rose by +18% YoY from $3.44 to $4.06 during the same period. Snap's overall operating metrics in the recent quarter were good as well. Also, the Wall Street analysts were also expecting a more modest $1.2 billion in Q4 2021 revenue for the company. In comparison, Snap had earlier guided for much lower revenue in the $1,165-$1,205 million range when it announced Q3 2021 results in late-October 2021. SNAP's revenue increased by +42% YoY from $911 million in Q4 2020 to $1,298 million in Q4 2021, as indicated in its most recent quarterly results presentation slides. I analyze SNAP's key metrics for the recent Q4 2021 in the next section to understand Snap's post-results announcement share price surge. In contrast, Snap's stock price jumped by +59% from $24.50 as of Februto $38.91 as of Februafter it reported its recent quarterly results. In my prior Novemarticle for SNAP, I highlighted that the company's shares dropped by -34% in a month between late-October 2021 and late-November 2021 following its revenue miss for Q3 2021. Nevertheless, investors seem to be more fixated on Snap's revenue growth prospects as compared to its profitability. As Snap expands its topline (+42% YoY in Q4 2021), the company's fixed or semi-fixed costs won't rise as fast as the increase in its revenue, which explains the company's gross margin improvement and turnaround towards profitability. As an illustration, SNAP revealed at the company's Q4 2021 earnings call that its gross margin expanded by +7 percentage points YoY to 66% in the most recent quarter, as a result of a -4 percentage points decline in content costs as a proportion of revenue and a -4% YoY decline in infrastructure cost per Daily Active User. Positive operating leverage was the key driver of Snap's turnaround towards profitability last year. As per S&P Capital IQ data, Snap started to generate positive non-GAAP adjusted earnings since the third quarter of 2020, and FY 2021 marked the first time that the company was in the black and free cash flow positive for the full year. SNAP has been loss-making between FY 2015 and FY 2020. Prior to assessing SNAP's future growth prospects, I will spend some time evaluating Snap's financial results for full-year 2021 and Q4 2021.Ī key highlight for SNAP in the most recent fiscal year is that the company finally turned profitable after years of losses. Given that I don't have confidence that SNAP can meet its long-term revenue growth target, I think that Snap's valuation de-rating is justified and its current valuations as deserving of a Hold rating. In my opinion, SNAP's ability to deliver on its +50% revenue expansion target in the long run is the key factor determining the stock's long-term share price performance. In five years' time, Snap is expected to stay in the black and continue to grow its revenue albeit at a slower pace as compared to history. My current article focuses on Snap's medium-term, five-year outlook. I have previously written about SNAP in an earlier article published on November 24, 2021, where I discussed about the company's Q3 2021 financial results. I keep a Hold investment rating for Snap Inc.'s ( NYSE: SNAP) shares. Drew Angerer/Getty Images News Elevator Pitch
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |