Snap beats Wall Street expectations for user growth, revenue

NEW YORK: Snap, owner of popular photo-messaging app Snapchat, on Thursday (Feb 4) beat analysts' estimates for both user growth and revenue, but warned that upcoming privacy changes from Apple Inc could hurt the business.

Shares of Snap declined 6 per cent to US$54.70 in trading after the bell.

Snap said Apple Inc's planned privacy changes, which will ask iPhone users to consent to personalised ads, could present a "risk" to advertiser demand, but added it was unclear how the changes could affect Snap's business in the long-run.

"The disruption to ad targeting caused by the iOS 14 privacy changes will clearly be a worry for Snap, which has been steadily growing its armoury of ad formats and advertisers," said Tom Johnson at ad agency Mindshare Worldwide.

Daily active users (DAUs), a metric watched by investors and advertisers, rose 22 per cent year-over-year to 265 million in the fourth quarter ended Dec 31. Analysts had expected 258 million, according to IBES data from Refinitiv.

The app made the biggest gains in regions outside North America and Europe, with 55 per cent growth in daily active users.

Revenue, which Snap generates mainly from ad sales, grew 62 per cent to US$911 million, easily beating Wall Street's consensus estimate of US$857.4 million.

Advertisers have been drawn to Snap's large base of young users, and the company has invested in developing features that appeal to brands including Snap Map, which lets users find local businesses near them.

Snap's net loss narrowed to US$113 million, or 8 cents per share, from US$240.7 million, or 17 cents per share, a year earlier.

The company forecast first-quarter daily active users to grow 20 per cent from the prior-year period to 275 million, and revenue to be between US$720 million to US$740 million.