Snap’s stock jumps 17% after its Q4 beat Wall Street’s expectations (SNAP)

Snap on Tuesday reported fourth-quarter results that beat analysts’ revenue and bottom-line expectations.
But it warned its first-quarter revenue could be lighter than Wall Street predicted.
Investors still cheered the results, sending its stock up as much as 18% in after-hours trading.
The company said that its daily active user count stabilized in the period after two quarters of declines.

Snap holiday quarter beat Wall Street’s forecasts, a rare bit of good news for the struggling company.

The company topped both analysts revenue and bottom-line expectations. Better yet, it announced that its number of daily active users, which had fallen in the two previous quarter, stayed steady in the period.

The company did warn that its first-quarter sales may be below the Street’s forecasts, but investors cheered the report anyway. In recent after-hours trading, Snap’s stock was up $1.26, or 17.9%, to $8.30 a share.

"Although 2018 was challenging in many ways, we are proud of the significant changes we have made to strengthen our company and grow our business over the long-term," company CEO Evan Spiegel said in prepared remarks Snap released before its conference call with investors and analysts. "We are excited for the year ahead," he continued, "and we are confident that we are well positioned as we enter the new year."

Here’s what Snap reported and how it compared with Wall Street’s expectations and the company’s prior-year results:

Fourth-quarter (Q4) revenue: $389.8 million. Analysts were looking for $377.48 million. In the fourth quarter of 2017, Snap posted sales of $285.69 million.
Q4 earnings per share (EPS): A loss of 14 cents. Wall Street was expecting a loss of 19 cents a share. In the same period a year earlier, the company lost 28 cents a share.
First-quarter (Q1) revenue (guidance): Between $285 million and $310 million. Analysts had previously predicted $306.28 million. In the first quarter last year, Snap saw sales of $230.67 million.
Q1 EPS: The company didn’t offer a per-share earnings forecast, but said it expected to post an adjusted loss before interest, taxes, depreciation, and amortization (adjusted EBITDA) of between $140 million and $165 million. Analysts were expecting adjusted EBITDA loss of $166.57 million in the period and a net loss of 24 cents a share. In the same period a year ago, the company lost 30 cents a share.

In the quarter, the company’s Snapchat app 186 million daily active users. That was down from 187 million it had in the fourth quarter of 2017. But the number was the same as it had in the third quarter of last year, marking the first time in three quarters that Snap’s daily user count hadn’t fallen.

Snap is rolling out an updated Android app

The number of daily Snapchat users on iPhones actually rose in the period from both the third quarter and the fourth quarter of 2017, the company said, although it didn’t break out those numbers. Snap has had particular trouble with its Android app, which apparently wiped out the user gains from its iPhone one.

The company has been testing a rebuilt version of its Android app, Spiegel said in his prepared remarks. Snap has already released the updated app to a "small percentage" of its users, he said.

"We look forward to providing an improved Android experience to more devices and regions over time," Spiegel said.

Snap saw another big outflow of cash in the fourth quarter. Its free cash flow, which represents the cash generated or used up in operations less the amount spend on capital expenditures, was in the red by $149 million. That was an improvement from the third quarter, when it burned through $159 million in free cash, but it meant that the company saw a free cash outflow of $810 million last year, down only slightly from the $819 million in burned through last year.

The company ended the year with $1.3 billion in cash and marketable securities, down from more than $2 billion a year earlier.

Snap has had trouble almost since its debut on the public markets. Prior to its report, its stock was down by nearly 50% over the previous year and had fallen even farther from its initial public offering price two years ago. It has lost numerous executives, most recently former Chief Financial Officer Tim Stone, who is set to depart after Tuesday’s report.

The company’s stock closed regular trading Tuesday up 9 cents, or 1.3%, to $7.02 a share.

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Source: Business Insider