Snap’s sales top estimates on strength of ads, subscriptions

Snapchat owner Snap reported a stronger-than-expected gain in fourth-quarter revenue and gave an upbeat forecast for the current period, a sign that an overhaul of its advertising business is paying off. The shares soared on the news. Sales rose 14% to $1.56 billion in the period ended Dec. 31, Snap said Tuesday in a statement. The social media company expects first-quarter sales of as much as $1.36 billion in the current quarter, compared with the average analyst estimate of $1.33 billion. Snap said new advertising formats have attracted more small- and medium-sized marketers to its photo-messaging app. Chief Executive Officer Evan Spiegel spent the past several years undertaking a costly revamp of Snapchat’s ads operation, moving away from more broadly targeted brand advertising toward more targeted ads with a direct prompt or call-to-action, such as purchasing a product or downloading an app. These direct-response ads, as they are known, are more expensive to purchase and require better targeting technology from companies such as Snap. Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here Although Snap finally began reaping the rewards of that overhaul last year, the company’s quarterly results have been inconsistent, at times falling short of Wall Street’s revenue estimates, and the stock has declined more than 30% in the past year. The shares jumped more than 12% in extended trading Tuesday after closing at $11.60 in New York. The Santa Monica, California-based company also beat analysts’ expectations for user growth on its Snapchat app after focusing more on video content, reaching 453 million daily active users in the fourth quarter. Profit, excluding certain items, rose to 16 cents a share in the period, topping the average projection of 14 cents. —Bloomberg News Subscribe to Ad Age Sign up now for the latest industry news and analysis Click here

Snap’s sales top estimates on strength of ads, subscriptions

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