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Snap Inc (SNAP) Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered 14% year-over-year revenue growth to $1.557B, GAAP diluted EPS of $0.01, and Adjusted EBITDA of $276M; free cash flow was $182M and Adjusted Gross Margin reached 57% .
  • Strength was driven by direct response ads (+14% YoY), SMB momentum, and subscription revenue (Other Revenue $143M; Snapchat+ subscribers reached 14M), while brand-oriented revenue declined 1% YoY .
  • Guidance: Q1 2025 revenue $1.325–$1.360B and Adjusted EBITDA $40–$75M; FY25 cost framework includes infrastructure cost per DAU $0.82–$0.87 and Adjusted OpEx $2.70–$2.75B .
  • Narrative catalysts: new ad placements (Sponsored Snaps, Promoted Places) increasing reach (+30% in US), ongoing AI/ML investments, and accelerating SMB adoption; brand demand from large clients remains weak and is a watch item .

What Went Well and What Went Wrong

What Went Well

  • Direct response ads and SMB execution: “Active advertisers more than doubled in Q4, with the improvements we have made to our advertising platform driving improved advertiser performance” .
  • New ad placements scaling reach: Sponsored Snaps delivered >50M average US impressions (18+) per day; Sponsored Snaps/Promoted Places expanded unique reach by ~30% in the US .
  • Profitability and cash generation: Adjusted EBITDA $276M, net income $9M, operating cash flow $231M, free cash flow $182M in Q4 .
  • Subscription growth: Other Revenue reached $143M (+>2x YoY) and Snapchat+ subscribers reached 14M, exiting the year with annualized subscription run-rate well over $500M .
  • Management tone: Evan Spiegel emphasized momentum and diversification: “driving top line revenue growth and diversifying our revenue sources… building toward our long-term vision for augmented reality” .

What Went Wrong

  • Brand-oriented upper-funnel weakness: Brand revenue down 1% YoY, concentrated among a relatively small group of large clients, largely in North America .
  • Engagement risks from product transition: Simple Snapchat shows gains among casual users, but management noted a cohort still prefers the tile-based stories layout and “we still haven’t been able to claw back some of the engagement losses we’re seeing with that cohort” .
  • Cost pressures: Infrastructure and legal/regulatory costs elevated; infra cost per DAU at $0.84 and higher legal costs expected to lift adjusted OpEx in FY25 .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$1,236.8 $1,372.6 $1,557.3
GAAP Diluted EPS ($)$(0.15) $(0.09) $0.01
Non-GAAP Diluted EPS ($)$0.02 $0.08 $0.16
Adjusted EBITDA ($USD Millions)$55.0 $132.0 $276.0
Adjusted EBITDA Margin (%)4% 10% 18%
Adjusted Gross Margin (%)53% 54% 57%
Operating Loss ($USD Millions)$(254.0) $(173.2) $(26.9)
Net Income (Loss) ($USD Millions)$(248.6) $(153.2) $9.1
Free Cash Flow ($USD Millions)$(73.4) $71.8 $182.4
DAU (Millions)432 443 453
ARPU ($)$2.86 $3.10 $3.44
Infra Cost per DAU ($)$0.81 $0.84 $0.84
Consensus (S&P Global)UnavailableUnavailableUnavailable

Note: Wall Street consensus via S&P Global was unavailable at time of request.

Segment and Geography Breakdown

Revenue by Type ($USD Millions)Q2 2024Q3 2024Q4 2024
Advertising$1,130.8 $1,250.0 $1,414.0
Other (incl. Snapchat+)$105.0 $123.0 $143.0
Revenue by Region ($USD Millions)Q2 2024Q3 2024Q4 2024
North America$767.6 $857.6 $968.9
Europe$229.8 $248.9 $287.0
Rest of World$239.4 $266.1 $301.3

KPIs

KPIQ2 2024Q3 2024Q4 2024
DAU – North America (M)100 100 100
DAU – Europe (M)97 99 99
DAU – Rest of World (M)235 244 254
ARPU – North America ($)$7.67 $8.54 $9.73
ARPU – Europe ($)$2.36 $2.52 $2.89
ARPU – Rest of World ($)$1.02 $1.09 $1.19
Snapchat+ Subscribers (M)11 12 14

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)Q1 2025N/A$1.325–$1.360 New
Adjusted EBITDA ($USD Millions)Q1 2025N/A$40–$75 New
DAU (Millions)Q1 2025451 (Q4 2024 guide) ~459 Raised
Infra Cost per DAU ($/quarter)FY 2025$0.83–$0.85 (FY 2024 guide) $0.82–$0.87 Range widened/lower start
Other Cost of Revenue (% of revenue)FY 202519%–21% (FY 2024 guide) 19%–20% Narrowed
Adjusted Operating Expenses ($USD Billions)FY 2025$2.425–$2.525 (FY 2024 guide) $2.700–$2.750 Raised
Stock-Based Comp ($USD Billions)FY 2025$1.13–$1.20 (FY 2024 guide) $1.15–$1.20 Slightly higher low end
Infra Cost per DAU ($)Q1 2025N/ALow end of FY25 range New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI/ML investmentsLens Studio 5.0 GenAI; privacy-safe signals; DR optimizations Larger ML models; improved signals; new ad placements announced On-device model (379M params) generating images in ~1.4s; Easy Lens adoption; scaling model freshness Accelerating
SMB momentumActive advertisers >2x YoY; Snap Promote; CAPI +300% YoY SMB largest contributor to ad growth Continued SMB-led growth; testing Smart Budget Optimization in Q1 Strengthening
Brand demand (upper-funnel)-1% YoY; volatility in certain verticals -1% YoY; weak large-client demand -1% YoY; concentration in large North America clients Weak/unchanged
Simple Snapchat rolloutConcept introduction; engagement mixed NA ~10M testers; cautious rollout; monetization risks ~25M testers; engagement gains among casual users; some cohort losses; ad demand migration efforts Cautious rollout
Regional revenue trendsNA slower; EU/ROW stronger NA +9% YoY; EU +24%; ROW +32% NA +8% YoY; EU +20%; ROW +35% Consistent
Regulatory/legal costLegal/regulatory burden ↑; Canadian DST cost Legal costs offset personnel declines Higher legal/regulatory expected in FY25 OpEx Rising
AR/SpectaclesLens Studio GenAI; AR extensions 5th-gen Spectacles; Snap OS; expanding developer experiences Snap OS updates; international expansion; education pricing; developer tools Building
Subscription growth11M Snapchat+ >12M Snapchat+ 14M Snapchat+; Other Revenue $143M Growing

Management Commentary

  • Evan Spiegel: “Active advertisers more than doubled in Q4, with the improvements we have made to our advertising platform driving improved advertiser performance and helping to grow revenue 14% year-over-year” .
  • On new placements: “Sponsored Snaps… delivering incremental reach… more than 50 million impressions on average in the U.S.… making it our largest single day reach product” .
  • CFO Derek Andersen on brand weakness: “Brand-oriented advertising revenue was down 1% year-over-year, driven by continued weakness… concentrated among… large clients… in North America” .
  • On FY25 cost outlook: “We estimate that full-year Adjusted Operating Expenses will be between $2.7 billion and $2.75 billion… SBC of $1.15 billion to $1.2 billion” .
  • On Simple Snapchat: “We still haven’t been able to claw back some of the engagement losses we’re seeing with that cohort” .

Q&A Highlights

  • Simple Snapchat rollout impact: Management is migrating story ad demand to in-feed/Sponsored Snaps and iterating features to recover engagement in a cohort that prefers tile-based stories .
  • Subscription monetization: Snapchat+ features and personalization drive adoption; management sees room for future ARPU increases over time .
  • Competitive/macro dynamics: Temporary changes in competitor availability produced imperfect engagement experiments; advertisers and creators are diversifying spend/platforms amid uncertainty .
  • SMB ramp dynamics: Automated setup, CAPI integrations (e.g., Snowflake, LiveRamp) and Snap Promote are easing adoption; testing Smart Budget Optimization to scale outcomes .
  • Vertical performance and compute efficiency: Strong DR in retail/CPG/health & wellness; app purchase optimization +70% YoY; compute efficiencies via SKU migration and code optimization lower infra per DAU .

Estimates Context

  • Consensus estimates (S&P Global) for Q4 2024 revenue/EPS/EBITDA were unavailable at time of request; therefore, beat/miss vs Street cannot be quantified.
  • Near-term estimate implications: Q1 2025 revenue guide of $1.325–$1.360B and Adjusted EBITDA of $40–$75M suggest cautious early-year seasonality and investments in infra/ML; brand weakness may temper top-line upside while SMB/DR momentum supports resilience .

Key Takeaways for Investors

  • DR and SMB are the growth engines; continued product optimization and automated tools should sustain advertiser acquisition and ROAS, supporting top-line resilience despite brand softness .
  • New formats (Sponsored Snaps, Promoted Places) are expanding reach and inventory; watch adoption pacing and lower-funnel bidding rollout to assess incremental revenue lift in 1H25 .
  • Subscription is now material: Other Revenue $143M in Q4 and 14M Snapchat+ subs; run-rate >$500M provides diversification and margin leverage as features expand .
  • Cost trajectory: infra per DAU guided to $0.82–$0.87, other COR at 19–20%, and Adjusted OpEx rising to $2.70–$2.75B; monitor legal/regulatory costs and ML investment payback .
  • Engagement/UX transition risk: Simple Snapchat benefits casual users, but creator/power-user cohorts need careful migration; near-term ad demand reallocations may cause friction; execution is key .
  • Regional mix: Europe/ROW growth outpaces North America due to DR platform progress; large-client brand demand weakness remains concentrated in NA .
  • Trading lens: Without confirmed consensus comparisons, narrative catalysts include SMB momentum, subscription growth, and new placements; watch Q1 guide adherence, brand demand recovery signals, and Simple Snapchat execution for stock moves .

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