Snap shares surge 24% on earnings beat, upbeat outlook

Snap has delivered a positive revenue forecast for the second quarter, projecting between $1.23 billion and $1.26 billion, which surpasses the consensus estimate of $1.14 billion.

The social media company expects adjusted EBITDA to range from $15 million to $45 million, significantly ahead of the $10.6 million estimate.

The forecast for daily active users is approximately 431 million, also slightly above the analyst estimate of 429.06 million, according to the data compiled by Bloomberg.

Snap shares gained as much as 24.5% in after-hours trading.

The optimistic guidance follows strong first-quarter results where Snap reported revenue of $1.19 billion, marking a 21% year-over-year increase and topping the $1.05 billion estimate.

Revenue growth was robust across all regions: North America revenue increased by 16% to $743.1 million; Europe revenue grew 24% to $195.8 million; and revenue from the rest of the world jumped 34% to $255.8 million.

The company also reported a notable improvement in adjusted EPS, which came in at 3 cents compared to 1 cent year-over-year, and well ahead of the expected 4 cent loss per share.

Daily active users reached 422 million, a 10% increase year-over-year, with notable growth in users from the rest of the world, which rose by 19% to 226 million. The average revenue per user (ARPU) increased across all regions, contributing to the strong performance.

In the wake of the report, Bernstein analysts lifted their price target on SNAP from $12 to $14 to reflect “elevated near-term growth, and a better line of site into longer-term profitability.”

Still, the investment firm maintained a cautious view on the social media company.

“It’s hard to nitpick with a healthy beat and raise on the table, the stock up big after-hours, and relative to the last 6 quarters this print was exceptional. Yet we walk away from the print no more comfortable at modeling out and underwriting a multi-year growth trajectory,” analysts said.“We still don’t have an answer on whether Snap is too subscale to control their own monetization destiny, but we can’t help but be a little more constructive on the runway today than we were yesterday,” they added.

Meanwhile, BMO Capital Markets analysts were somewhat more bullish, reiterating an Outperform rating on the stock citing several positive takeaways from the print including ad inflection, “impressive SMB adoption of ad products,” strong Snapchat+ scale, “and the ongoing unification of ranking models for Stories/Spotlight to increase user engagement and Creator adoption.”