"Snap SNAP reported fourth-quarter revenue of $1.72 billion, up 10% year over year, largely due to strength in average revenue per user. Adjusted EBITDA margin came in at 21%, up 300 basis points from the prior year, owing to growing operating leverage and a favorable sales mix. Why it matters: Despite a 5% year-over-year decline in global daily active users, or DAUs, traction in high-margin offerings such as Snapchat+, Sponsored Snaps, and Memories Storage Plans improved core platform monetization, supporting both top-line and profitability expansion."
"Monetization metrics improved due to better user and advertiser engagement. Sponsored Snaps drove active advertiser growth of 28% year over year. On the user front, paid offerings like Snapchat+ remained a bright spot, and should support 3%-4% annual ARPU growth over the next few years. Despite the solid performance, Snap continues to lag heavyweights like Meta, which recently reported 25% annual growth in ad sales."
"We maintain our $9 fair value estimate for no-moat Snap. Our model adjustments reflect higher innovation expenses due to the upcoming Specs launch, offset by higher gross margin expectations. Shares were up 3% after hours to about $6 and appear materially undervalued. Coming up: Management expects first-quarter 2026 revenue to be $1.52 billion at the midpoint alongside adjusted EBITDA margin of roughly 12%. We view these targets as achievable and model upside to both."
Revenue reached $1.72 billion in the fourth quarter, up 10% year over year, driven primarily by higher average revenue per user. Adjusted EBITDA margin expanded to 21%, reflecting operating leverage and a favorable sales mix. High-margin products—Snapchat+, Sponsored Snaps, and Memories Storage Plans—boosted monetization and advertiser engagement, with Sponsored Snaps lifting active advertisers 28% year over year. Paid offerings should support 3%–4% annual ARPU growth over coming years. North America DAUs fell to 94 million from 100 million, and international growth was hindered by Australia account removals. Guidance targets Q1 2026 revenue of $1.52 billion and roughly 12% adjusted EBITDA margin.
Read at www.morningstar.com
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