A Banner for Snap Inc. hangs on the facade of the the New York Stock Exchange (NYSE) on the eve of the company's IPO in New York, U.S., March 1, 2017. REUTERS/Brendan McDermid
Feb 4 (Reuters) - Snap beat Wall Street estimates for fourth-quarter revenue, as more advertisers turned to the social media platform during the holiday season, sending its shares up over 2% in extended trading.
The Snapchat-parent said total active advertisers on the platform rose 28% in the fourth quarter, underscoring strength in direct response ads and growth in new ad formats such as Sponsored Snaps and Promoted Places.
The results calm investor jitters as advertisers increasingly rely on platforms such as Meta and TikTok, which are preferred due to their larger user base.
"The ads platform (of Snap) still has a long way to go in attracting big budgets from enterprise advertisers," said Emarketer analyst Max Willens.
Revenue rose 10% from a year earlier to $1.72 billion in the quarter ended December 31, exceeding analysts' average estimate of $1.70 billion according to data compiled by LSEG.
It expects first-quarter revenue to be between $1.50 billion and $1.53 billion, slightly below estimates of $1.55 billion.
The forecast does not include revenue from the Perplexity integration, a $400 million deal announced last year, as Snap said the companies "have yet to mutually agree on a path to a broader roll out".
Snap saw particularly strong growth in its medium-customer segment globally, with North America medium-customers the largest contributor to absolute dollar growth in that segment, while it continued to face some headwinds in its North America large-customer business, CFO Derek Andersen said on a conference call with analysts.
The company's quarterly outlook for adjusted earnings before interest, taxes, depreciation and amortization of $170 million to $190 million was above estimates of $177.9 million, as it pivots toward profitable growth by tighter cost control.
It reported net income of $45 million in the fourth quarter, compared with $9 million a year earlier. Its 2025 net loss narrowed to $460 million from $698 million in 2024.
The company is doubling down on augmented reality smart glasses with the launch of independent unit, Specs, last month, and also diversifying its revenue stream by focusing on its subscription service Snapchat+.
Subscribers for Snapchat+ rose 71% to 24 million in the fourth quarter. Daily active users of Snapchat rose 5% from a year earlier to 474 million, but fell by 3 million from the prior quarter.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Krishna Chandra Eluri)
