It’s profitable. Somehow
Sound the hornsunveil the banners, call the parade. Snap is profitable.
And we mean unadjusted EBITDA profitable, adjusted operating income profitable, or even the infamous non-GAAP net income profitable. It’s real profitable.
In the fourth quarter of 2021, Snap reported revenue of $1.3 billion (up 42% year over year), an operating loss of $25.1 million, and GAAP net income of $22.6 million. On behalf of all the mean things I’ve written about Snap’s long and occasionally meandering road to profitability, I want to congratulate it.
With just one small caveat of $63.2 million. The company’s operating result was negative, so how did you manage to achieve a positive net result? Observe:
Photo credit: snap
What is the company’s “other income” that helped it push an operating deficit into the green in Q4 2021? We do not know it. Not yet. It is not discussed in the company’s earnings release, slides or prepared notes. Regardless, Snap’s quarter was super good, and investors are excited. The company’s shares are currently up sharply (up 40.90%) after a dreadful day of regular trading (down 23.53%).
In short, it appears Apple’s privacy changes, which have impacted a number of companies, are doing well at Snap. This comes as a surprise given that the company is in the third quarter of 2021 quotes Apple’s new privacy regime directly in its earnings announcements. What to make of the matter? Let’s turn to the company upcoming balance sheet speech. Here’s the company’s Chief Business Officer, Jeremi Gorman (emphasis added):
On the direct response page We’ve continued to work on the challenges presented by Apple’s ATT-related changes, and we’re making solid progress. As expected, macro headwinds related to supply chain disruptions and work stoppages emerged on the brand side and remain unresolved in the new year. Despite all of this, we continued to add new advertisers, pushing our active advertiser count to another all-time high.
Solid progress indeed!
The reason for the company’s blowout quarter is solid user growth, which is exactly what Meta is struggling with at the moment. Here’s Snap’s chart on the matter:
Photo credit: snap
In summary, as the kids would say, it’s lit!
In other related economic news, Amazon is having a great after-hours period after its own earnings came in hot. This comes after PayPal, Spotify, Netflix and others in the tech space were forced to eat their hat after missing investor expectations.
In other words, the earnings market is patchy and we are seeing divergence in the performance of companies that have appeared to be moving in lockstep for at least the past year.
