Snap Q4 Earnings: 218 million Users Reached But Losses Affect Share Price

Snapchat parent Snap Inc. is yet to post a profit, two years after its Initial public offering (IPO). The company has posted financial results for the fourth quarter of the fiscal year 2019 and the news isn’t good.

Snap has posted a loss of $241 million, which is a 44 percent increase year-on-year.

The loss comes even though the app has actually added users – it now has 8 million daily users and 218 million total users, which is 4 percent more than the previous quarter and 17 percent year-on-year.

One of the reasons for the company posting a loss is a one-time $100 million legal settlement payout to shareholders, who had claimed that the company hid the impact of competition from Facebook to its business.

The Snapchat app has been facing competition on many fronts ­– its ‘stories’ feature has been co-opted by Instagram, Facebook, and WhatsApp.

Snap Inc. is also facing major competition from the Chinese video-sharing app TikTok, which has become quite popular globally for sharing videos.

Following the announcement, the company’s shares (NYSE: SNAP) had plunged around ten percent in after-hours trading, closing at $18.99 Tuesday. Its share price has come to around its IPO price of $17, while its high remains at $27.09.

The revenue guidance was strong still $450-470 million. The company’s CFO Derek Anderson told TechCrunch, “Q4 marked our first quarter of Adjusted EBITDA ( Earnings before interest, tax, depreciation, and amortization) profitability at $42 million for the quarter, an improvement of $93 million over the prior year.”

The EBITDA adjustment is expected to affect the next quarter to the tune of $70-90 million. The company now has $2.1 billion in cash and marketable securities, which is $148 million than the previous quarter.

The company is hopeful for the rest of 2020, according to its CEO Evan Spiegel, “We’ve recently completed our 2020 strategic planning process and have aligned our teams and resources around our goals of supporting real friendships on Snapchat, expanding our service to a broader global community, investing in our AR and content platforms, and scaling revenue while achieving profitability in order to self-fund our investments in the future.”