Snap, the parent company of disappearing messaging app Snapchat, said Thursday it posted its first ever quarterly net profit propelling the company’s shares higher.
“Achieving positive free cash flow for the full year is an important milestone as we are increasingly able to self fund our investments in the future, which positions us well to accelerate our vision for computing overlaid on the world through augmented reality,” said Snap CEO Evan Spiegel in prepared remarks.
The company reported revenue of $1.3 billion in the last three months of 2021, beating Wall Street’s expectations of $1.2 billion. It earned 22 cents per share, more than double estimates of 10 cents per share. Snap posted a net profit of $22.6 million in the fourth quarter. About 319 million people logged into Snapchat daily, an uptick of 20% compared to the same period last year.
Snap’s fourth quarter earnings contrasts with the quarterly performance of , which renamed itself Meta. On Wednesday, Facebook reported earnings that fell short of expectations and were punctuated by a first-ever drop in daily active users on its core social network.
The rough performance at Facebook dragged other social media stocks, including Snap, lower. Earlier on Thursday, Snap’s stock closed down 24% at $24.50 per share. Snap’s earnings, however, didn’t disappoint and the company’s stock at one point jumped 56% to $38.15 per share in after-hours trading.
Like other social networks, though, Snap also expected Apple’s privacy changes to impact its ad business. In prepared remark, Snap’s Chief Business Officer Jeremi Gorman said its sales team is helping advertisers adapt to these changes.
Snapchat has been investing more in augmented reality, which allows users to overlay a virtual image onto their view of the real world. Users are able to try out clothing, glasses and other accessories using AR. The company also teamed up with Universal to host a virtual concert with celebrity Jennifer Lopez and Colombian pop singer Malum on Thursday evening.
“Augmented reality represents one of our most exciting long term revenue opportunities. AR is unique in that it is a fully immersive and interactive experience that delivers a measurable and repeatable return on investment for advertisers,” Gorman said in her remarks.