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Snap Beats Profit Estimates on Advertising Platform Strength

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Snap Inc. (SNAP) exceeded Wall Street’s quarterly profit expectations on Tuesday, benefiting from significant improvements to its advertising platform. This growth helped boost its shares by 6% in after-hours trading. Amid growing uncertainty about a potential ban of TikTok in the U.S., analysts believe Snap could capitalize on the situation.

CEO Evan Spiegel stated that the uncertainty surrounding TikTok has been beneficial to Snap, as advertisers are focused on diversifying their ad spend and contingency planning. Snap is also considering increasing the price of its Snapchat+ subscription service to further raise its average revenue per user. The company reported a significant jump in Snapchat+ subscribers, which doubled to 14 million in the fourth quarter.

Snap has been heavily investing in artificial intelligence and machine learning tools to create more personalized ads. A notable shift in its strategy has been an emphasis on direct response ads, designed to prompt specific actions like app downloads or website visits, particularly as brand awareness ads show signs of weakness. These efforts have allowed Snap to tap into small- and mid-sized businesses, which have become the largest contributors to the company’s advertising revenue growth in 2024.

The company is also planning to expand its advertising formats, such as Sponsored Snaps (video ads in users’ inboxes) and Promoted Places (business location highlights on Snap Map), into additional markets.

“Snap’s diligent work on its ad platform and diversifying its revenue streams through subscriptions have paid off,” said Jasmine Enberg, principal analyst at eMarketer.

Snap reported adjusted earnings per share of 16 cents for the fourth quarter, surpassing analysts’ average estimate of 14 cents. The company also saw a 9% increase in daily active users, reaching 453 million, slightly surpassing the expected 450.8 million. For the first quarter of 2024, Snap forecasts revenue between $1.33 billion and $1.36 billion, with adjusted EBITDA expected to range between $40 million and $75 million, which is slightly below analyst expectations of $78.1 million.

Quarterly revenue rose 14% to $1.56 billion, marginally surpassing the average forecast of $1.55 billion.

 

Spotify Posts First Annual Profit and Projects Strong Quarter Ahead

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Spotify Technology reported its first-ever annual profit on Tuesday, attributing the success to a combination of strong user growth, price hikes, and strategic cost-cutting efforts. The Swedish audio streaming giant also provided a positive quarterly forecast, projecting earnings above Wall Street’s expectations, which drove its shares up nearly 10% in early trading.

The company’s profit marks the successful culmination of months-long efforts to improve profitability through cost reductions, including layoffs, reduced marketing spending, and scaling back investments in podcasting and audio. In the upcoming quarter, Spotify expects operating income of 548 million euros ($566.2 million), surpassing analysts’ forecasts of 450.6 million euros.

Spotify’s projected monthly active users (MAU) of 678 million for the quarter is close to the analysts’ estimate of 679.4 million, while its forecast of adding 2 million new premium subscribers, bringing the total to 265 million, exceeds expectations.

CEO Daniel Ek shared plans to introduce more personalized offerings for subscribers, including a new premium tier targeted at “superfans of music,” which will feature additional benefits to cater to different user preferences. Ek emphasized that Spotify’s future growth would involve creating various products tailored to specific audiences, rather than offering a one-size-fits-all option.

Spotify’s fourth-quarter results were bolstered by record user additions, with 35 million new subscribers, bringing the total to 675 million MAUs, surpassing estimates. Premium subscribers grew by 11% to 263 million, exceeding expectations of 260 million. The company also focused on boosting video and podcast content to increase user engagement, with a successful expansion of its music video feature and enhancements for content creators.

Revenue for the fourth quarter rose 16% to 4.24 billion euros, surpassing analysts’ estimates of 4.19 billion euros, driven by subscriber growth and a 5% increase in average revenue per user. The company’s gross profit soared 40%, thanks to a 16% drop in operating expenses, and its gross profit margin increased to 32.2% from the previous quarter’s 31.1%.

 

Dassault Systèmes Forecasts Higher Sales and Earnings in 2025

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Dassault Systèmes has projected revenue growth of 6% to 8% for 2025, an improvement from 5% in the previous year, driven by stronger software sales in late 2024. The French software firm, which serves the automotive, aerospace, and industrial sectors, also expects diluted earnings per share to rise to between 1.36 and 1.39 euros, up from 1.20 euros in 2024. Additionally, its operating margin is forecasted to increase to a range of 32.6%–32.9%, compared to 31.9% last year.

The positive outlook follows improved performance in Dassault’s software division, where revenue grew 9% in Q4 to 1.60 billion euros, supported by strong demand in the aerospace and defense sectors. The company’s flagship 3DEXPERIENCE platform, which offers 3D modeling, data management, and project management tools, saw sales growth of 22% in Q4—up from 21% in the same quarter of 2023 and recovering from a 10% decline in Q3 2024.

Dassault also announced a long-term partnership with Volkswagen to optimize the automaker’s engineering and manufacturing processes, though financial details were not disclosed.

Meanwhile, revenue at Medidata, Dassault’s clinical trial data analytics unit, increased by just 1% in Q4, an area closely monitored by investors.

Analysts at Stifel described the results as solid despite macroeconomic challenges but noted that the company’s 2025 guidance remains cautious. Dassault’s shares rose up to 2.5% at market open before stabilizing.