Shares of Snap Inc. (NYSE:SNAP) rose nearly 8% in post-market trading on Wednesday after the Snapchat owner reported robust metrics for the fourth quarter and provided a forecast that met expectations.
Daily active users in Q4 were 474M, up by 21M users year-over-year but down by 3M sequentially. However, they are largely in line with the consensus estimate of nearly 477M. Average revenue per user was $3.62 in the quarter, above the estimate of $3.56.
“The decline in Global DAU in Q4 reflects, in part, our decision to substantially reduce our community growth marketing investments in order to focus on more profitable growth,” the company said in its shareholder letter.
During the quarter, Snap said it implemented platform-level age verification in Australia in accordance with a new law requiring users to be at least 16 years old, which resulted in the removal of about 400,000 accounts.
Free cash flow surged 13% to $206M during the quarter, exceeding expectations of $183.8M. Adjusted EBITDA jumped 30% to $358M, topping the $298.8M estimate.
Net income for the three months ended December 31 was $45M, compared to $9M for the same period last year.
On a per-share basis, the Santa Monica, California-based firm earned 3 cents, while the average expectation was a loss of 3 cents per share.
Revenue rose 10% to $1.72B and was above the $1.70B estimate.
For the first quarter, the company guided revenue between $1.50B and $1.53B (est. $1.54B) and adjusted EBITDA of $170M to $190M (mid. $180M; est. $173.7M).
Additionally, Snap authorized a stock buyback of up to $500M of its Class A common stock.