Instant income: what to watch?

social media company Instantaneous ( INSTANTANEOUS -4.30% ) has seen its stock hammer recently. Shares have fallen 56% in the past six months, due to a combination of a broad stock market decline and recent iOS changes affecting many digital advertisers.

Importantly, investors may soon get a glimpse of how the company is handling iOS challenges. Snap has announced the date for its first quarter financial results: Thursday, April 21. The quarter will likely provide a window into the Snap iOS issue and other important things for investors. Here are three key areas to check when Snap reports revenue.

Image source: Getty Images.

1. Impact of iOS

First, investors need to realize that Snap isn’t sitting idly by as iOS changes its ad tracking and measurement features.

“Our sales team is working hard to help advertisers adapt to new measurement paradigms, driven by Appleprivacy-related changes to iOS,” said Jeremi Gorman, chief commercial officer of Snap, during the company’s latest earnings call. The company’s product team has also made changes. All of this led to the company starting to recover from the impact of iOS. changes sooner than management expected, management said in its fourth quarter call.

In fact, management said on the company’s fourth quarter earnings call that it could overcome the negative factors weighing on its business due to iOS platform changes as soon as “a few more quarters.” It’s much earlier than Metaplatforms‘ view for it to be a “multi-year trip”.

Investors should look for more positive news on this front in the management’s first quarter update.

2. Revenue Growth

Snap provided promising guidance for the first quarter of 2022 in its last earnings call, despite these recent platform changes. The social media company expects to generate between $1.03 billion and $1.08 billion in revenue in the first quarter, representing 34-38% year-over-year revenue growth.

This growth should help Snap break even on an adjusted earnings before interest, tax, depreciation and amortization (EBITDA) basis in the first quarter.

3. Daily active users

Management said it expects continued growth in the number of daily active users (DAUs). Specifically, the company has guided for DAUs between 328 million and 330 million. That compares to 319 million in the prior quarter and 280 million a year ago. If Snap’s first quarter results meet Snap’s internal guidelines for the key metric, it would drive DAU growth of 17% year-over-year. That’s pretty impressive on its own, especially if Snap continues to find ways to more effectively monetize its user base.

Overall, it looks like Snap is confident in continuing to grow its business despite its current challenges.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

About Donnie R. Losey

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