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Snap (SNAP) is expected to report results of its second quarter on Thursday, August 1, with a conference call scheduled for 5:30 pm EDT. What to watch for:

AD BUSINESS IMPROVEMENTS: Last week, Morgan Stanley upgraded Snap to Equal Weight from Underweight with a price target of $16, up from $12. The firm's latest advertiser/agency conversations speak to improvements in Snap's ad business, including 7.0 attribution tools and an increase in advertiser willingness to test direct response offerings more broadly, the firm tells investors. Morgan Stanley, which also believes there is an improved app install offering coming for further growth, raised its Snap FY24 and FY25 revenue estimate by about 2% each and its EBITDA forecasts by about 8% and 6%, respectively.

MONETIZATION RECOVERY: Loop Capital kept a Buy rating and $20 price target on Snap as part of the company's broader research note on Interactive Media & Services sector last month. The firm is bullish on a monetization recovery for the middle-cap social media names, with an adtech-driven rebound being supported by measurement improvements, the analyst tells investors in a research note, adding that expectations for continued ad monetization gains at Snap "look highly conservative".

UPSIDE TO ESTIMATES: Back on July 15, Wolfe Research initiated coverage of Snap with a Peer Perform rating. The firm listed Snap as a Tactical Call, citing estimates upside, positive intra-quarter data points, and incremental growth from DR transaction.

OUTLOOK: During the last earnings conference call, Snap said it saw Q2 revenue $1.225B-$1.255B, with consensus at 1.25B. The company said at the time, "As we enter Q2, we anticipate continued growth of our global community, and as a result, our Q2 guidance is built on the assumption that DAU will be approximately 431 million in Q2. We are focused on executing against our roadmap to deliver improvements to our DR advertising platform to drive improved results for our advertising partners and accelerate topline growth. Our Q2 guidance range for revenue is $1,225 million to $1,255 million, implying year-over-year revenue growth of 15% to 18%. Given the revenue range above, and our investment plans for the quarter ahead, we estimate that Adjusted EBITDA will be between $15 million and $45 million in Q2."

For the full year, Snap said it saw adjusted operating expenses $2.43B-$2.53B, and content and developer partner costs/advertising and other costs 19%-21% of revenue. The company added that it saw FY24 infrastructure cost per DAU 83c-85c.

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