Pinterest And Snap Show V-Shaped Recovery; Cloudflare Guns For Zero-Trust

Management’s commentary and guidance indicate that they expect this momentum to continue in Q1: “we expect positive trends from our investments in ad tools like shopping and automation, and sales coverage expansion to continue. We plan to expand our international coverage further in existing geographies, and also expand monetization into Latin America in the first half of the year.” 

Recently, Microsoft attempted to buy Pinterest according to news sources. At $51 billion, Pinterest is twice the valuation of LinkedIn at the time of acquisition. Last year, Microsoft put in a bid for Tiktok.

Snap

Snap announced Q4 results on February 5th, topping consensus estimates on both the top and bottom lines although guidance for next quarter came in under expectations on adjusted EBITDA. 

In Q4, revenue grew 62% YoY to $911M, topping Wall Street’s estimate of $855M by 7%. 

Adjusted EPS of $0.09 beat by $0.02 while adjusted EBITDA of $166M comfortably exceeded expectations calling for $142M. 

Global daily active users (DAUs) rose 22% YoY to 265M, surpassing expectations for 258M. Daily active users exceeded expectations across all geographies, including North America, Europe and ROWS.

For Q1, Snap sees revenue of $730M at the midpoint and adjusted EBITDA of -$60M. The adjusted EBITDA guidance came as a surprise as analysts were expecting positive EBITDA for Q1.Still, -$60M would be an improvement over -$81M in Q1 2020.  

In its Q4 earnings call, Snap CFO Jeremi Gorman discussed the rebound the company observed after Q2: “in Q3 and Q4, we saw many existing advertisers return to Snap and so many new ones leverage our innovative ad formats and bidding capabilities to drive real business value on our platform. This drove active advertisers to an all-time high.” 

Snap currently has an average of 200 million people engaging with AR on Snapchat every day. The company noted that they will continue to invest heavily in AR to create new cutting-edge tools and capabilities that allow advertisers to reach their audience in new ways.

Snap believes there is tremendous value in giving advertisers the ability to engage with their audience directly via the camera.Management disclosed that businesses leveraging AR as one component of a larger multi-product campaign on Snapchat tend to achieve stronger results. 

Another key area for investment moving forward for Snap is video advertising and the growth of Spotlight: “We see more opportunity over time to grow video inventory particularly via the growth in viewership of Spotlight and Stories.” This is the primary way Snap monetizes its users, but the company believes there will be even more opportunity here in the future. 

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