SNAP: Global user DAU reached 218.1 million in 4Q19, and revenue reached US$561 million

Snap, which claims to be the Facebook of young people, released its 4Q19 financial report, which showed accelerated user growth, with global DAU increasing by 17% year-on-year to 218 million. In 2019, the total net increase in daily active users was 31 million, mainly from investments in core products and improvements to the Android app.

Revenue increased 44% year-over-year to $561 million. Adjusted EBITDA was $42 million. Full-year adjusted EBITDA for 2019 increased 65%, a step closer to achieving full-year adjusted EBITDA profitability in 2020.

The company's DAU has increased in all markets around the world, which is a general positive.

The company continues to invest in the discovery platform to build a sustainable content ecosystem. The total daily time spent by users watching the discovery module content has increased by 35% year-on-year; Snap Original Shows have been watched by half of GEN Z users in the United States, and the discovery page has become the primary destination for mobile content consumption; the number of users who watch Premium Discovery content for more than 15 minutes a day has increased by nearly 50% year-on-year; and 50 dramas have gained 10 million monthly active users.

The company continues to invest in AR and camera platforms, and 75% of community users use AR products every day.

The company continues to improve its advertising platform products and capabilities to improve advertisers' marketing effectiveness, which will ultimately drive long-term revenue growth. The company also continues to build additional platform innovations to better serve the large and highly interactive community.

Q4 revenue was US$561 million, a year-on-year increase of 44%; North American market revenue increased by 42%, and ARPU increased by 31%. The slowdown in North American growth in the fourth quarter was mainly due to shorter holidays and a high base last year; European revenue increased by 47%, and ARPU increased by 31%. The accelerated growth rate benefited from the reorganization of the sales team; elsewhere, revenue increased by 49% and ARPU increased by 9%.

Global DAU grew 17% year-on-year, 9% in North America, 12% in Europe, and 36% in other regions.

The company's user monetization ARPU was $2.58, up 23% year-on-year, with a year-on-year increase of 31% in the United States and Europe and 9% in other regions. Compared with Twitter's $16 in the United States and $4.9 in international markets, Snap's single user monetization potential is still several times higher.

The gross profit margin was 56%, up 8 percentage points year-on-year. The infrastructure cost per user was US$0.72, flat year-on-year. The increase in user usage offset the cost-saving efforts. On the content side, the company doubled its investment in high-quality content, which achieved 50 dramas and 10 million monthly active users.

Operating expenses were $271 million, up 14% year-over-year and flat quarter-over-quarter. The number of full-time employees in the fourth quarter increased 11% year-over-year.

Q4 was the first quarter of adjusted EBITDA profitability, at $42 million, up $93 million year-on-year. Net loss was $241 million, down $49 million year-on-year and up $13 million quarter-on-quarter. The year-on-year decline mainly reflected a one-time judicial settlement, which offset the improvement in adjusted EBITDA.

Free cash flow was -$76 million, up $73 million year-on-year. 1Q20 DAU is expected to be between 224-225 million, up 18% year-on-year. Revenue is between $450-470 million. Adjusted EBITDA is between -90 and -70 million.