Snap Earnings: High-Margin Products Like Snapchat+ Drive Improved Platform Monetization

ForkLibertarian · 2026-02-12T10:56:53+00:00

Snap reported Q4 revenue of $1.72 billion, a 10% year-over-year increase, supported by improved monetization despite a decline in daily active users. Although competition is tough, Snap maintains a fair value estimate of $9, with potential upside despite high uncertainty ratings.

ForkLibertarian

2026-02-12 10:56:53

Abstract generation in progress

Key Morningstar Metrics for Snapchat

Fair Value Estimate: $9
Morningstar Rating: ★★★★
Morningstar Economic Moat Rating: None
Morningstar Uncertainty Rating: Very High

What We Thought of Snapchat’s Earnings

Snap SNAP reported fourth-quarter revenue of $1.72 billion, up 10% year over year, largely due to strength in average revenue per user. Adjusted EBITDA margin came in at 21%, up 300 basis points from the prior year, owing to growing operating leverage and a favorable sales mix.

Why it matters: Despite a 5% year-over-year decline in global daily active users, or DAUs, traction in high-margin offerings such as Snapchat+, Sponsored Snaps, and Memories Storage Plans improved core platform monetization, supporting both top-line and profitability expansion.

Monetization metrics improved due to better user and advertiser engagement. Sponsored Snaps drove active advertiser growth of 28% year over year. On the user front, paid offerings like Snapchat+ remained a bright spot, and should support 3%-4% annual ARPU growth over the next few years.
Despite the solid performance, Snap continues to lag heavyweights like Meta, which recently reported 25% annual growth in ad sales. We expect competition to remain high and forecast roughly 10% annual sales growth for Snap in the next five years, which lags the broader industry’s midteens growth.

The bottom line: We maintain our $9 fair value estimate for no-moat Snap. Our model adjustments reflect higher innovation expenses due to the upcoming Specs launch, offset by higher gross margin expectations. Shares were up 3% after hours to about $6 and appear materially undervalued.

Coming up: Management expects first-quarter 2026 revenue to be $1.52 billion at the midpoint alongside adjusted EBITDA margin of roughly 12%. We view these targets as achievable and model upside to both.

Key stats: North America DAUs declined to 94 million from 100 million in the prior-year period due to reduced community marketing investments. International user-base growth came in below expectations, as a new platform-level age-verification law in Australia led to the removal of 400,000 accounts.

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