Snap shares surged 28% on Friday after the company surprised Wall Street by showing a profit and reported sales and user numbers that exceeded analysts’ estimates.

The stock climbed $3.15 to close at $14.55, its biggest percentage gain since 2022. Even after the rally, the stock is down 14% for the year due to a 31% plunge in February.

Revenue in the first quarter increased 21% to $1.19 billion from $989 million a year earlier, topping analysts’ estimates for sales of $1.12 billion, according to LSEG.

The company reported adjusted earnings per share of 3 cents, while analysts were expecting a 5-cent loss. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $46 million, compared to analysts’ expectations for a loss of $68 million.

Snap said adjusted EBITDA “exceeded our expectations” and was primarily driven by operating expense discipline, as well as accelerating revenue growth.

Snap has been working to rebuild its advertising business after the digital ad market stumbled in 2022. Its investments are starting to pay off. The company said in its investor letter that revenue growth was primarily driven by improvements in the advertising platform, as well as demand for its direct-response advertising solutions. 

“I think more broadly, we saw a much more robust brand environment, which played out in all of our regions in Q1,” CFO Derek Andersen said on the earnings call.

User growth was also better than expected. Snap reported 422 million daily active users (DAUs) in the first quarter, up 10% year over year and topping the average analyst estimate of 420 million, according to StreetAccount.

In February, Snap announced it would lay off 10% of its global workforce, or around 500 employees. The company said Thursday that headcount and personnel costs will “grow modestly” through the rest of the year. 

Advertising revenue came in at $1.11 billion in the first quarter. Snap’s “Other Revenue” category, which is primarily driven by Snapchat+ subscribers, reached $87 million, an increase of 194% year over year. Snap reported more than 9 million Snapchat+ subscribers for the period.

Though Snap’s growth was its fastest since March 2022, it still fell behind that of Meta, which reported 27% growth in its better-than-expected first-quarter results on Wednesday. Meta shares plunged anyway after the company issued a light forecast and spooked investors with talk of its long-term investments.

For the second quarter, Snap expects to report revenue between $1.23 billion and $1.26 billion, up from the $1.22 billion expected by analysts, according to StreetAccount.

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