Snap (SNAP) reported its Q3 earnings on Tuesday, surpassing expectations and hinting at potential future growth for the company.
In after-hours trading, Snap shares surged by at least 11%.
These earnings beats were a much-needed victory for Snap, the owner of Snapchat, as it has been struggling due to Apple’s App Transparency Tracking and the recent slowdown in digital advertising.
Despite some of Snap’s plans, such as mainstream AR glasses, not fully taking off yet, the company has seen success with its AI chatbot, My AI, which has been used by over 200 million people and has generated over 20 billion messages. Additionally, Snap has attracted 5 million subscribers for Snapchat+, potentially adding over $200 million in annual income.
“We are focused on improving our advertising platform to drive higher return on investment for our advertising partners, and we have evolved our go-to-market efforts to better serve our partners and drive customer success,” said Snap CEO Evan Spiegel.
Snap also provided an optimistic internal forecast for its Q4 adjusted EBITDA, expecting it to fall between $65 million and $105 million. However, it’s important to note that this is not formal guidance.
The earnings rundown
Here are the key numbers that Snap reported, compared to Wall Street’s expectations:
Adjusted Earnings Per Share: $0.02 actual versus $0.04 expected
Revenue: $1.19 billion actual versus $1.11 billion expected
Global Daily Active Users (DAUs): 406 million actual versus 405.79 million expected
Notably, Snap’s daily active user numbers grew by 12% compared to the previous year.
In its report, Snap announced that COO Jerry Hunter is set to retire. The company also authorized a share buyback program of up to $500 million, indicating confidence in the undervalued stock.
Despite the positive revenue growth and signs of advertising market recovery, Snap acknowledged the challenges faced during Q3. Furthermore, there is concern about another advertising downturn due to the war in Israel.
“Our business continued to face significant headwinds in the third quarter,” stated the investor letter released alongside the earnings report. “We believe that we can be successful in this new operating environment — with elevated inflation, increasing interest rates, and heightened geopolitical tensions — by rigorously prioritizing our investments.”
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on X, formerly Twitter, at @agarfinks and on LinkedIn.
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