Snap’s Q3 Earnings Exceed Expectations, Shares Soar 11% After-Hours
Snap, the parent company of Snapchat, reported its third-quarter earnings on Tuesday, surpassing analysts’ estimates for both revenue and profit. This impressive performance has ignited optimism for further growth in the social messaging company.
Following the earnings announcement, Snap shares experienced a remarkable surge of at least 11% in after-hours trading. This surge is a much-needed win for Snap, as the company has been battling challenges due to the impact of Apple’s App Transparency Tracking and a digital advertising slowdown.
Snap’s future prospects have been closely watched, particularly its efforts to introduce mainstream augmented reality (AR) glasses. While these plans are yet to fully materialize, Snap has made progress in other areas. The company recently launched its own AI chatbot called My AI, which has already been used by over 200 million people, resulting in more than 20 billion messages sent. Additionally, Snap has successfully attracted 5 million subscribers to its premium subscription Snapchat+, potentially generating an annual income of over $200 million.
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 in a statement.
Snap also provided an internal forecast for Q4, expecting an adjusted EBITDA ranging from $65 million to $105 million. While this range is wide, it surpasses Wall Street’s estimates of $100.6 million. However, the company emphasized that this was not formal guidance and should be interpreted with caution.
The company’s daily active users also witnessed noteworthy growth of 12% year over year. In addition, Snap announced that its Chief Operating Officer, Jerry Hunter, is set to retire. It also authorized a share buyback program of up to $500 million, suggesting management’s belief that the company’s stock is undervalued.
Despite the positive earnings and signs of recovery in the advertising market, Snap acknowledged the challenges faced in the third quarter. There are concerns of another advertising downturn due to ongoing geopolitical tensions, specifically the war in Israel. However, Snap remains confident in navigating this challenging operating environment by prioritizing strategic investments.
In conclusion, Snap’s Q3 earnings surpassed expectations, with the company witnessing strong growth in user numbers and making significant strides in its AI offerings. The surge in Snap’s stock price reflects investors’ optimism for the company’s future prospects in the evolving advertising landscape.
