Snap shares initially soared as much as 20% in after-hours trading as the company beat on the top and bottom lines, then settled to a slight decline as investors digested news that some advertisers had paused spending following the onset of war in the Middle East.
Here’s how the company did:
- Earnings per share: 2 cents, adjusted, vs. 4 cent loss expected by analysts, according to LSEG, formerly known as Refinitiv.
- Revenue: $1.19 billion vs. $1.11 billion expected, according to LSEG.
- Global Daily Active Users (DAUs): 406 million vs. 405.7 million expected, according to StreetAccount.
- Average revenue per user: $2.93 vs. $2.74 expected, according to StreetAccount.
The company highlighted a return to sales growth during the quarter, as revenues rose 5% from the previous year when it logged $1.13 billion. Its EPS of 2 cents for the quarter is lower than that 8 cents per share it reported during the third quarter of 2022.
As part of Snap’s “internal forecast,” the company said that it expects sales in its fourth quarter to be in the range of $1.32 billion to $1.38 billion, compared with $1.33 billion expected by analysts. Snap said it is not providing official fourth quarter guidance “due to the unpredictable nature of war,” reversing course from the previous quarter when it provided official guidance.
The company said it has “observed pauses in spending from a large number of primarily brand-oriented advertising campaigns immediately following the onset of the war in the Middle East,” which is impacting its current quarter’s sales.
The company’s GAAP net loss widened 2% year-over-year to $368 million in its third quarter, or 23 cents per share.
Snapchat+, the company’s subscription service that costs $3.99 a month, reached over 5 million subscribers in its recent quarter, up from 4 million during the prior quarter.
Snap CEO Evan Spiegel highlighted the company’s “positive growth in Q3” in a statement, pointing to its major cost-cutting efforts as helping improve the overall business.
Last summer, Snap said last summer that it would lay off 20% of its workforce consisting of over 6,000 employees. The cost cutting continued as recently as this September when Snap said that it shut down its augmented reality enterprise business, resulting in 170 employees exiting the company.
“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,” Spiegel said in the statement.
Snap said that its chief operating officer, Jerry Hunter, is retiring after seven years at the company.
The company also said that has authorized a stock repurchase program of up to $500 million. It added that it has $3.6 billion in cash, cash equivalents, and marketable securities as of September 30, 2023.
Watch: Snapchat+, a subscription-based revenue stream, has hit 4M subscribers
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