Snap Inc. reported impressive quarterly results on Tuesday, exceeding Wall Street’s forecasts for both revenue and user growth.
The parent company of Snapchat has successfully attracted advertisers back to its platform by enhancing its advertising features. In addition to the positive earnings report, Snap announced a share repurchase program of up to $500 million.
Following the announcement, Snap’s shares initially dipped by 8% in after-hours trading but rebounded to gain 10%, reaching $12.
Based in Santa Monica, California, Snap has faced ongoing competition from major players like Meta Platforms, which owns Facebook and Instagram. To strengthen its position, Snap has invested in machine learning technologies to refine ad targeting and has made it easier for small and medium-sized businesses to advertise on Snapchat.
For the third quarter ending September 30, Snap’s revenue rose by 15% year-over-year to $1.37 billion, surpassing the average analyst estimate of $1.36 billion.
Snap anticipates fourth-quarter revenue between $1.51 billion and $1.56 billion, aligning with Wall Street’s expectations, particularly during the critical holiday shopping season when advertising spending typically peaks.
The company acknowledged that demand from large advertisers has been lower in recent months, though two new ad formats are expected to stimulate interest. One of these formats allows businesses to promote their offerings on Snap Map.
CEO Evan Spiegel noted, “We’re seeing brands try to drive people back into their stores and establishments. The feedback has been great.”
Snapchat also saw a 9% year-over-year increase in daily active users, reaching 443 million, which exceeded analyst estimates of 441 million. In a bid to further enhance user engagement, Snap recently began rolling out a redesign of its app, streamlining it from five sections to three.
Early tests indicate that this change has successfully attracted users who were less active on the platform previously.
The company reported adjusted earnings per share of 8 cents for the third quarter, exceeding Wall Street’s expectation of 5 cents.
