Snap shares fall over 10% on third-quarter revenue miss
Snapchat parent reports Q3 loss per share of 3 cents, revenue of $1.72 billion, and 495 million daily active users; Q4 guidance tops Wall Street expectations
Quick Look
- Snap shares sank over 10% after the Snapchat parent missed on third-quarter revenue ($1.72 billion vs. $1.73 billion expected) and daily active users (495 million vs.
- 499 million expected).
- The company reported net income of $56 million, adjusted earnings of $383 million, and Q4 revenue guidance of $1.95 billion to $1.99 billion, above Wall Street's $1.95 billion estimate.
AI-generated summary
Why It Matters
Snap reported third-quarter earnings with revenue of $1.72 billion, up 14% year-over-year, and net income of $56 million compared to a $104 million net loss in the prior year. Adjusted earnings of $383 million topped analyst projections of $337 million.
Snap shares sank over 10% when the Snapchat parent missed on revenue and daily active users in its third-quarter earnings report Wednesday.
Here's how the company did compared with analysts' expectations:
Loss per share: 3 cents. That figure is not comparable to analysts' estimates.
Revenue: $1.72 billion vs. $1.73 billion expected, according to LSEG
Global daily active users: 495 million vs. 499 million expected, according to StreetAccount
Global average revenue per user, or ARPU: $3.48 vs. $3.48 expected, according to StreetAccount
Sales in Snap's third quarter jumped 14% year-over-year while net income came in at $56 million, compared to the $104 million net loss it logged the prior year.
Snap's third-quarter adjusted earnings came in at $383 million, topping the $337 million that analysts were projecting, according to StreetAccount.
The Snapchat parent said fourth-quarter revenue should come in between $1.95 billion and $1.99 billion. The midpoint of that figure is higher than Wall Street's estimates of $1.95 billion.
Fourth-quarter adjusted earnings are expected to come in between $490 million and $525 million. Analysts were expecting that figure to be $498 million.
Snap executives said in an investor letter that the company plans for globally monthly active users to become its "primary audience metric" starting in its first quarter for 2027. The company also said it has 977 MAU for the quarter.
"Daily engagement has historically been stable as a percentage of monthly engagement, but we do not intend to optimize Snapchat around daily use at the expense of long-term value for our community," the investor letter said. "A longer-term horizon better aligns our reported metrics with the product and safety decisions that strengthen relationships, create lasting utility, and support broader, more durable audience growth."
What to Watch
AI outlook — possibilities, not facts
Snap's Q4 revenue will fall between $1.95 billion and $1.99 billion, with adjusted earnings between $490 million and $525 million
Likely · Within months
Open Questions
- What specific factors caused the revenue and daily active user misses?
- How will the shift to monthly active users as the primary metric affect investor comparisons?
- What drove the improvement from a $104 million net loss to $56 million in net income?
