Snap, parent company of Snapchat, turned in better results than Wall Street expected for the third quarter of 2023, as the company touted improvements to its ad platform.
Overall, Snap posted Q3 revenue of $1.19 billion, an increase of 5%, and a net loss of $368 million (or 23 cents per share). Analyst consensus estimates for the company were $1.11 billion in revenue and a net loss of 24 cents per share, according to FactSet.
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Snapchat gained 9 million daily users in the period, to stand at an average of 406 million. That was in line with Wall Street’s projection of 405.8 million daily active users for the app, per FactSet.
“Our revenue returned to positive growth in Q3, increasing 5% year-over-year and flowing through to positive adjusted EBITDA as our reprioritized cost structure demonstrated the leverage in our business model,” CEO Evan Spiegel said in a statement. “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.”
For Q4, the company told investors it expects revenue to be $1.32 billion-$1.375 billion, implying year-over-year revenue growth of approximately 2% to 6%. Snap in part cited the Israel-Hamas war for “limited” visibility into advertising demand for the year-end quarter, saying it “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… Due to the unpredictable nature of war, we believe it would be imprudent to provide formal guidance for Q4.”
During Q3, Snap said, it implemented more than 17 major machine-learning ranking and optimization improvements for app, web and Dynamic Product Ad (DPA) platforms.
In announcing the results, the company said COO Jerry Hunter notified Snap that he will retire. Hunter joined Snap seven years ago and served “an important role in building the company’s engineering and business structures,” according to the company. Hunter will “continue to support Snap through July 1, 2024 to help ensure this transition is effective,” Snap said.
Meanwhile, Snapchat+ — the app’s $4/month subscription service with prerelease and experimental features — topped 5 million subscribers in the quarter. Doing the math, that would suggest an annual run rate of more than $240 million.
The company also announced that since launching My AI, the free artificial-intelligence chatbot that Snapchat made available to all users in April 2023, more than 200 million people have sent more than 20 billion messages on the service. Snap said it believes that makes My AI “one of the most-used AI chatbots available today.”
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