Snap Inc., the parent company of Snapchat, exceeded Wall Street’s revenue and user growth expectations in its Q3 earnings on Tuesday. The company reported a 15% year-over-year revenue increase to $1.37 billion, surpassing analyst estimates of $1.36 billion, alongside a rise in daily active users to 443 million, beating projections of 441 million.
To attract advertisers, Snap invested in machine learning to better target ads and simplified ad tools for small- and medium-sized businesses. It also announced a share buyback program worth up to $500 million. Initially, Snap’s stock fell 8% in after-hours trading but later rebounded by 10% to reach $12.
Despite stiff competition from larger players like Meta, Snap’s new ad formats are drawing positive attention. Among these is a feature allowing brands to promote on Snap Map, aimed at increasing foot traffic to stores. “We’re seeing brands try to drive people back into their stores,” Snap CEO Evan Spiegel said on an earnings call, emphasizing strong advertiser feedback.
Looking ahead, Snap forecasts Q4 revenue between $1.51 billion and $1.56 billion, aligned with Wall Street’s expectations for the high end. The holiday season is crucial, though Snap notes lower demand from large brands in recent months. Additionally, Snap’s app redesign—reducing sections from five to three—is already encouraging greater engagement among new and casual users.
Snap’s Q3 adjusted earnings per share were 8 cents, surpassing Wall Street’s estimate of 5 cents.