Snap crushes analysts' Q3 revenue expectations, sending its stock soaring
Snap's revenue for Q3 blew away analysts' expectations and sent its stock booming in after-hours trading late Tuesday.
Snapchat's parent company said it generated $678.7 million in revenue in the third quarter, up by 52% year-on-year. The reported revenue beat Wall Street analysts' consensus by more than $100 million.In after-hours trading,
- Revenue: $678.7 million, up 52% year-on-year (vs $559.2 million estimate)
- Daily Active Users: 249 million, up 18% year-on-year (vs 244.6 million estimate)
- Earnings Per Share (adjusted): 1 cent (vs estimated loss of 5 cents)
Snap's third quarter has historically been successful: Last year, the company saw a 50% increase in revenue and 13% increase in DAUs. In a call with investors Tuesday night, Snap CEO Evan Spiegel said the company reported year-over-year Q3 growth rates for both revenue and daily active users that are higher than they've been since 2017.The jump in revenue growth by Snap could signal optimism for the rest of the tech industry as it continues to stymie the effects of the coronavirus pandemic. Snap's third-quarter earnings come more than a week before tech giants like Facebook and Google release their own.
Like many tech companies, Snap relies on revenue from brands, whose pandemic-related financial slowdowns were expected to have a domino effect on ad buyers. However, digital ad spending has since started to trend back up across the board, boosting the revenue of social networks like Facebook, TikTok, and
Snap again declined to provide financial guidance on its estimates for Q4 due to "given the uncertainties related to the ongoing COVID-19 pandemic and the rapidly shifting macro conditions." In Tuesday night's call, Snap chief financial officer Derek Andersen said the company expected percentage growth in both revenue and DAUs in Q4 similar to that it reported this quarter.
Looking forward, the company is in the process of rolling out its one of its biggest format changes. The company unveiled at its Snap Partner Summit in June that it was adding a navigation bar to help Snapchat users easier find and access the deluge of features added to the app. Spiegel disclosed Tuesday that the navigation-bar update is the first time the company has "prototyped and launched" a redesign first on Android — a userbase the company notoriously alienated with a Snapchat app known for frequent crashing and poor camera quality. Snap released its overdue revamp to its Android app last year.
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