Snap returns to quarterly revenue growth on improved ad business

Snap Inc. returned to revenue growth in the third quarter after two periods of decline, showing the long-running improvements to its digital advertising business are finally paying off. The shares jumped about 15% in extended trading. Sales increased 5.4% to $1.19 billion in the period ended Sept. 30, Snap said Tuesday in a statement. Analysts, on average, projected a revenue decline of 2%, according to data compiled by Bloomberg. Snap has spent much of the year working to revamp its advertising business on its Snapchat app in an effort to reverse a slowdown in sales. It’s part of a strategy the company announced last year to target investments and projects that can directly boost revenue. Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here “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,” CEO Evan Spiegel said in the statement. Snap is more than a year into an overhaul of its business. It found early success in its subscription offering, Snapchat+—unique in the social media industry—which already has more than 5 million subscribers paying $3.99 for early access to in-app features. Meanwhile, more than 200 million people have sent more than 20 billion messages to its My AI chatbot, which can help drive engagement on the app. Not every diversification venture has been successful. Last quarter, the company closed a new division focused on making augmented reality services for businesses. The aim was to let retailers adapt Snap’s AR technology for their own websites, but the company ultimately realized that the cost and complexity required weren’t worth it. In the third quarter, Snap posted a net loss of $368.3 million, which was less than analysts’ average estimate of $397.8 million. The company’s board authorized a stock repurchase plan of as much as $500 million. The company said it has seen a “large number” of brand-focused advertising campaigns pause in the third quarter after the start of the Israel-Hamas war, and expects this delay could continue into the fourth quarter. As a result, Snap said it would be “imprudent” to provide a formal outlook for the current quarter, although its internal forecast sees revenue growth of $1.32 billion to $1.38 billion, which would be an increase of 2% to 6%. That compares with the average estimate of $1.34 billion. The shares rose to a high of $12.07 in extended trading after closing at $9.70 in New York. The stock has climbed 8.4% this year. Snap also announced the retirement of its Chief Operating Officer Jerry Hunter, who has served in that role since 2022. Hunter, formerly senior vice president of the engineering team, was given the job of bringing the technical and advertising sides of the businesses closer together to help overhaul Snap’s ad business. His responsibilities will be transitioned to other executives by the end of the month, though he will remain with the company and assist with the transition through July 1. The Snapchat app is used by 75% of 13- to 34-year-olds in more than 25 countries to send disappearing messages and share videos with special effects. The company said it had 406 million daily active users in the quarter, an increase of 12% from a year earlier. Snap said it expects daily active users to climb to a range of 410 million to 412 million in the current quarter. —Bloomberg News Subscribe to Ad Age Sign up now for the latest industry news and analysis Click here

Snap returns to quarterly revenue growth on improved ad business

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