Snap Experiences Strong Fourth Quarter as New Ad Features Drive Growth
Updated: Dec 18, 2023
Snap, the parent company of popular photo messaging app Snapchat, has reported better-than-expected revenue for the third quarter and has projected a positive outlook for the current quarter.
The company's efforts to enhance its ad-targeting tools with artificial intelligence have started to pay off, leading to increased revenue.
In the third quarter, Snap's revenue rose by 5% to $1.19 billion, surpassing analysts' expectations of $1.11 billion. This growth can be attributed to the successful implementation of AI-powered ad features, which have improved the company's ability to target ads effectively.
Following the announcement, Snap's shares initially surged by as much as 14% in extended trading. However, some analysts expressed concerns about the company's ability to compete with larger rivals like Meta (formerly Facebook). As a result, the share price fluctuated.
Looking ahead, Snap expects its revenue for the fourth quarter to be between $1.32 billion and $1.38 billion, slightly above analysts' estimates of $1.33 billion. The company remains optimistic about its future performance, but acknowledges the potential impact of geopolitical events, such as a conflict in the Middle East, on advertising spending.
Snap's subscription service, Snapchat+, which offers exclusive features to subscribers for a monthly fee of $3.99, reached over 5 million members in the third quarter. This demonstrates the company's ability to monetise its platform beyond traditional advertising.
CEO Evan Spiegel highlighted the positive impact of the company's ad platform improvements on average revenue per user (ARPU). He stated, "I think what you're seeing is the work starting to show up in the output and the fundamental progress we're making with the ad platform and that's showing up in the ARPU, which is great news for the business."
Snapchat's daily active users also exceeded expectations, reaching 406 million, compared to Wall Street's estimate of 405.7 million. This growth in user engagement further strengthens the company's position in the competitive social media landscape.
While Snap's net loss widened to $368 million in the quarter, the company remains focused on driving revenue growth and expanding its user base.
Snap has reported higher-than-expected revenue for the third quarter, driven by the success of its AI-powered ad-targeting tools.
The company's revenue rose by 5% to $1.19 billion, surpassing analysts' estimates.
Snap expects its revenue for the fourth quarter to be between $1.32 billion and $1.38 billion.