Shares of Snap Inc. (NYSE: SNAP) experienced a decline on Monday, contributing to an overall drop of 35% in the company's stock price this year. Despite this downturn, there is a sense of optimism surrounding Snap due to its recent performance and strategic initiatives aimed at fostering further growth.
According to AlphaStreet, Snap showcased robust revenue and earnings growth in its latest quarterly results. The company reported a revenue increase of 15% year-over-year, totalling $1.37 billion for the third quarter of 2024. This growth was largely driven by momentum in the direct-response (DR) advertising sector as well as an expansion in the Snapchat+ subscription service. Additionally, adjusted earnings per share saw a notable surge of 300% year-over-year, reaching $0.08.
The revenue trajectory was bolstered by performance across various global regions, particularly in Europe and the Rest of World, both of which posted double-digit growth propelled by advancements in the DR advertising platform.
In terms of user engagement, Snap reported a consistent rise in daily active users (DAUs). The platform recorded a 9% year-on-year increase, reaching 443 million DAUs. Total time spent viewing content surged by 25% compared to the previous year. Notably, the third quarter saw the sharing of over a billion Snaps publicly on Snapchat each month, with approximately 10 million users engaging with Simple Snapchat across a variety of countries. Spotlight, the platform's short-form video feature, averaged over 500 million monthly active users during Q3, up 21% year-on-year. Furthermore, the engagement with Spotlight content among users surged by over 60% year-on-year.
Snap's advertising division also demonstrated resilience, with advertising revenue climbing 10% year-over-year to $1.25 billion. This increase was primarily attributed to the strong performance of DR advertising, which saw a 16% rise, driven by high demand for Pixel Purchase optimisation and a growing contribution from App Purchase optimisation strategies.
Investments in artificial intelligence (AI) and augmented reality (AR) are also proving beneficial for Snap. The company incorporated AI capabilities into Snapchat Memories, allowing users to create AI-generated collages and video mashups. The third quarter saw a more than threefold increase in interactions with its AI-powered chatbot, My AI, in the United States.
Snap's focus on augmented reality continues to drive significant engagement, with over 375,000 AR creators and developers having crafted more than 4 million Lenses globally. The rollout of generative AI capabilities in Lens Studio is anticipated to enhance user experience within AR. Moreover, Snap introduced the fifth generation of Spectacles in Q3, aiming to create more immersive AR encounters.
Looking ahead, Snap's fourth quarter forecast projects DAUs to approach approximately 451 million, indicating an anticipated 9% year-over-year growth and about a 2% sequential increase. Revenue predictions for the fourth quarter are estimated to fall between $1.51 billion and $1.56 billion, suggesting a year-over-year growth rate of 11-15%.
Source: Noah Wire Services