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Snap Inc, the parent company of messaging app Snapchat, reported a successful third quarter, exceeding Wall Street expectations for both revenue and user growth. The company's strategic investments in improving ad features have started to pay off.
Snap witnessed an essential highlight when the company reported initiating a share repurchase program of as much as US$500 million. This increased the confidence among investors for its performance moving forward.
Initial trading volatility saw the company’s share fall by 8%, but it eventually gained back 10% of it at the price level of US$12. There still was positivity in terms of investor mood concerning the share as a whole.
Snap’s third quarter revenue, ending on September 30 rose 15% year-over-year to US$1.37 billion which exceeded the analyst’s estimate of US$1.36 billion.
In the next quarter, the firm expects to make between US$1.51 billion and US$1.56 billion in revenue in line with market expectations. Moreover, this is the holiday season that is highly marked by advertising revenue.
The innovative ad formats the new Snap is using are increasing engagement. Snap has invested in machine learning to perfect ad targeting. Demands from bigger advertisers will be spurred by new ad formats, which include promotions on Snap Map.
According to CEO Evan Spiegel, "We're seeing brands try to drive people back into their stores and establishments. The feedback has been great."
Daily active users of the app rose by 9% year-over-year to 443 million, higher than the projected 441 million, a direct consequence of Snap's sustained effort. The company is focused on improving user experience by redesigning its app and streamlining the interface to increase the accessibility.
For the third quarter, Snapchat posted adjusted earnings per share at 8 cents, hence beating the expectations of Wall Street at 5 cents. This financial performance reflects that the company can easily manage challenges in the competitive digital advertising market.
