Written by Sheila Dunn
(Reuters) – Snap beat Wall Street expectations on Tuesday for both quarterly revenue and user growth, as the parent company of the messaging app Snapchat succeeded in luring back some advertisers with better-performing advertising features. Ta.
The company also announced a stock repurchase program of up to $500 million.
Snap Inc.’s stock initially fell 8% in post-market trading, but has since risen 10% to $12.
The Santa Monica, Calif.-based company makes most of its revenue from selling digital ads, but has long struggled to compete with larger competitors like Meta Platforms (NASDAQ:), which owns Facebook and Instagram. Ta. To gain a competitive edge, Snap invested in machine learning to better target ads to users and also made it easier for small businesses to advertise on Snapchat.
Revenue for the third quarter ended Sept. 30 rose 15% from a year earlier to $1.37 billion, beating the average analyst estimate of $1.36 billion.
Snap said it expects revenue for the current quarter to be in the range of $1.51 billion to $1.56 billion. Wall Street was targeting the upper end of this range, according to Refinitiv data.
The fourth quarter includes the holiday shopping season. This is a critical time when brands spend a lot of money promoting their products and services. Snap Inc. said in a letter to shareholders that advertising from major companies has traditionally helped boost Snap’s year-end results, but demand from major companies has declined in recent months. .
Two new ad formats could help drive demand from large advertisers, including one that allows advertisers to promote their businesses on Snap Maps.
“We’re seeing brands trying to bring people back into their stores and facilities,” Snap CEO Evan Spiegel said on an earnings call with analysts. “The feedback has been great.”
Snapchat’s daily active users rose 9% year over year to 443 million, exceeding analysts’ expectations of 441 million.
Snap announced last month that it would begin rolling out a redesign of Snapchat that would simplify the app from five separate sections to three. Spiegel said initial testing of the redesign showed it helped expand usage among people who weren’t previously heavy users of Snapchat.
Snap reported third-quarter adjusted earnings of 8 cents per share, beating Wall Street expectations of 5 cents.
