Snap Inc. saw its stock soar as much as 25% on Wednesday after reporting better-than-expected Q3 results and announcing a $500 million share buyback program. The company also revealed a $400 million partnership with AI startup Perplexity to integrate its conversational search technology into Snapchat by early 2026.
Key Q3 Financials vs. Wall Street Estimates: - EPS: Loss of $0.06 (not directly comparable to analyst estimates) - Revenue: $1.51 billion vs. $1.49 billion expected (LSEG) - Global DAUs: 477 million vs. 476 million expected (StreetAccount) - Global ARPU: $3.16 vs. $3.13 expected (StreetAccount)
The company provided Q4 revenue guidance of $1.68-$1.71 billion, with the midpoint ($1.695 billion) slightly above Wall Street's $1.69 billion expectation. Q3 revenue grew 10% YoY, with net losses narrowing to $104 million from $153 million a year earlier.
Snap reported Q3 adjusted EBITDA of $182 million, surpassing StreetAccount's $125 million forecast. For Q4, it projects adjusted EBITDA between $280-$310 million, above the $255.4 million consensus.
Despite Wednesday's rally, Snap shares remain down 32% year-to-date, underperforming the Nasdaq's 22% gain. The company warned investors about potential headwinds from new regulations like Australia's Social Media Minimum Age Bill, set to take effect next month, which could negatively impact user metrics.
Snap also noted that upcoming platform-level age verification features from Apple and Google, along with new online child safety laws in Utah and California, may affect user growth. The Utah legislation will fully take effect in May 2026.
The company maintained its long-term goal of reaching 1 billion global monthly active users but cautioned that Q4 DAUs may decline due to regulatory pressures and platform changes.
The earnings report contrasts with Pinterest's disappointing results earlier this week, while mirroring the strong digital advertising performance recently reported by tech giants Meta, Alphabet, and Amazon. Meta posted 26% revenue growth to $51.24 billion, Amazon's ad revenue rose 24% to $17.7 billion, and Alphabet's total ad revenue increased 13% to $74.18 billion in their respective Q3 reports.
Reddit also reported strong results last Thursday, with revenue jumping 68% YoY to $585 million and global daily active unique users growing 19% to 116 million, beating expectations.