Snap (NYSE:SNAP) Issues Quarterly Earnings Results

Key Points

• Snap reported quarterly EPS of $0.03 and revenue of $1.72 billion, slightly below analyst expectations of $1.73 billion; revenue rose 14.3% year over year.
• Advertising revenue grew only 4% as weaker brand spending offset stronger direct-response advertising. Direct-response campaigns showed gains, with Snap pointing to AI tools and improved measurement as ways to attract more advertiser spending.
• Snap forecast fourth-quarter revenue of $1.95 billion–$1.985 billion and adjusted EBITDA of $490 million–$525 million; paid subscribers topped 30 million.

Snap (NYSE:SNAP - Get Free Report) released its quarterly earnings data on Wednesday. The company reported $0.03 earnings per share for the quarter, FiscalAI reports. The business had revenue of $1.72 billion for the quarter, compared to analyst estimates of $1.73 billion. Snap had a negative return on equity of 14.61% and a negative net margin of 4.90%. Snap's revenue was up 14.3% compared to the same quarter last year. During the same period last year, the firm posted ($0.06) earnings per share.

Here are the key takeaways from Snap's conference call:

• Q3 revenue rose 14% year over year to $1.72 billion, while net income reached $56 million and adjusted EBITDA increased to $383 million. Gross margin expanded about 7 percentage points, and free cash flow rose 76% to $164 million.
• Advertising revenue grew just 4%, as declining upper-funnel brand spending—particularly from U.S. and Middle East consumer packaged goods advertisers—offset stronger direct-response growth. Management said direct response now represents about 77% of revenue and expects brand improvements to take hold over 2027.
• Direct-response campaigns showed improved results: app-purchase campaign revenue grew more than 54% as purchase volume more than doubled, while web-purchase campaign revenue increased 11%. Snap is betting that AI-powered ad tools, better measurement, and new placements will help turn these gains into larger advertiser budgets.
• For Q4, Snap guided to revenue of $1.950 billion–$1.985 billion and adjusted EBITDA of $490 million–$525 million. Other revenue, led by subscriptions, grew 84% in Q3, and Snap surpassed 30 million paid subscribers.
• Snap warned that evolving youth-related regulation could bring product changes, higher compliance and legal costs, and harm to user growth or engagement. It will also make global monthly active users, rather than daily active users, its primary audience metric starting in Q1 2027.

Snap Trading Up 5.8%

SNAP stock traded up $0.33 during mid-day trading on Wednesday, hitting $5.92. 78,639,640 shares of the stock were exchanged, compared to its average volume of 40,733,936. The company has a current ratio of 2.94, a quick ratio of 2.94 and a debt-to-equity ratio of 1.75. The business has a fifty day moving average price of $5.76 and a 200 day moving average price of $5.42. Snap has a 12 month low of $3.81 and a 12 month high of $9.13.

Insider Transactions at Snap

In related news, CFO Douglas Hott sold 131,884 shares of the firm's stock in a transaction dated Monday, August 17th. The stock was sold at an average price of $5.20, for a total transaction of $685,796.80. Following the transaction, the chief financial officer directly owned 2,324,563 shares of the company's stock, valued at approximately $12,087,727.60. This trade represents a 5.37% decrease in their position. The sale was disclosed in a filing with the SEC, which is accessible through this link. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CAO Rebecca Morrow sold 20,000 shares of the business's stock in a transaction that occurred on Wednesday, September 9th. The stock was sold at an average price of $5.35, for a total value of $107,000.00. Following the completion of the sale, the chief accounting officer owned 578,105 shares of the company's stock, valued at $3,092,861.75. The trade was a 3.34% decrease in their position. The SEC filing for this sale provides additional information. Insiders have sold a total of 445,926 shares of company stock valued at $2,326,930 over the last 90 days. Company insiders own 22.68% of the company's stock.

Analysts Set New Price Targets

A number of analysts have weighed in on the company. The Goldman Sachs Group reiterated a "neutral" rating and set a $6.50 price target on shares of Snap in a report on Tuesday, August 4th. Royal Bank Of Canada reissued a "sector perform" rating and set a $8.00 target price on shares of Snap in a research report on Thursday, September 17th. BMO Capital Markets restated an "outperform" rating on shares of Snap in a research report on Tuesday, August 4th. Barclays boosted their price objective on Snap from $15.00 to $16.00 and gave the company an "overweight" rating in a research note on Tuesday, August 4th. Finally, Evercore set a $8.00 target price on Snap in a report on Tuesday, August 4th. One research analyst has rated the stock with a Strong Buy rating, eleven have assigned a Buy rating, twenty-two have issued a Hold rating and two have given a Sell rating to the company. Based on data from MarketBeat.com, the stock presently has a consensus rating of "Hold" and a consensus price target of $7.71.

Snap Company Profile

Snap Inc is a technology and social media company best known for Snapchat, a visual messaging and social networking application. Snapchat enables users to communicate through photos, videos, messages and Stories, while offering creative tools such as augmented reality (AR) Lenses and filters. The platform also includes features such as Snap Map, Spotlight and content from publishers and creators.

Snap generates most of its revenue from digital advertising, including video, augmented reality and other advertising formats delivered across Snapchat.

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