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Snap (SNAP - Free Report) reported third-quarter 2023 earnings of 2 cents per share, beating the Zacks Consensus Estimate by 150%. The metric declined 75% year over year.
Revenues increased 5.3% year over year to $1.19 billion, which beat the Zacks Consensus Estimate by 7.55%.
Daily active users (DAU) at the end of the reported quarter were 406 million, up 11.8% year over year. Snap added 43 million DAU on a year-over-year basis.
Geographically, revenues from North America (66.2% of revenues) decreased 3.1% year over year to $786.15 million. Revenues from Europe (16.9%) increased 24.1% to $200.3 million. Rest of the World (ROW) revenues were $202.1 million, up 30% year over year.
The average revenue per user (ARPU) decreased 5.8% year over year to $2.93. On a year-over-year basis, the ARPU of North America decreased 3.8%, while the ARPUs of Europe and ROW increased 15.3% and 7.9%, respectively.
Improvement of User Engagement in the Third Quarter
North America DAU was 101 million, up 1% year over year. Europe DAU was 95 million, up 8% year over year and ROW DAU was 211 million at the end of the reported quarter, up 20.6% year over year.
In the third quarter, Snap added new publisher deals and renewed agreements with ITV in the U.K., ProSieben in Germany, Network 18 in India and ESPN in the Netherlands.
The Snapchat+ subscription service reached more than 5 million paying subscribers in the third quarter. The company made considerable progress in diversifying revenues with Snapchat+, ARES and sponsored AR advertising.
SNAP is broadening its presence in the realm of generative artificial intelligence through the introduction of many AI-integrated features. More than 200 million people have used the company’s AI chatbot.
Operating Details
In the quarter under review, the cost of revenues on a non-GAAP basis increased 19.1% year over year to $555.8 million.
Adjusted operating expenses were $1.01 billion, down 7.7% year over year.
Sales and marketing expenses increased 10% year over year to $297.3 million and general and administrative expenses declined 15.7% year over year to $221.1 million. Research and development expenses contracted 12.4% year over year to $494.6 million.
Adjusted EBITDA was $40.1 million, down 44.8% from the year-ago quarter.
Balance Sheet and Cash Flow
As of Sep 30, 2023, cash and cash equivalents and marketable securities were $3.6 billion compared with $3.7 billion as of Jun 30, 2023.
Operating cash flow was $13 million in the third quarter of 2023 compared with $56 million in the year-ago quarter.
Free cash flow was negative $61 million in the third quarter of 2023 compared with $18 million in the year-ago quarter.
Zacks Rank & Stocks to Consider
Snap currently carries a Zacks Rank #3 (Hold).
Shares of Snap have gained 1.4% compared with the Zacks Computer and Technology sector’s rise of 30.8% in the past year.
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Palo Alto Networks (PANW - Free Report) , Salesforce (CRM - Free Report) and Fortinet (FTNT - Free Report) . Palo Alto Networks sports a Zacks Rank #1 (Strong Buy), and Salesforce and Fortinet each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Palo Alto Networks' first-quarter fiscal 2024 earnings has been revised upward by 1 cent to $1.16 per share in the past 60 days. For fiscal 2024, earnings estimates have increased by 4 cents to $5.34 per share in the past 60 days.
Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 22.2%. Shares of PANW have surged 80.6% year to date.
The Zacks Consensus Estimate for Salesforce’s third-quarter fiscal 2024 earnings has been revised 23 cents northward to $2.06 per share in the past 60 days. For fiscal 2024, earnings estimates have moved 8.3% upward to $8.06 per share in the past 60 days.
Salesforce’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 14.2%. Shares of CRM have risen 54% year to date.
The Zacks Consensus Estimate for Fortinet's third-quarter 2023 earnings has been unchanged at 37 cents per share in the past 60 days. For 2023, earnings estimates have remained stagnant at $1.51 per share in the past 60 days.
Fortinet’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 17.1%. Shares of FTNT have gained 17.7% year to date.
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SNAP Q3 Earnings Surpass Estimates, Revenues Increase Y/Y
Snap (SNAP - Free Report) reported third-quarter 2023 earnings of 2 cents per share, beating the Zacks Consensus Estimate by 150%. The metric declined 75% year over year.
Revenues increased 5.3% year over year to $1.19 billion, which beat the Zacks Consensus Estimate by 7.55%.
Daily active users (DAU) at the end of the reported quarter were 406 million, up 11.8% year over year. Snap added 43 million DAU on a year-over-year basis.
Geographically, revenues from North America (66.2% of revenues) decreased 3.1% year over year to $786.15 million. Revenues from Europe (16.9%) increased 24.1% to $200.3 million. Rest of the World (ROW) revenues were $202.1 million, up 30% year over year.
The average revenue per user (ARPU) decreased 5.8% year over year to $2.93. On a year-over-year basis, the ARPU of North America decreased 3.8%, while the ARPUs of Europe and ROW increased 15.3% and 7.9%, respectively.
Snap Inc. Price, Consensus and EPS Surprise
Snap Inc. price-consensus-eps-surprise-chart | Snap Inc. Quote
Improvement of User Engagement in the Third Quarter
North America DAU was 101 million, up 1% year over year. Europe DAU was 95 million, up 8% year over year and ROW DAU was 211 million at the end of the reported quarter, up 20.6% year over year.
In the third quarter, Snap added new publisher deals and renewed agreements with ITV in the U.K., ProSieben in Germany, Network 18 in India and ESPN in the Netherlands.
The Snapchat+ subscription service reached more than 5 million paying subscribers in the third quarter. The company made considerable progress in diversifying revenues with Snapchat+, ARES and sponsored AR advertising.
SNAP is broadening its presence in the realm of generative artificial intelligence through the introduction of many AI-integrated features. More than 200 million people have used the company’s AI chatbot.
Operating Details
In the quarter under review, the cost of revenues on a non-GAAP basis increased 19.1% year over year to $555.8 million.
Adjusted operating expenses were $1.01 billion, down 7.7% year over year.
Sales and marketing expenses increased 10% year over year to $297.3 million and general and administrative expenses declined 15.7% year over year to $221.1 million. Research and development expenses contracted 12.4% year over year to $494.6 million.
Adjusted EBITDA was $40.1 million, down 44.8% from the year-ago quarter.
Balance Sheet and Cash Flow
As of Sep 30, 2023, cash and cash equivalents and marketable securities were $3.6 billion compared with $3.7 billion as of Jun 30, 2023.
Operating cash flow was $13 million in the third quarter of 2023 compared with $56 million in the year-ago quarter.
Free cash flow was negative $61 million in the third quarter of 2023 compared with $18 million in the year-ago quarter.
Zacks Rank & Stocks to Consider
Snap currently carries a Zacks Rank #3 (Hold).
Shares of Snap have gained 1.4% compared with the Zacks Computer and Technology sector’s rise of 30.8% in the past year.
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Palo Alto Networks (PANW - Free Report) , Salesforce (CRM - Free Report) and Fortinet (FTNT - Free Report) . Palo Alto Networks sports a Zacks Rank #1 (Strong Buy), and Salesforce and Fortinet each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Palo Alto Networks' first-quarter fiscal 2024 earnings has been revised upward by 1 cent to $1.16 per share in the past 60 days. For fiscal 2024, earnings estimates have increased by 4 cents to $5.34 per share in the past 60 days.
Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 22.2%. Shares of PANW have surged 80.6% year to date.
The Zacks Consensus Estimate for Salesforce’s third-quarter fiscal 2024 earnings has been revised 23 cents northward to $2.06 per share in the past 60 days. For fiscal 2024, earnings estimates have moved 8.3% upward to $8.06 per share in the past 60 days.
Salesforce’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 14.2%. Shares of CRM have risen 54% year to date.
The Zacks Consensus Estimate for Fortinet's third-quarter 2023 earnings has been unchanged at 37 cents per share in the past 60 days. For 2023, earnings estimates have remained stagnant at $1.51 per share in the past 60 days.
Fortinet’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 17.1%. Shares of FTNT have gained 17.7% year to date.