Snap Shares Drop Over 10% After Q3 Revenue and User Count Fall Short

Shares of Snap Inc., the parent company of Snapchat, experienced a significant decline of over 10 percent following the release of its third-quarter earnings report on Wednesday. The company fell short of analysts' predictions on revenue and daily active user numbers, sparking investor concern despite some positive earnings figures.

Snap’s adjusted earnings per share (EPS) came in at $0.19, surpassing expectations of $0.16, according to data from LSEG. However, total revenue for the quarter reached $1.72 billion, slightly below the $1.73 billion forecasted by analysts. The company reported 495 million global daily active users (DAUs), missing the anticipated 499 million as tracked by StreetAccount. On a brighter note, the global average revenue per user (ARPU) matched estimates at $3.48.

Year-over-year, Snap’s sales climbed 14 percent, illustrating steady growth in top-line revenue. The company also posted a net income of $56 million in Q3, a notable turnaround from the $104 million net loss recorded during the same quarter last year. Adjusted earnings, which exclude certain one-time expenses, stood at $383 million, well above the analyst consensus of $337 million.

Looking ahead, Snap provided guidance for the fourth quarter that suggests optimism despite the recent miss. Revenue is forecasted to fall between $1.95 billion and $1.99 billion, with the midpoint slightly exceeding Wall Street’s estimate of $1.95 billion. Adjusted earnings for Q4 are expected to range from $490 million to $525 million, compared to analysts’ projections of $498 million.

In an investor letter accompanying the earnings report, Snap announced plans to shift its focus toward monthly active users (MAUs) as the main metric for audience measurement starting from the first quarter of 2027. The company reported 977 million monthly active users for the current quarter. The letter emphasized that while daily user engagement has been stable relative to monthly engagement, the company intends to prioritize long-term value over daily use metrics. This approach aims to align product and safety decisions with efforts to build stronger user relationships and more sustainable audience growth.

Snap’s Chief Commercial Officer, Ronan Harris, addressed the earnings call and cited reduced advertising spending from certain consumer packaged goods (CPG) companies as a factor negatively affecting third-quarter sales. Harris attributed this pullback to macroeconomic challenges in the United States and the Middle East. Despite these pressures, he noted positive signs of growth in other sectors, especially financial services within the U.S. market. Harris indicated that Snap’s strategy involves diversifying its advertising client base beyond CPG to maintain momentum.

The quarterly report highlights the challenges social media companies face amid shifting advertiser budgets and evolving user behaviors. Snap’s efforts to redefine its key audience metrics and expand into new verticals reflect broader industry trends where platforms seek to balance engagement with long-term user loyalty and revenue diversification.

Investors and market analysts will closely watch Snap’s performance in the coming quarters to see if the company can regain user growth momentum and capitalize on emerging advertising opportunities. As competition intensifies across the social media landscape, platforms like Snapchat must continuously adapt to maintain relevance and financial health.