Snap Inc (SNAP) Q3 2024 Earnings Call Highlights: Strong Revenue Growth and User Expansion

GuruFocus News
4 min read

In This Article:

  • Revenue: $1.37 billion, up 15% year-over-year.

  • Advertising Revenue: $1.25 billion, up 10% year-over-year.

  • Direct Response Advertising Revenue: Increased 16% year-over-year.

  • Other Revenue: More than doubled year-over-year to $123 million.

  • Daily Active Users (DAU): 443 million, an increase of 37 million year-over-year.

  • Adjusted EBITDA: $132 million, up from $40 million in the prior year.

  • Free Cash Flow: $72 million in Q3.

  • Net Loss: $153 million, improved from a net loss of $368 million in the prior year.

  • Infrastructure Costs per DAU: $0.84 in Q3.

  • Adjusted Gross Margin: 54% in Q3.

  • Snapchat+ Subscribers: More than doubled year-over-year to exceed 12 million.

  • Cash and Marketable Securities: $3.2 billion on hand.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Snap Inc (NYSE:SNAP) reported a 15% year-over-year increase in total revenue, reaching $1.37 billion in Q3 2024.

  • Daily active users grew by 37 million year-over-year, reaching 443 million in Q3 2024.

  • The company saw significant growth in its direct response advertising business, with total active advertisers more than doubling year-over-year.

  • Snapchat+ subscription revenue more than doubled year-over-year, contributing to the diversification of Snap Inc (NYSE:SNAP)'s revenue sources.

  • Snap Inc (NYSE:SNAP) achieved $132 million in adjusted EBITDA and $72 million in free cash flow, indicating improved financial performance and operational efficiency.

Negative Points

  • Brand-oriented advertising revenue declined by 1% year-over-year, reflecting weak demand from certain consumer discretionary verticals.

  • The rollout of Simple Snapchat poses potential risks of disruption to user engagement and monetization, requiring careful testing and iteration.

  • Infrastructure costs increased due to investments in machine learning and AI, impacting overall cost structure.

  • Total eCPMs decreased by approximately 7% year-over-year as inventory growth outpaced advertising demand.

  • The company faces challenges in reaccelerating upper funnel brand revenue growth, with no significant recovery expected in the near term.

Q & A Highlights

Q: How is Snap managing the risk associated with the transition to Simple Snapchat, and what measures are in place to prevent monetization headwinds? A: Evan Spiegel, CEO, explained that Snap is excited about the long-term potential of Simple Snapchat, particularly for new and less engaged users. However, they are taking a cautious approach by iterating and testing before a broader rollout. This includes understanding inventory shifts and potential monetization impacts, such as moving story ad delivery to interstitial placements. The goal is to ensure both the community and partners benefit from these changes.

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