---
title: "Snap gains on results suggesting ad revamp is working"
description: "Snap Inc. reported third-quarter revenue that slightly topped analysts’ expectations, suggesting the overhaul of its advertising business is catching on with marketers. The shares rose in extended trading."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "Business Maverick"
author: "Bloomberg"
author_url: "https://www.dailymaverick.co.za/author/bloomberg/"
canonical_url: "https://www.dailymaverick.co.za/article/2024-10-30-snap-gains-on-results-suggesting-ad-revamp-is-working/"
published: "2024-10-30T05:58:31"
updated: "2024-10-30T05:58:33"
lang: "en-ZA"
word_count: 570
---

# Snap gains on results suggesting ad revamp is working

> Snap Inc. reported third-quarter revenue that slightly topped analysts’ expectations, suggesting the overhaul of its advertising business is catching on with marketers. The shares rose in extended trading.

By Bloomberg · Published 30 October 2024, 07:58 SAST · Updated 30 October 2024, 07:58 SAST

## Key points
- Snap is riding a rollercoaster of revenue growth and user engagement, defying gravity with a 15% sales bump to $1.37 billion, while simultaneously warning investors that holiday cheer might be a little less jolly this year due to a sluggish ad market—because who doesn’t love a plot twist?
- Snap's Q3 sales surged 15% to $1.37 billion, slightly exceeding analyst expectations, driven by user growth and video content focus.
- The company has revamped its ad strategy towards performance-driven ads, though results have been inconsistent, missing revenue estimates in two of the last four quarters.
- Despite a 9% stock gain post-results, Snap's shares have plummeted 36% this year, with Q4 sales projections falling short of analyst predictions.
- Snap reported a reduced net loss of $153.2 million and announced a $500 million share buyback, reflecting ongoing efforts to stabilize its financial performance.

## Content

Sales increased 15% to $1.37-billion in the period ended 30 September, Snap said on Tuesday in a statement. Analysts, on average, estimated $1.36-billion, according to data compiled by Bloomberg. The social media company also eclipsed projections for user growth on the Snapchat app, bolstered by an increased focus on video content.

Snap has revamped [its advertising business](https://www.bloomberg.com/news/articles/2024-05-19/snap-ceo-evan-spiegel-focused-on-ai-machine-learning-push) over the last several years, focusing on direct response ads that prompt users to take a specific action, such as visiting a website or downloading an app. Historically, the company had targeted brand awareness ads, which are cheaper to build and operate but less lucrative.

That pivot has shown signs of promise for Snap’s business, but the results have been inconsistent. Snap has fallen short of Wall Street’s revenue estimates in two of the past four quarters.

The shares gained about 9%, reversing an initial drop of as much as 13% after the results were released. The stock closed at $10.89 in New York and has plunged 36% this year.

Snap projected holiday quarter sales will be $1.51-billion to $1.56-billion, compared with the average estimate of $1.56-billion. Snap cautioned that the pace of advertising from large clients wasn’t as brisk as typical for the period.

“Upper funnel advertising from large enterprise clients has historically been an important component of demand in Q4, and this portion of the business has been underperforming our overall ads business in recent quarters,” the Santa Monica, California-based company said in a letter to shareholders.

Snap said users spent 25% more time watching video content on its Snapchat app in the third quarter than the year prior, which in turn has lured advertisers to buy more ads on the site. The company reported Snapchat had 443 million daily active users in the third quarter, up 9% from one year ago and surpassing analysts’ expectations.

Snap recently redesigned its app to highlight more video content for users from people they might not be connected to, and improved its algorithm for ranking posts, which has helped boost engagement. The company’s subscription product, called Snapchat+, has also lured users to spend more time on the site. The service, which includes access to an AI-powered chatbot, now has 12 million subscribers — more than double from a year earlier — and generates nearly $123-million in revenue, the company said.

“Snap’s continued hard work to revamp its ad business to better serve performance-focused advertisers, particularly small and medium-sized businesses, and diversify its revenue streams through subscriptions is paying off,” said Jasmine Enberg, an analyst at EMarketer. “Investors should be pleased with Snap’s topline revenue and user growth figures, though the weaker guidance for Q4 suggests that brand advertising remains a significant headwind.”

The company based in Santa Monica, California, has been spending heavily on artificial intelligence and augmented reality technologies in order to better target ads, recommend video content, create digital image filters and build new products, including smart glasses. The company plans to spend nearly [$1.5-billion](https://www.bloomberg.com/news/articles/2024-05-19/snap-ceo-evan-spiegel-focused-on-ai-machine-learning-push) this year on infrastructure services related to those technologies, Bloomberg earlier estimated.

Snap reported a net loss of $153.2-million in the period ended 30 September, compared with a loss of $368.3-million a year earlier. Analysts, on average, projected a loss of $223.2-million. Snap also announced board approval for a $500-million share buyback programme, though that programme could be terminated at any time. The company’s previous buyback plan of as much as $500-million was authorised in October 2023.