Snap Inc. hasn’t seen the same sort of recovery that its larger social-media peers have, and investors are about to see if conditions improved in the third quarter.
The Snapchat parent company is due to report quarterly results after the close of trading Tuesday, and Wall Street will be watching for whether Snap
SNAP,
can log revenue that’s flat or up on a year-over-year basis, after two quarters in a row of declines. Consensus expectations call for revenue to decline slightly to $1.11 billion from $1.13 billion, but perhaps Snap can deliver upside.
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Here’s what to look out for in the upcoming report.
What to expect
Earnings: The FactSet consensus calls for a 24-cent loss per share on a GAAP basis, compared with a 22-cent loss per share in the year-earlier period.
Revenue: Analysts are looking for $1.11 billion on the top line, down from $1.13 billion in the year-earlier period. The company’s outlook called for $1.07 billion to $1.13 billion in revenue.
Daily active users: Analysts tracked by FactSet project that Snap had 406 million daily active users in the third quarter. The company previously said that its financial guidance for the period assumed 405 million to 406 million daily active users.
Stock movement: Snap shares have logged double-digit declines on a percentage basis following each of the company’s last five earnings reports. Still, the stock is up 6% so far this year.
What analysts are saying
- “Domestic downloads continue to decline for Snap (-9% Y/Y). While international adoption also appeared challenged as downloads declined by -2% Y/Y, led by India. Time spent also appears to be challenged domestically, though the influx of creators posting on Snapchat should help solve the engagement questions.” — Bernstein analyst Mark Shmulik
- “With our time-spent tracker … suggesting continued soft user engagement at Snap, a fundamental inflection at the company increasingly hinges on a material inflection in ad spend. So far, our ad channel checks suggest modestly improving spending environment for Social in Q3 and Q4, though not yet a checkmark recovery. And advertiser sentiment towards Snap in particular remains muted, leading us to put a Tactical Underperform on the stock into the print.” — Evercore ISI analyst Mark Mahaney
- “Given management has said the level of infrastructure spend will depend on revenue growth, it’s uncertain where margins will end up. Based on the 3Q guide and management commentary on opex, a 50% gross margin or lower is likely being contemplated by investors while there’s likely less buy-side consensus on what 2024 gross margins, and hence [earnings before interest, taxes, depreciation and amortization], look like.” — RBC Capital Markets analyst Brad Erickson
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