The Snap-back continues. Snapchat blew past earnings expectations for a big profit in the third quarter as it added 7 million active users daily in the quarter to hit 210 million, up 13% on the previous year. Snap also hit sales and cut $ 446 million, up 50% from the previous year, with a loss of $ 0.04 EPS. It flew past Bloomberg's agreement on Wall Street estimates that projected $ 437.9 million in revenue and a loss of 0.05 EPS.
Snap has managed to continue to cut losses when it comes to profitability. Net losses improved to $ 227 million from $ 255 million last quarter, with losses down $ 98 million against Q3 2018.
CEO Evan Spiegel put the case in his prepared remarks as to why Snapchat's stock price should be higher: "We are a high-growth business, with strong operating power, a clear path to profitability, a clear vision for the future and the opportunity to invest in the long term." Snapchat's share price had dropped 4% to $ 1
This is partly due to the high cost of Snapchat's growth relative to average revenue per user. It notes that it saw the growth of users in all regions, 5 million of the 7 million new users came from the rest of the world, with only 1 million coming from North America and the European regions. your growth and retention than expected on the newly developed Android app that has been a hit in India. However, since Snapchat serves so much HD video content, but earns only $ 1.01 average revenue in the rest of the world, one must hope that it can continue to grow ARPU to make it profitable globally.
Some other top line statistics from Snapchat's revenue:
- Cash flow from operations improved by $ 56 million to a loss of $ 76 million in Q3 2019, compared to the previous year.
- Free cash flow improved by $ 75 million to (84) million in Q3 2019, compared with the previous year.
Interestingly, Spiegel noted that "We benefited from year-round growth in user activity in Q3, including growth in Snapchatter's posts and viewing of stories." Snapchat hadn & # 39; t suggested that the stories grew in the last two years, as it was attacked by clones including Instagram stories that led Snapchat to shrink in users a year ago, before it recovered.
Since Stories viewership is critical to total ad serving on Snapchat, we can see analysts who insist on hearing more about this metric in the future.
The other important part of Snapchat's advertising properties is Discover where the total time you watch grew 40% over the year. And instead of running with just a few hits, over 100 Discover channels saw over 3 million viewers per month in Q3. With Instagram's IGTV as a flop, Discover is still Snapchat's best differentiated revenue driver and one it needs to continue to invest in and market. With Instagram trying to compete more vigorously on chat with the new, just friends, only Threads app, Snapchat can't rely on fleeting messages to keep it special.
Looking forward to Q4, Snap estimates 214 to 215 million active users daily and $ 540 million to $ 560 million in revenue
214 to 215 million in Q4, which means a sequential increase in DAU of 4 to 5 million. When it comes to our financial guidance, we are guiding an area between $ 540 million and $ 560 million for sales in the fourth quarter. For Adjusted EBITDA in the fourth quarter, we are leading to a series of breaks and a positive $ 20 million, which will mark our seventh consecutive quarter compared to the year over improvement in Adjusted EBITDA.