Snap, Inc. (NYSE: SNAP), the parent of photo-sharing platform Snapchat, reported a narrower net loss for the third quarter, which also beat the estimates. The positive bottom-line performance reflects hectic subscriber additions and revenue growth. The company’s stock dropped Tuesday evening, soon after the announcement, as its fourth-quarter guidance fell short of expectations.
At the end of the third quarter, the company had 210 million daily active users, up 13% from the year-ago period. The user base expanded in all key markets including North America, Europe and Rest of World. Revenues climbed 50% annually to $446 million and exceeded the estimates.
Loss Narrows
Adjusted loss narrowed to $0.04 per share in the third quarter from $0.12 per share last year. Unadjusted net loss was $227.4 million or $0.16 per share, compared to a loss of $325.1 million or $0.25 per share in the third quarter of 2018. Analysts were looking for a slightly wider loss.
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“We delivered strong results this quarter, and we are pleased that the investments we have made are continuing to drive the growth of our community and our business. We are a high growth business, with strong operating leverage, a clear path to profitability, a distinct vision for the future, and the ability to invest over the long term. We are excited about executing on the many opportunities in front of us,” said CEO Evan Spiegel.
Outlook
Looking ahead, the management expects fourth-quarter revenues to be in the range of $540 million to $560 million, compared to $390 million last year. Adjusted EBITDA is expected to be between breakeven and $20 million. Analysts are looking for a higher top-line number for the December-quarter.
Gaming Deal
During the quarter, the company partnered with SYBO Games and launched a new multiplayer game titled Subway Surfers Airtime – an expansion of the hit franchise with the same name.
Snap shares had a positive start to 2019 and their value more than doubled since the beginning of the year. The stock closed Tuesday’s regular trading session sharply lower.
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