The Snap social network is once again growing in revenue after several quarters of decline. Investors have celebrated this and their shares have reacted upwards this Tuesday on the stock market outside of normal market hours, although they have then lost ground. The company has taken it upon itself to cool things down with the warning that there are advertising campaigns that are being paralyzed as a result of Israel’s war against Hamas in Gaza. The company, on the other hand, remains stuck in losses.
“We have seen pauses in spending on a large number of primarily brand-oriented advertising campaigns immediately following the start of the war in the Middle East, which has been a drag on revenue for the quarter to date,” Snap stated in its third quarter earnings release. “Although some of these campaigns have already resumed and the impact on our revenue has partially diminished, we continue to see new pauses and the risk remains that these pauses persist or increase in magnitude,” he added.
The social network company Snapchat achieved revenues of 1,188.5 million dollars (about 1,120 million euros at the current exchange rate) in the third quarter of the year, 5% more than in the same period of the previous year. However, given the negative evolution of the first half of the year, revenues still fall by 2% in the accumulated figures for the first nine months of the year.
Furthermore, the company cannot find the path to profitability. Its red numbers were 368 million dollars in the third quarter, 2% more than in the same period of 2022. In the first nine months as a whole, losses are reduced by 6%, but they are still 1,074 million Dollars. The operating results are also bad, with sharp drops in gross operating profit, of 45% in the quarter and 98% in the first nine months.
“Our revenue grew again in the third quarter, increasing 5% year-on-year and flowing towards a positive adjusted gross operating profit, as our new cost structure has demonstrated the leverage of our business model,” he noted. through a statement by its founder and CEO, Evan Spiegel. “We are focused on improving our advertising platform to drive greater return on investment for our advertising partners, and we have evolved our go-to-market efforts to better serve our partners and drive customer success,” he added.
Although the business is not going very far, the Santa Monica, California-based company still has a solid balance sheet, with a position of $3.6 billion in cash, equivalents and marketable securities. The company has announced a $500 million share buyback plan with which it aims to offset the dilution resulting from the issuance of new shares to compensate employees.
When it went public in 2017, Snap was a company with exponential growth. That growth was losing strength, but it still maintained a good pace at the beginning of 2022. Then it stopped suddenly and a decline began that suggested the exhaustion of the network itself. The company, however, ensures that its user activity continues to grow strongly and the improvement in revenue in the third quarter shows that it is capable of reversing the trend.
Snap did not want to formally give forecasts for the last quarter of the year, although it has shared its own internal forecasts with the market. “Due to the unpredictable nature of war, we believe it would be imprudent to provide formal guidance for the fourth quarter. Our internal forecast is based on a revenue range of between $1,320 million and $1,375 million, which implies year-over-year revenue growth of approximately 2% to 6%. “Within this revenue range, we estimate that adjusted EBITDA will be between $65 and $105 million,” has announced.
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