Snap Shares Surge Over 20% on Strong Q3 Earnings and $500 Million Buyback
Snap Inc. shares soared more than 20% on Wednesday after the company reported third-quarter earnings that exceeded Wall Street expectations and announced a $500 million stock repurchase program.
**Earnings Highlights:**
– **Earnings per share:** Loss of $0.06 (figure not directly comparable to analyst estimates)
– **Revenue:** $1.51 billion vs. $1.49 billion expected (LSEG)
– **Global daily active users:** 477 million vs. 476 million expected (StreetAccount)
– **Global average revenue per user (ARPU):** $3.16 vs. $3.13 expected (StreetAccount)
Looking ahead, Snap anticipates fourth-quarter sales of between $1.68 billion and $1.71 billion. The midpoint of this range ($1.695 billion) slightly surpasses Wall Street’s expectation of $1.69 billion.
**Financial Performance and Outlook**
For the third quarter, Snap’s revenue grew 10% year-over-year while the company reported a net loss of $104 million—an improvement from the $153 million net loss recorded in the same quarter last year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $182 million, significantly above the $125 million projected by StreetAccount.
For Q4, Snap expects adjusted EBITDA in the range of $280 million to $310 million, well above the $255.4 million estimated by analysts.
**Regulatory Challenges Ahead**
In its letter to investors, Snap warned that new government regulations may negatively affect user engagement metrics. Specifically, Australia’s social media minimum age bill—which passed in November 2024 and will take effect next month—will require platforms like Meta (Facebook and Instagram), TikTok, and Snap to prevent children under 16 from owning accounts or face penalties.
“As these internal and external factors take effect, we expect overall DAU may decline in Q4, with particularly negative impacts in certain jurisdictions,” the company stated.
Additionally, Snap highlighted potential impacts from upcoming platform-level age verification initiatives launched by Apple and, soon, Google. These measures, alongside child safety regulations in Utah and California, could further affect daily active user counts as companies tighten age restrictions. Utah’s law is slated for full implementation in May 2026.
“We are also preparing for the upcoming rollout of platform-level age verification, which will use new signals provided by Apple and soon Google to help us better determine the age of our users and remove those we learn are under 13,” Snap said.
**Monetization and New Partnerships**
Snap also acknowledged that some efforts to improve monetization, such as scaling its Snapchat+ subscription service, may have an “adverse impact on engagement metrics” globally as new experiences roll out.
In a bid to diversify revenue, Snap announced a partnership with startup Perplexity AI. The collaboration will see conversational search integrated directly into Snapchat, beginning in early 2026. According to Snap, Perplexity will pay $400 million over one year, combining cash and equity, as the service is rolled out globally. Revenue from this deal is expected to begin contributing in 2026.
**Social Media Industry Snapshot**
Elsewhere in the industry, Pinterest shares fell sharply after reporting third-quarter results that missed earnings-per-share expectations and provided weaker-than-expected guidance. Finance chief Julia Donnelly cited market uncertainty and the introduction of a new tariff impacting the home furnishing category in Q4.
Meanwhile, big tech peers continue to show strength in digital ads:
– **Meta (Facebook-parent):** Q3 sales jumped 26% to $51.24 billion
– **Amazon:** Online ad revenue climbed 24% to $17.7 billion
– **Alphabet:** Total Q3 ad revenue rose 13% to $74.18 billion; YouTube ad sales increased by 15% to $10.26 billion
– **Reddit:** Q3 sales surged 68% to $585 million, with global daily active uniques up 19% year-over-year to 116 million, topping expectations
**Conclusion**
Snap’s positive results and outlook signal steady growth and resilience amid mounting regulatory challenges, while its diversification efforts and strategic partnerships aim to fortify the company’s future revenue streams. As the social media landscape contends with tighter legislation and shifting consumer habits, tech giants continue to adapt in pursuit of user growth and monetization.
https://www.cnbc.com/2025/11/05/snap-q3-earnings-report-2025.html