Dive Brief

• Snap’s revenue rose 15% 12 months over 12 months within the third quarter to $1.37 billion, beating Wall Street estimates.
• The company’s total variety of energetic advertisers greater than doubled 12 months over 12 months in Q3, with every day energetic users (DAUs) reaching 443 million globally, a 37 million increase 12 months over 12 months.
• Snap CEO Evan Spiegel emphasized the corporate’s investments in augmented reality (AR) and artificial intelligence (AI) as a method for long-term growth, forecasting revenue within the fourth quarter to grow 11% to fifteen%.

Dive Insight

Snap’s strong Q3 results proceed the corporate’s hot streak this 12 months, with revenue growing 15% 12 months over 12 months. However, the platform faced weaker demand from consumer discretionary verticals, including technology, entertainment, and retail.

Advertising Revenue

Advertising revenue grew 10% 12 months over 12 months to $1.25 billion, driven primarily by direct-response promoting revenue, which grew 16%. This growth helped double the corporate’s total energetic advertisers 12 months over 12 months, with increased investments from small- and medium-sized businesses.

Snapchat+ Subscription Service

The success of the Snapchat+ subscription service, with total subscribers greater than doubling 12 months over 12 months to 12 million, also contributed to revenue growth. Daily energetic users (DAUs) grew 9% 12 months over 12 months to 443 million, with over one billion Snaps shared publicly on the platform every month, a 21% increase from the previous 12 months.

Long-term Growth

CEO Spiegel emphasized the corporate’s investments in AI and AR as a method for long-term growth, citing the potential for brand new consumer experiences and innovation across its ads business. The company has been expanding its AI capabilities, including a recent partnership with Google Cloud for extra generative AI experiences inside its AI chatbot, My AI. The variety of Snaps sent to My AI within the U.S. greater than tripled quarter over quarter in Q3.

Augmented Reality (AR) and Artificial Intelligence (AI)

Snap’s AR efforts, including the launch of Easy Lens, a tool for constructing Snapchat Lenses inside minutes via text prompt, are also driving growth. The company reported that over 225 million users engaged with over 25 custom Olympic-related AR experiences globally through the Paris Olympics, a result that might drive advertiser spend to the platform for other tentpole sporting events.

Other Initiatives

The company has also introduced recent ad solutions, including Sponsored Snaps, which enables advertisers to send full-screen vertical videos on to Snapchat users, and Promoted Places, which allows brands to spotlight locations on the platform’s Snap Map. Additionally, the corporate brought back its Phantom House content series in October, alongside advertisers including Hulu, State Farm, and Maybelline New York.

Conclusion

Snap’s strong Q3 results reveal the corporate’s continued growth and momentum, driven by its direct-response ads business and Snapchat+ subscription service. The company’s investments in AI and AR hold promise for long-term growth, with the potential to drive recent consumer experiences and innovation across its ads business.