Snap disappoints with fourth-quarter revenue guidance, sending shares down

By Sheila Dang and Akanksha Rana (Reuters) - Snap Inc on Tuesday forecast fourth-quarter revenue largely below Wall Street estimates, sending its shares down 5% in after-market trading.

Reuters October 23, 2019 05:06:18 IST
Snap disappoints with fourth-quarter revenue guidance, sending shares down

Snap disappoints with fourthquarter revenue guidance sending shares down

By Sheila Dang and Akanksha Rana

(Reuters) - Snap Inc on Tuesday forecast fourth-quarter revenue largely below Wall Street estimates, sending its shares down 5% in after-market trading.

The parent company of photo messaging app Snapchat estimated fourth-quarter revenue of $540 million (£418.99 million) to $560 million, the midpoint of which was below analysts' estimate of $555.4 million, according to IBES data from Refinitiv.

The outlook overshadowed Snap's third-quarter results released on Tuesday, which showed larger-than-expected growth in daily active users. Wall Street also glossed over Snap's estimate it would reach profitability in the fourth quarter, as measured by earnings before interest, tax, depreciation and amortization (EBITDA).

On a conference call with analysts, Snap Chief Financial Officer Derek Andersen said the company's peak advertising demand period, which runs between the Black Friday and December holidays, had one fewer week this year, and was reflected as a "headwind" in the guidance.

Snapchat, popularized by its photo visual effects which allow users to change gender in photos or add a dog filter over their face, had 210 million daily active users in the third quarter ended Sept. 30, up from 203 million in the prior quarter.

It had 186 million users in the year-ago quarter.

The number, a widely watched metric by investors and advertisers, was above analysts' average estimate of 206.6 million, according to IBES data from Refinitiv.

Snapchat faces competition from several other apps for the coveted younger demographic, including Facebook Inc's Instagram and newer apps like TikTok, used to create and share short lip-sync, comedy and talent videos.

Investors are still cautious about Snap, given the company's tumultuous past and "irregular user-engagement record," said Haris Anwar, an analyst at financial markets platform Investing.com.

"A slight miss on expectations would be enough to hurt the stock and revive the old memories," he said.

Revenue, which the company largely makes by selling advertising on the app, jumped about 50% to $446.2 million in the third quarter and beat an average analyst estimate of $435.05 million.

Average revenue per user jumped 33% to $2.12 during the quarter from a year earlier.

In remarks released before the conference call with analysts, Snap Chief Executive Evan Spiegel said this year's growth has put the company "on a clear path to Q4 adjusted EBITDA profitability."

The company's net loss narrowed to $227.4 million, or 16 cents per share, from $325.1 million, or 25 cents per share, a year earlier.

Excluding items, Snap posted a loss of 4 cents per share in the quarter. Analysts had expected a loss of 5 cents per share.

(Reporting by Akanksha Rana in Bengaluru and Sheila Dang in New York; Editing by Shailesh Kuber, Richard Chang and Chris Reese)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.