Snap Inc. (SNAP) stock fell 11.46% after hours on Wednesday, dropping to $5.24 from its $5.92 close. The Snapchat parent's stock erased a 5.81% gain from the regular session, when shares rose from a $5.60 previous close. According to reports from CNBC, the after-hours slide came despite the company posting a profit and guiding above estimates, but missing on revenue and daily users. The stock decline reflects investor disappointment over the company's inability to meet user growth expectations despite strong financial performance, with the mixed results creating a tug of war between margin-focused and growth-focused investors.
Snap reported third-quarter revenue of $1.72 billion, up 14% from $1.51 billion a year earlier, which landed just below the $1.73 billion analysts expected. As reported by LSEG, net income reached $56 million, compared with a $104 million loss in the same quarter of 2025. Adjusted earnings per share hit $0.19, ahead of the $0.16 forecast, while adjusted EBITDA more than doubled to $383 million from $182 million, surpassing StreetAccount's projection of $337 million by approximately 13%. Operating cash flow rose 44% to $210 million and free cash flow increased 76% to $164 million, demonstrating strong cash generation capabilities. The profit beat of around 13% on revenue marginally below expectations indicates the improvement came from the cost side rather than stronger sales.
Snapchat daily active users reached about 495 million, falling short of the 499 million StreetAccount had projected by approximately 4 million users. Monthly active users reached 977 million. As reported by CNBC, Snap plans to replace global daily users with monthly active users from its Q1 2027 report, with monthly users becoming its primary audience metric. The company will also stop reporting regional daily users and regional average revenue per user (ARPU), though ARPU itself will continue, recalculated on monthly users. CEO Evan Spiegel noted that daily activity still matters but no longer works as the main gauge of long-term value.
According to CNBC reports, Snap's two main revenue streams grew at very different rates in Q3. Advertising revenue rose 4%, while other revenue, led by subscriptions, jumped 84%. Paid subscribers across Snapchat+, Memories Storage and Lens+ passed 30 million. Chief commercial officer Ronan Harris attributed the advertising revenue slowdown to lower spending by consumer packaged goods companies, citing macro pressures in the US and Middle East, though he pointed to positive signs from diversified verticals like financial services in the US.
For the fourth quarter, Snap guided revenue of $1.95 billion to $1.99 billion, with the midpoint of $1.97 billion sitting just above the $1.96 billion Wall Street estimate and implying sequential growth of roughly 13% to 16% from the third quarter. According to CNBC, Snap expects adjusted EBITDA of $490 million to $525 million, against a $498 million forecast. The company continues investing in augmented reality with the SPECS launch, as noted by CEO Evan Spiegel. Chief Financial Officer Doug Hott noted that the total cost structure grew by just 1% over the same period, highlighting the company's improved operational efficiency and better-than-expected Q4 outlook. Co-Founder and CEO Evan Spiegel emphasized AI's growing importance, stating that "AI is becoming a meaningful advantage for Snap, helping us improve our products faster, serve our community more effectively, and work more efficiently."
