Snap warns Hamas-Israel war could impact ad biz
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Shares in Snap Inc. soared briefly Tuesday after the tech giant said it not only beat Wall Street estimates on its top and bottom lines, but it expects continued momentum in the fourth quarter.
Why it matters: It’s a much-needed win for Snap, which has struggled to regain its momentum following an industry-wide advertising slowdown in 2022.
Yes, but: Initial optimism faded after the tech giant warned investors that despite positive projections for the fourth quarter, the Hamas-Israel war could cause a disruption to advertising.
- "We observed pauses in spending from a large number of primarily brand-oriented advertising campaigns immediately following the onset of the war in the Middle East, and this has been a headwind to revenue quarter-to-date," the company said.
- "While some of these campaigns have now resumed, and the impact on our revenue has partially diminished, we continue to observe new pauses and the risk that these pauses could persist or increase in magnitude remains."
By the numbers: Snap added 9 million daily active users last quarter, ahead of Wall Street estimates, and bringing its total daily active user base to 406 million globally.
- It posted revenues of $1.18 billion, a 5% year-over-year increase.
- That revenue increase is notable, considering the firm‘s quarterly revenue declined year-over-year for the previous two quarters in 2023.
Between the lines: In an investor letter, the company touted the success of some of its new product investments in artificial intelligence and subscriptions.
- More than 200 million people have used Snap’s personalized AI chatbot to collectively send more than 20 billion messages since Snap debuted the took in April.
- More than 5 million people for its premium subscription Snapchat+, which costs $3.99 monthly.
The big picture: Snap, like most tech firms, has prioritized revenue growth and efficiency this year.
- The company laid off 20% of its staff last year, and shuttered its enterprise augmented reality business.
- In a statement, CEO Evan Spiegel said the firm is "focused on improving our advertising platform to drive higher 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."
Go deeper: Snap promotes Patrick Harris to president of Americas role as Rob Wilk exits
