Snap shares tumble 10% as Q3 revenue and user counts fall short

Snap shares fell more than 10% on Wednesday after the social media firm disclosed third-quarter results that trailed analyst expectations. The market reaction followed a report showing revenue of $1.72 billion, a figure slightly below the $1.73 billion projected by LSEG. Global daily active users stood at 495 million, missing the 499 million target set by StreetAccount.

Despite the top-line miss, the company improved its bottom line. Snap recorded a net income of $56 million for the quarter, reversing a net loss of $104 million in the same period last year. Adjusted earnings reached $383 million, exceeding the $337 million analysts had forecast. Global average revenue per user remained steady at $3.48, in line with projections.

Sales increased 14% from the previous year. However, Chief Commercial Officer Ronan Harris noted that lower spending by consumer packaged goods companies weighed on performance. Harris attributed this pullback to macro pressures in the United States and the Middle East, though he did not name specific advertisers.

In an investor letter, Snap executives announced a shift in how they measure audience success. Starting in the first quarter of 2027, global monthly active users will replace daily engagement as the primary audience metric. The company reported 977 million monthly active users for the current quarter. The letter stated that optimizing for daily use at the expense of long-term value is no longer the goal.

Executives argued that a longer-term horizon better aligns reported metrics with product and safety decisions. They emphasized that this approach strengthens relationships and supports durable audience growth. The shift signals a move away from chasing daily frequency in favor of lasting utility for the community.

Looking ahead, Snap guided fourth-quarter revenue to land between $1.95 billion and $1.99 billion. The midpoint of this range exceeds Wall Street's estimate of $1.95 billion. The company expects adjusted earnings for the period to fall between $490 million and $525 million, while analysts had been forecasting $498 million.

Harris said the company is seeing positive growth signs in diversified verticals such as financial services in the U.S. He explained that part of the strategy involves looking outside of pressures in consumer packaged goods to find traction in these other sectors.