Snap eyes Q4 profit after shrinking losses
Snap said it expected to hit its target of turning a profit by the end of the year, posting a strong revenue beat and shrinking losses in the third quarter, in a turnround of fortunes after a painful 2018.
The parent company of the messaging app Snapchat said on Tuesday that it expected to break even or bring in as much as $20m in adjusted earnings before interest, taxes, depreciation and amortisation in the fourth quarter of the year, marking a much-anticipated milestone for investors.
Reporting its third-quarter results, the Los Angeles-based group said adjusted earnings in the three months to the end of September shrunk to $42m in the quarter from $138m the previous year.
Revenues rose 50 per cent year-on-year to $446m, beating consensus analyst estimates of $436m as compiled by S&P Capital IQ.
The positive quarter comes after Snap was dogged last year by an exodus of top executives, product mishaps and fears it would lose users to Facebook-owned rival Instagram.
However, in 2019, the company doubled down its investment in the creation of new advertising formats, popular augmented reality photo filters, and building up a catalogue of premium content.
This quarter, the company added 7m users to reach 210m, compared with 203m in the previous quarter and 186m in the same quarter of 2018.
"We delivered strong results this quarter, and we are pleased that the investments we have made are continuing to drive the growth of our community and our business," said chief executive Evan Spiegel.
"We are a high growth business, with strong operating leverage, a clear path to profitability, a distinct vision for the future, and the ability to invest over the long term," he added.
Net losses shrunk to $227m, from $325m in the same quarter last year, beating analysts' expectations of $265m.
Shares in Snap were flat in after-hours trading.
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