Snap (SNAP) Down 3.1% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Snap (SNAP). Shares have lost about 3.1% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Snap due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.SNAP Earnings Meet Estimates in Q3, Revenues Increase Y/YSnap reported a third-quarter 2025 loss of 6 cents per share, meeting the Zacks Consensus Estimate. The company had registered a loss of 9 cents per share in the year-ago period.Revenues rose 10% year over year to $1.51 billion and beat the Zacks Consensus Estimate by 1%.Top-line Details of SNAPRevenues from North America (60% of total revenues) rose 5% year-over-year to $898 million. Revenues from Europe (20% of revenues) jumped 20% to $298 million. Revenues from Rest of World (ROW) (21% of revenues) were $311 million, up 17% year-over-year.The average revenue per user (ARPU) increased 2% year over year to $3.16. The ARPU of North America and Europe climbed 8% and 19% on a year-over-year basis, respectively, while ARPU for ROW increased 2%.Other revenues, the majority of which consists of Snapchat+ subscription revenues, increased 54% year over year to $190 million in the third quarter, reaching an annualised run rate of more than $750 million. Snap approached 17 million Snapchat+ subscribers in the quarter, representing 35% year-over-year growth.User Engagement Growth for Snap Aids Q3 SalesSNAP's global community reached 477 million daily active users (DAU) in the third quarter, up 8% year over year. Snap added 8 million DAU on a quarter-over-quarter basis.North America's DAU was 98 million, which decreased 3% year over year. Europe's DAU was 100 million, up 1% year over year. The ROW's DAU was 280 million at the end of the reported quarter, which increased 15% year over year. Snap reached 943 million monthly active users in the third quarter, representing 7% year-over-year growth.Snapchat+ approached 17 million subscribers in the third quarter, growing 35% year over year, and was the primary driver of the 54% year-over-year surge in other revenues. To build on this momentum, the company expanded its premium offerings by introducing Lens+, a new subscription tier that offers access to exclusive AI-powered augmented reality Lenses and early access to new features.Global time spent watching content and the number of content viewers increased year-over-year in the third quarter, reflecting multiyear investment in machine learning infrastructure and continued growth in Spotlight. The share of total Spotlight views from content posted in the last 24 hours increased more than 300% year over year in the United States as models better surface topical and trending content.Snap’s Advertising Details in Q3In the third quarter, direct response advertising revenue increased 8% year over year, driven by strong demand for pixel purchase and app purchase optimisations, along with continued momentum from small and medium-sized business advertisers. Purchase-related ad revenue grew more than 30% year over year, reflecting higher attribution accuracy and improved campaign performance enabled by enhanced Dynamic Product Ads using large language models.The Sponsored Snaps platform continued to gain momentum as one of Snap’s most effective ad formats, driving up to 22% higher conversions and 19% lower cost per action when integrated into campaigns.Global impression volume rose 22% year over year, supported by expanded ad delivery in Sponsored Snaps and Spotlight, while total effective CPMs declined 13% due to higher impression supply. Sponsored Snaps delivered up to 22% higher conversions and 19% lower cost per action, while Promoted Places campaigns produced double-digit visitation lifts, including a 15% incremental lift for Panda Express. The App Power Pack generated over 25% lift in iOS app installs, underscoring Snap’s growing appeal for app-based advertisers. Small and medium-sized businesses remained the largest contributors to ad revenue growth, aided by improved onboarding tools and partnerships with commerce platforms such as WooCommerce.Snap’s Operating DetailsAdjusted cost of revenues increased 5% year-over-year to $671 million.In the third quarter, adjusted operating expenses were $654 million, up 8% year-over-year. Research and development expenses rose to $250 million, sales and marketing expenses decreased to $198 million, and general and administrative expenses increased to $206 million.Adjusted EBITDA was $182 million, up 38% from the year-ago quarter. Adjusted EBITDA margin expanded 2 percentage points to 12%. Adjusted EBITDA flow-through was 37% in the quarter.Infrastructure costs increased 8% year over year, driven by investments in machine learning and AI compute, as well as the 8% year-over-year increase in global DAUs. Infrastructure cost per DAU was 85 cents in the third quarter.Balance Sheet and Cash FlowAs of Sept. 30, 2025, cash, cash equivalents and marketable securities were $3 billion compared with $2.9 billion as of June 30, 2025.The operating cash flow was $146.49 million compared to $115.87 million in the prior year.The free cash flow was $93 million compared to $72 million reported in the year-ago quarter.GuidanceSnap expects daily active users to decline in the fourth quarter, with revenues in the range of $1.68-$1.71 billion, indicating 8-10% year-over-year growth. The company projects adjusted EBITDA between $280 million and $310 million, reflecting improved cost discipline and operating leverage.Infrastructure costs are expected to rise modestly to $420-$435 million, with full-year per-user costs maintained at 82-87 cents per DAU. All other cost of revenue is projected at 18-19% of total revenue, below the full-year range of 19-21%. Adjusted operating expenses are estimated near the low end of $2.65-$2.7 billion, while stock-based compensation is expected between $1.08 billion and $1.10 billion for the full year.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates revision.The consensus estimate has shifted 46.67% due to these changes.VGM ScoresCurrently, Snap has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors.Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Snap has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.Performance of an Industry PlayerSnap belongs to the Zacks Internet - Software industry. Another stock from the same industry, Atlassian (TEAM), has gained 0.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2025.Atlassian reported revenues of $1.43 billion in the last reported quarter, representing a year-over-year change of +20.6%. EPS of $1.04 for the same period compares with $0.77 a year ago.For the current quarter, Atlassian is expected to post earnings of $1.11 per share, indicating a change of +15.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +3.5% over the last 30 days.The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Atlassian. Also, the stock has a VGM Score of B.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Snap Inc. (SNAP): Free Stock Analysis Report Atlassian Corporation PLC (TEAM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks