Snap, the parent company of messaging app Snapchat, is bracing for the fallout from war in the Middle East. The technology company reported third-quarter earnings Tuesday afternoon but did not provide guidance for the coming quarter. explain“Due to the unpredictability of war, we do not believe it would be prudent to provide formal guidance for the fourth quarter.”
Immediately after the earnings release, Snap stock briefly rose from $9.70 per share to a high of nearly $10.91 before falling to a low of $9.30 in after-hours trading. Snap shares essentially climbed back to $9.65 as the market digested the company’s earnings and (lack of) guidance.
Snap said spending on a “substantial” amount of ad campaigns was paused after the war in the Middle East, which began after the Islamic militant group Hamas launched an unprecedented attack on Israel on October 7, posing a “headwind” to its revenue this fourth quarter. .
Snap’s “internal forecast” for the fourth quarter assumes a revenue range of $1.32 billion to $1.375 billion, and estimates adjusted EBITDA will be between $65 million and $105 million.
“While some of these activities have now resumed and the impact on our revenue has partially subsided, we continue to observe new pauses and the risk that these pauses may persist or become larger remains,” the company said in a statement. Press release.
Google parent Alphabet, which also reported third-quarter financial results on Tuesday, was asked whether the war had had an impact on its advertising business. Alphabet executive Ruth Porat sidestepped the question, noting that the company’s primary focus is helping employees in the region and how Alphabet’s “products can help as much as possible during this very painful time,” she concluded She said she had “nothing to add.”
For the quarter, Snap’s adjusted earnings per share were 2 cents, beating expectations for a 2-cent loss, while revenue also beat expectations, coming in at $1.19 billion versus expectations of $1.11 billion. However, on a GAAP basis, the company’s net loss widened to $368 million, or 23 cents per share.
Snap Chief Executive Evan Spiegel said the company achieved “positive growth” in the third quarter, citing cost-cutting efforts. The company said over the summer it would lay off 20% of its workforce, or about 1,200 employees. In September, Snap revealed that the company had shut down its augmented reality enterprise business and that 170 employees had left.
Snap also said Chief Operating Officer Jerry Hunter is retiring after seven years at the company and has authorized a stock buyback program of up to $500 million.
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