Snap Inc. announced revenue and user-count growth in its third-quarter financial report at the end of October, showing signs of recovery from a rough patch for its finances and operations. The Santa Monica-based company also announced the retirement of its chief operating officer, Jerry Hunter, and a $500 million share repurchase program.
Hunter joined Snap in 2016, first serving as vice president of core engineering, and then as senior vice president of engineering for more than four years. He has been the company’s chief operating officer since September of last year. He is not being replaced.
The company reported $1.2 billion of revenue in the third quarter of this year, up 5% year over year and 11% quarter over quarter, which it attributes to improvements to its ad platform, ad products and go-to-market operations. It also experienced growth in Snapchat’s daily active user count, which increased to 406 million, up 12% from the third quarter of the previous year. Snapchat+, a paid addition to its signature app, has added more than 5 million subscribers since launching in June of last year.
Amid this rise in users, Snap laid off 170 employees in late September when it shuttered its augmented reality-licensing division. The company said that the investment in AR needed to sustain the division was too great and that the advent of generative artificial intelligence had made it hard for the company to differentiate its offerings. Jasmine Enberg, an analyst at Insider Intelligence Inc., wrote that the closure of Snap’s AR department was a “tough pill to swallow, but a necessary move” as more companies shift their focus to AI.
“It still needs to stabilize its core North American market, but Snap is in a better position to do so,” Enberg said. “If it can continue this momentum into the fourth quarter, Snap will end the year in a much better place.”
Snap’s board authorized a stock repurchase program of up to $500 million, after implementing a $500 million buyback program in the second quarter of last year and another in 2017 for an unspecified amount. The purpose of this is to protect stockholder value from the impact of dilution. Snap did not provide formal guidance for the fourth quarter but reported that its forecast is assuming a fourth-quarter revenue range of $1.32 billion to $1.38 billion.
