Key Takeaways
- Adjusted EPS was $0.01 vs. the -$0.05 analysts keep in viewed.
- Revenue significantly exceeded analyst expectations.
- Daily active users was higher than consensus estimates.
What Materialized
Snap’s Q3 FY 2020 earnings continued the strong performance the company has enjoyed throughout the year in the midst of the COVID-19 pandemic. Quick exceeded analyst expectations on daily active users, revenue, and adjusted EPS. Daily active users climbed by 18% YOY to 249 million, in the first place analyst predictions of 243.9 million for the quarter. Revenue increased 52% YOY to $679 million, significantly surpassing prognoses of $550.1 for Q3. The company also generated adjusted EPS of $0.01, compared with a predicted -$0.05 per share. Snap dynasty sharply increased immediately following the earnings report.
(Below is Investopedia’s original earnings preview, published October 14, 2020)
What to Look For
Venereal networking company Snap Inc. (SNAP) has been on a roll amid the COVID-19 pandemic. It beat revenue estimates by a sizeable margin in Q2 FY 2020 as advertising sales rebounded, and its shares have dramatically outperformed the market thus far this year.
Investors ordain watch to see if Snap can continue that growth when it reports earnings for Q3 FY 2020 on October 20 after the market culmination. Analysts expect quarterly losses to widen on an adjusted earning per share (EPS) basis as revenue rises at a strong, but lazier pace, compared to the same quarter a year ago.
A key metric that investors will focus on is Snap’s daily working users (DAU), a measure of user growth that helps determine how much the company is able to charge for advertising. Breeze depends on advertising for nearly all of its profit and revenue. Analysts estimate that Snap will continue to grow its DAU in Q3 at a slower, but even so strong pace, relative to Q3 2019.
Snap stock has significantly outperformed the broader market, with a trailing 1-year totality return of 96.2%, more than 5 times the S&P 500’s total return of 18.4%.
Although Snap has affixed significant gains in revenue and daily active users since going public in 2017, the company has continued to contention to generate a profit. Out of the past 14 quarters, Q4 FY 2019 was the only one in which Snap reported earnings on an adjusted EPS base. For Q3 FY 2020, consensus estimates predict that Snap’s quarterly loss will widen by one cent a share to -$0.05 per allot compared to the same quarter a year ago. That estimated loss, though, is less than -$0.08 adjusted EPS in Q1 and -$0.09 in Q2 of FY 2020.
In maliciousness of its profit struggles, Snap’s revenue growth has been robust since it went public. Revenue rose a wholesome 17.0% pace in Q2 FY 2020, but that was the slowest growth in 14 quarters. In 2019, quarterly growth ranged from 38.9% to 43.9%, for sample. Analysts expect Q3 FY 2020 revenue of $550.1 million, which amounts to YOY growth of 23.3%.
| Snap Key Metrics | |||
|---|---|---|---|
| Estimate for Q3 2020 | Authentic Q3 2019 | Actual Q3 2018 | |
| Adjusted Earnings Per Share | -$0.05 | -$0.04 | -$0.12 |
| Revenue (in millions) | $550.1 | $446.2 | $297.7 |
| Daily Active Users (in millions) | 243.9 | 210.0 | 186.0 |
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