stockrowLatest quarter
Snap reported Q3 revenue of $1.72 billion, below the $1.73 billion consensus. Adjusted earnings per share were $0.19, above the $0.16 consensus. Snap’s diluted earnings per share were $0.03, compared with −$0.06 a year earlier.
The company’s filing attributed the revenue increase to higher advertising spending, including on Sponsored Snaps and Promoted Places, and to subscription growth and new subscription products. CFO Doug Hott said advertising revenue grew 4% year over year, while other revenue grew 84%, led by Snapchat+, Memories Storage and Lens+.
Snap’s gross margin rose to 62.3% from 55.3% a year earlier. Its filing said content and developer partner costs fell as advertising shifted toward higher-margin products, partly offset by higher transaction processing and infrastructure costs. Free cash flow increased to $164.5 million from $93.4 million.
Hott said Q3 revenue was within Snap’s prior guidance range of $1.70 billion to $1.74 billion.
| Q3 FY2026 | Q3 FY2025 | Change | |
|---|---|---|---|
| Revenue | $1.7 billion | $1.5 billion | 14.3% |
| Diluted EPS | $0.03 | −$0.06 | — |
| Gross margin | 62.3% | 55.3% | 7.0 percentage points |
| Operating margin | 4.45% | −8.52% | 13.0 percentage points |
| Free cash flow | $164.5 million | $93.4 million | 76.0% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $0.06 | $0.07 | Missed by 14.3% |
| Revenue | $1.6 billion | $1.5 billion | Beat by 4.31% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
| Against its own guidance | For | Guided | Reported | Result |
|---|---|---|---|---|
| Revenue | Q3 FY2026 | $1.7 billion–$1.7 billion | $1.7 billion | Within the guide |
What management said on the call
CEO Evan Spiegel said Snap’s advertising revenue growth remained below its ambitions, and the company’s focus was on converting performance improvements into broader adoption and a larger share of advertiser budgets. Chief Commercial Officer Ronan Harris attributed a decline in brand advertising mainly to reduced spending by consumer packaged goods companies amid macroeconomic pressures in the United States and Middle East.
Asked about the distinction between large and small advertisers, Harris said smaller businesses need an easy way to start campaigns, obtain a first conversion and measure results. Larger advertisers, he said, need consistent performance and reliable third-party measurement. Harris said Snap was integrating with buying platforms and using AI technologies to match products with users’ interests. He described his focus as making performance easier for advertisers “to both see and measure to be able to buy it.”
For web purchase campaigns in Q3, Harris said purchases increased over 31% year over year, average cost per purchase declined 15% and revenue grew 11%. He said revenue from campaigns optimized for app purchases grew over 54% year over year, while their average cost per purchase declined approximately 24%.
Hott said Q3 margin expansion reflected revenue growth, a greater contribution from direct revenue and cost efficiencies. Spiegel said Snap continued to invest in creators and AI-powered recommendations; he also reported that Spotlight posters grew 130% year over year and daily active viewers increased 40%.
For Q4, Hott gave a revenue range of $1.950 billion to $1.985 billion and adjusted EBITDA guidance of $490 million to $525 million. He said the outlook includes investments in Specs, which Snap would pace against product, ecosystem and economic milestones. Hott also said global monthly active users would become Snap’s primary audience metric beginning with Q1 2027 results.
Guidance
CFO Doug Hott said Snap now anticipates full-year infrastructure costs of $1.65 billion to $1.66 billion, compared with its prior guidance of $1.65 billion to $1.70 billion. He said Snap had increased its investments in AI and machine learning without increasing overall infrastructure costs.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Revenue, Brand Advertising | FY2027 | Snap expects its brand advertising business to regain ground during 2027. | — | — |
| EBITDA, non-GAAP | Q4 FY2026 | $490.0 million–$525.0 million | Q3 FY2026: $300.0 million–$350.0 million | Raised |
| Operating expenses growth, Non Gaap Other Cost of Revenue | FY2026 | 16.0%–17.0% | — | New |
| Operating expenses, Non Gaap Infrastructure Costs | FY2026 | $1.7 billion–$1.7 billion | — | New |
| Operating expenses, Non Gaap Infrastructure Costs | Q4 FY2026 | Snap expects infrastructure costs to grow modestly year over year in Q4. | — | — |
| Revenue | Q4 FY2026 | $2.0 billion–$2.0 billion | Q3 FY2026: $1.7 billion–$1.7 billion; reported $1.7 billion | Raised |
| Net income | FY2027 | Snap expects sustained positive net income beginning in FY2027. | — | — |
| Share repurchases | FY2027 | Snap expects to begin a multiyear share repurchase program in FY2027. | — | — |
| Share repurchases | Q4 FY2026 | Snap expects to complete its current share repurchase program in Q4 FY2026. | — | — |
| Operating expenses, Stock Based Compensation | FY2026 | $1.1 billion | — | New |
| Operating expenses, non-GAAP | FY2026 | $2.8 billion | — | New |
| Operating expenses growth, Cost of Revenue Excluding Infrastructure | FY2026 | 16.0%–17.0% | — | New |
| Operating expenses, Infrastructure Costs | FY2026 | $1.7 billion–$1.7 billion | — | New |