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SNAP Gearing Up to Report Q3 Earnings: What's in the Cards?

Snap SNAP is set to report third-quarter 2021 results on Oct 21.

The Zacks Consensus Estimate for revenues is currently pegged at $1.09 billion, indicating 59.9% growth from the year-ago reported figure.

In the last reported quarter, its subscriber growth — reflected by Daily Active Users (DAUs) — increased 55 million on a year-over-year basis and 13 million sequentially. DAUs at the end of the second quarter were 293 million.

The Zacks Consensus Estimate for global DAUs is currently pegged at 301 million, indicating growth of 20.9% from the year-ago quarter.

The consensus mark for the bottom line has remained steady at 6 cents per share in the past 30 days, which indicates an increase of 500% from the year-ago quarter.

Let’s see how things have shaped up for the upcoming announcement.

Snap Inc. Price and EPS Surprise

Snap Inc. price-eps-surprise | Snap Inc. Quote

Factors to Consider

Snap has been benefiting from a spike in the usage of Snapchat. The growing adoption of Snapchat among Gen Z (13-24 years) is expected to have driven DAUs. It is a larger platform than Facebook FB, Instagram and Twitter TWTR among this demography.

The company has been focused on continuously adding a set of innovative features like Lens Studio 2.0, Camera Kit, Snap Minis and Bitmoji for Games, which is making Snapchat more attractive for users and advertisers.

In the third quarter, the company released 3D Bitmoji with over 1,200 combinations of body poses, facial expressions, gestures, and backgrounds to choose from. Snapchatters can see their 3D Bitmoji in Snap Profiles, Friendship Profiles, and also have the option to share their customized 3D Bitmoji with friends on and off Snapchat.

Snap introduced My Places feature for Snap Map where Snapchatters can discover more than 30 million businesses, log their favorite local spots, and find personalized recommendations informed by their friends and the global Snapchat community.

The company also launched a suite of creative tools, including custom Stickers and three Augmented Reality enabled Lenses that encourage Snapchatters to fingerspell, honoring International Week of the Deaf. Using SignAll’s AI and computer vision technology that recognizes and translates American Sign Language, these AR Lenses will inspire Snapchatters to fingerspell their name, as well as other common words like love, hug, and smile.

In addition to the strong adoption of AR Lenses, Discover content and Shows are expected to have driven user growth.

The Zacks Consensus Estimate for third-quarter ARPU is pegged at $3.65, suggesting an increase of 33.7% from the year-ago reported figure.

A steady ad-spending environment is expected to reflect on Snap’s third-quarter top-line growth. Creator Marketplace, launched in the second quarter, is expected to have been a key catalyst in the third quarter. Creator Marketplace integrates Creators directly into Snap’s advertising ecosystem for businesses to connect with Lens Creators, Lens Developers, Lens Partners, and eventually Snap Stars to help elevate their marketing presence on Snapchat.

This Zacks Rank #3 (Hold) company’s partnership with the cross-platform game engine, Unity Software U to extend the reach of Unity’s Ad supply to Snapchat advertisers is expected to have attracted ad revenues in the to-be-reported quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Advertising has been the only source of revenues for Snap, which has been facing significant competition from the likes of Twitter, Facebook, Google and Pinterest for ad dollars. Moreover, a persistent decline in price per ad impression is likely to have weighed on advertising revenues.

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