Snap shares fall over 10% after revenue and user misses

By Tom Whitfield

Snap shares fell more than 10% on Wednesday after the Snapchat parent reported $1.72 billion of third-quarter revenue and 495 million global daily active users, both below analyst expectations. The revenue and user misses outweighed stronger adjusted earnings.

The operating comparison was mixed:

• Adjusted earnings per share: $0.19 versus $0.16 expected, according to LSEG.
• Revenue: $1.72 billion versus $1.73 billion expected, according to LSEG.
• Global daily active users: 495 million versus 499 million expected, according to StreetAccount.
• Global average revenue per user, or ARPU: $3.48 versus $3.48 expected, according to StreetAccount.

Third-quarter sales rose 14% from a year earlier. Net income reached $56 million, compared with a $104 million net loss in the prior-year quarter. Adjusted earnings reached $383 million, above the $337 million analysts projected, according to StreetAccount. The earnings beat did not prevent the double-digit share decline.

What did the user and revenue misses show?

The revenue shortfall was $10 million, while global daily active users were 4 million below the StreetAccount forecast. Global average revenue per user matched expectations at $3.48, so the surprise was not a reported fall in revenue per user. It was lower audience scale alongside slightly lower sales.

That distinction matters as Snap seeks to restore advertiser spending without sacrificing monetization. The supplied results did not break out revenue by geography, advertiser or product, which limits any assessment of where the shortfall came from. Nor did they provide a bridge from the adjusted earnings beat to revenue or operating costs. In plain terms, Snap sold more than a year ago but still missed the expected user and sales levels.

Can fourth-quarter guidance repair the miss?

Snap guided to fourth-quarter revenue of $1.95 billion to $1.99 billion. The company said the midpoint was higher than Wall Street's $1.95 billion estimate. For adjusted earnings, it forecast $490 million to $525 million, compared with the $498 million analysts expected. The range placed consensus inside it, rather than presenting an unqualified earnings beat.

That guidance gives the next quarter two tests. Revenue must land near the midpoint to turn the guide into a clear beat, and adjusted earnings must move beyond the $498 million estimate. Yet the sales outlook faces the same unresolved issue: whether weakness in consumer packaged goods spending will continue or offset gains elsewhere.

A midpoint above the cited estimate does not establish that demand has recovered. The guide points upward, but actual sales must confirm it.

Why is Snap changing its audience metric?

Starting in the first quarter of 2027, Snap plans to make global monthly active users its "primary audience metric." The company reported 977 million MAU for the third quarter. The change would place monthly reach at the center of audience reporting, but the release set no numerical growth target and did not specify how long daily-user disclosure would continue.

The investor letter said: "Daily engagement has historically been stable as a percentage of monthly engagement, but we do not intend to optimize Snapchat around daily use at the expense of long-term value for our community."

The letter added: "A longer-term horizon better aligns our reported metrics with the product and safety decisions that strengthen relationships, create lasting utility, and support broader, more durable audience growth."

The stated logic links monthly reach to product and safety decisions. The test is whether Snap supplies enough detail to verify the resulting audience growth. It missed the daily-user forecast, and a reporting change cannot prove that engagement has become more durable. Disclosure continuity will determine whether the shift improves comparability or obscures the shortfall. A new headline metric can change the presentation without changing the underlying engagement.

Can non-CPG verticals offset the pressure?

Snap chief commercial officer Ronan Harris said lower spending by unspecified consumer packaged goods, or CPG, companies affected third-quarter sales. Harris attributed the reduced spending to "macro pressures in the U.S. and also the Middle East." The company did not name the advertisers or quantify their lost spending, so the explanation remains broad.

Harris said: "As we look ahead, we're seeing very positive signs of growth from diversified verticals like financial services in the U.S. So part of our strategy here is to look outside of the pressures in CPG and find traction in these other verticals."

The growth claim remains unquantified in the supplied figures. No revenue contribution, growth rate or timing was given for financial services or other diversified verticals. ARPU met expectations at $3.48, but the next proof point is whether revenue per user and total sales improve as spending shifts away from CPG. Snap has identified a possible replacement for CPG demand, not a demonstrated replacement.

CNBC's report also linked a separate Jim Cramer segment on the 2027 capex spending outlook. It provided no capex estimate and no Snap-specific investment figure, so it adds no quantified assumption to the earnings outlook.

Snap beat on adjusted earnings but missed on revenue and daily users; fourth-quarter delivery and the 2027 shift to MAU must show whether broader spending produces durable growth.