Snap earnings Q3 2022

Snap shares plummeted more than 20% in extended trading on Thursday after the social media company reported weaker-than-expected revenue for the third quarter. It’s Wall Street’s first peak into the current state of the struggling online ad market.

Here are the key numbers.

• Earnings per share: 8 cents, adjusted, versus a small loss just shy of breakeven expected, according to a Refinitiv survey of analysts
• Revenue: $1.13 billion versus $1.14 billion expected, according to Refinitiv
• Global Daily Active Users (DAUs): 363 million versus 358.2 million expected, according to StreetAccount

Snap’s third-quarter revenue grew 6% from a year earlier, the first time its dipped into single digits since the company’s public market debut in 2017. Meanwhile, even as it reported a surprise adjusted profit, Snap’s net loss surged 400% to $360 million, partly due to a $155 million restructuring charge.

Daily active users increased 19% year-over-year, showing the company is still able to attract people to the service despite the struggles on the business side. Average revenue per user (ARPU) was down 11% to $3.11.

In August, Snap announced that it would lay off 20% of the company’s roughly 6,000 employees as part of a major restructuring plan. Severance and related costs made up a big part of the restructuring charge in the period.

“This quarter we took action to further focus our business on our three strategic priorities: growing our community and deepening their engagement with our products, reaccelerating and diversifying our revenue growth, and investing in augmented reality,” Snap CEO Evan Spiegel said in a statement. User growth “continues to expand our long-term opportunity as we navigate this volatile macroeconomic environment,” he said.

Apple’s 2021 privacy update to iOS remains a barrier in Snap’s ability to track users across the web, thus weakening its online advertising business. Rival social media companies, most notably Facebook, have been similarly hurt by Apple’s changes. Facebook parent Meta reports quarterly results next week.

The economic slowdown and potential for recession has also led many advertisers to pause or reduce spending on their campaigns.

Snap shares have lost over three-quarters of their value this year and are down more than 30% since July, when the company reported second-quarter results that missed on the top and bottom lines. As in the second quarter, Snap’s board authorized a stock repurchase program of up to $500 million. The company had $4.4 billion in cash, cash equivalents, and marketable securities as of Sept. 30.

As part of its plan to reduce costs, Snap said during the quarter that it would shutter several expensive projects, including its Pixy drone, which it planned to sell for $230. Snap also ended the production of its Snap Originals premium shows.

In Thursday’s release, Snap said that its Snapchat+ subscription service “reached over 1.5 million paying subscribers in Q3 and is now offered in over 170 countries.” Snap debuted the subscription service in June as a way for users to access exclusive and pre-release features for $3.99 a month.

WATCH: Snap earnings preview