Snap’s third quarter results were met with a negative market reaction, as the company missed Wall Street’s revenue expectations despite year-over-year sales growth. Management highlighted that direct response advertising performed well, but continued weakness in brand advertising, particularly among consumer packaged goods companies, weighed on overall growth. CEO Evan Spiegel described advertising growth as “below our ambitions” and noted that while direct response campaigns saw improved purchase outcomes, macroeconomic pressures and lower spending from key verticals limited broader gains. The company attributed its margin expansion to disciplined cost control and operating leverage, with gross margin and net income margins both improving sharply.
Is now the time to buy SNAP? Find out in our full research report (it’s free for active Edge members).
Snap (SNAP) Q3 2026 highlights:
- Revenue $1.72 billion vs S&P analysts’ estimates of $1.73 billion (14.3% year-on-year growth, 0.5% miss)
- Adjusted EPS $0.17 vs S&P analysts’ estimates of $0.16 (in line)
- Adjusted EBITDA $382.6 million vs analyst estimates of $337.3 million (22.2% margin, 13.5% beat)
- Operating margin 4.5%, up from -8.5% in the same quarter last year
- Daily active users 495 million, up 18 million year on year
- Market capitalization $8.61 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our top 5 analyst questions from Snap’s Q3 earnings call
- Ross Sandler (Barclays) pressed Chief Commercial Officer Ronan Harris on brand advertising weakness and the outlook for a recovery, to which Harris cited macro pressures and a strategic pivot toward diversified verticals outside CPG, expressing confidence in gradual improvement into 2027.
- Eric Sheridan (Goldman Sachs) asked CFO Doug Hott about the shift to monthly active users as a core metric, with Hott explaining the move aligns reporting with long-term value creation and community health, not just daily frequency.
- Doug Anmuth (JPMorgan) questioned CEO Evan Spiegel about the path to higher ad growth, particularly the role of AI tools. Spiegel replied that translating improved performance into broader advertiser adoption is the next step, with AI-powered measurement being central.
- Rich Greenfield (LightShed Partners) inquired about the implications of not optimizing for daily use on revenue. Spiegel clarified that the focus is on durable engagement, not short-term metrics, while Harris noted direct response now represents 77% of ad revenue.
- Alice Duska (Loop Capital) asked Hott about further cost optimization potential, with Hott emphasizing that while the quarter demonstrated strong operating leverage, future margin progress depends on scaling revenue faster than expenses.
Catalysts in upcoming quarters
In future quarters, the StockStory team will focus on (1) the pace of adoption and monetization of new AI-driven ad products and Sponsored Snaps, (2) how effectively Snap manages the ongoing shift to monthly active user metrics and communicates this transition to stakeholders, and (3) signs of stabilization or improvement in brand advertising spend across key geographies and verticals. Regulatory developments and their impact on user growth and product strategy will also be critical to monitor.
Snap currently trades at $5.12, down from $5.90 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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