Snap, the parent company of Snapchat, reported its revenue rose 5% in the latest quarter after two straight quarters of declines on a rebound in the digital advertising market.
Advertising is the biggest source of Snap’s revenue – and the company cautioned the ad market remains volatile, pointing to the impact of war in the Middle East:
- “We have had a number of primarily brand-oriented campaigns pause spending in the early period, I will say that we have seen a lot of those campaigns resume spending and the impact to our daily run rate has reduced significantly as a result of that but we also have seen a very small amount of incremental campaign pauses trickle in more recently,” said Snap CFO Derek Andersen said in an analyst call yesterday.
Revenue for the third quarter was $1.19 billion, up from $1.13 billion a year ago. In the previous two quarters, Snap’s revenue had fallen between 4% and 7%.
The company remains unprofitable – its net loss of $368 million for the third quarter is wider than a loss of $360 million a year ago.
Ad platform improvements
In a letter to investors, Snap said the company has “focused on improving our advertising platform” to generate higher returns for advertisers.
“We continue to make really significant investments in the ad ranking and optimization of creating a much broader range of signals into the ad platform and driving much larger models,” Andersen said. “And we’ve also instituted a much faster pace of experimentation. All of that’s leading to more precise conversion predictions, improved ROI for advertisers.”
The company said it has invested in improving ad ranking and optimization using ML models, leading to a significant improvement in ROI for advertisers and an increase in lower-funnel revenue year-over-year and quarter-over-quarter. Also, its 7/0 Pixel Purchase optimization now lets advertisers bid for attributed seven-day clickthrough conversions.
Snapchat also reported working with advertisers to improve the effectiveness of their privacy-centric integrations with the ad platform. This resulted in significantly higher signal quality for those advertisers.