Snap Inc.'s Q3 2026 Earnings: A Resilient Performance
Good afternoon everyone, and welcome to Snap Inc.'s third quarter 2026 earnings conference call. At this time, participants are in a listen-only mode.
In a recent conference call, the company shared its Q3 2026 results, which demonstrated the growing earnings power of Snap's business. Revenue increased by 14% year-over-year to $1.72 billion, and the company generated positive net income. Gross margin expanded by approximately 7 percentage points, while net income margin and adjusted EBITDA margin each expanded by approximately 10 percentage points.
The growth in revenue was driven by a significant increase in daily active users, which grew to 495 million, and monthly active users, which reached 977 million. This growth is a testament to the company's focus on keeping its community safe, growing its advertising business faster, and strengthening relationships at the heart of Snapchat.
Communication between friends and family remains the foundation of Snapchat, with average daily messages sent increasing by 8% year-over-year, and the number of people engaging in two-way communication increasing by 6% year-over-year. The company's camera, Spotlight, Map, and games give people more to share and more reasons to connect.
Spotlight is becoming an increasingly important part of that experience, with content that sparks conversations and inspires creativity. Globally, the number of people posting to Spotlight grew 130% year over year, while daily active viewers increased by 40% year-over-year. This growth is a significant milestone for the company, as it demonstrates the increasing importance of Spotlight in users' experiences.
The company continues to invest in creators and AI-powered recommendations to help Snapchatters discover content they enjoy and want to share with friends. AI is becoming a meaningful advantage for Snap, helping the company improve its products faster, serve its community more effectively, and work more efficiently.
For example, in Q3, the engineering teams more than doubled the number of merged pull requests year-over-year, while the defect rate per merge pull request declined by over 71%. This is a testament to the company's commitment to using AI to improve its products and services.
The company also reported significant growth in other revenue streams, with paid subscribers across Snapchat+, Memories Storage, and Lens+ surpassing 30 million. This growth is driven by innovative AI-powered features that have helped Lens+ exceed expectations, demonstrating how new creative experiences can drive demand for the company's paid products.
Overall, Snap Inc.'s Q3 2026 earnings demonstrate a resilient performance, with revenue growing faster than its cost base and expanded margins generating stronger cash flow. This strengthens the company's ability to invest in its business, offset dilution, and create long-term value on a per-share basis.
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