"Snap SNAP reported third-quarter revenue of $1.507 billion, up 10% year over year, due to strength in international markets. Adjusted EBITDA margin came in at 12%, up 200 basis points from a year ago, due to cost efficiencies and a greater mix of high-margin products like Sponsored Snaps and Spotlight. Why it matters: Despite persisting weakness in North American markets, advertising revenue from international markets continues to grow, driven by improved direct advertising monetization and increased demand from small and mid-sized businesses."
"Continued weakness in large North American accounts client business drove softer sales for the quarter, though international strength offset some pressure. Despite ongoing initiatives aimed at driving a recovery, we expect North American growth to remain subdued in the near term. We like that Snap is continually investing in growing monetization engines like Snapchat+ and sponsored Snaps. While these initiatives have yet to contribute materially to growth, the persistence of current adoption trends may offer some upside to our valuation."
"The bottom line: We maintain our fair value estimate for no-moat Snap at $9 per share. Given the solid quarterly performance, shares were up 15% during after-hours trading Nov. 5, inching closer to our unchanged valuation. We now view shares as fairly valued. Coming up: For the fourth quarter, the firm expects sales of $1.7 billion at the midpoint and an adjusted EBITDA margin of about 17%."
Snap reported third-quarter revenue of $1.507 billion, a 10% year-over-year increase driven by strength in international markets. Adjusted EBITDA margin rose to 12%, a 200-basis-point improvement from a year earlier, reflecting cost efficiencies and a higher mix of Sponsored Snaps and Spotlight. International advertising revenue grew through improved direct advertising monetization and increased demand from small and mid-sized businesses. Large North American account weakness softened sales, and North American growth is expected to remain subdued near term despite recovery initiatives. The firm continues investing in Snapchat+, sponsored Snaps, and other monetization engines. Fourth-quarter guidance targets $1.7 billion sales and about 17% adjusted EBITDA margin.
Read at www.morningstar.com
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