Snap Inc (NYSE: SNAP) stock surged over 23% in the pre-market session of October 21st, 2020 (Source: Google finance) after the company posted better than expected results for the third quarter of FY 20. Snap’s net loss narrowed to US$199.8 million from US$227.37 million, a year earlier. Daily active users (DAUs), which is a widely watched metric by investors and advertisers, rose 18per cent year-over-year to 249 million in the quarter ended Sept. 30. while the analysts had expected 244 million, according to IBES data from Refinitiv. This represents an increase of 4% quarter-over-quarter and 18% year-over-year, demonstrating the benefits of years of investment in our product and partnerships across a wide range of geographies. In North America, DAU rose by 6 million or 7% year-over-year to reach 90 million. In Europe, DAU rose by 7 million or 10% to reach 72 million. In Rest of World, DAU rose by 26 million or 43% to reach 87 million.
SNAP in the third quarter of FY 20 has reported the adjusted earnings per share of 1 cents, beating the analysts’ estimates for the adjusted loss per share of 4 cents. The company had reported the adjusted revenue growth of 52 percent to $679 million in the third quarter of FY 20, beating the analysts’ estimates for revenue of $555.9 million. In North America, revenue rose 56% year-over-year in Q3, while ARPU rose 46% year-over-year. In Europe, revenue grew 49% year-over-year in Q3, while ARPU grew 36% year-over-year. The relatively higher rates of growth in North America and Europe in Q3, are on back of the ramp in demand from brand advertisers beginning relatively earlier and stronger in these regions. In Rest of World, revenue rose 35% year-over-year in Q3, while ARPU fell 6% year-over-year as accelerating growth in DAU modestly outpaced growth in absolute advertising demand. Rest of World revenue growth rose by 21 percentage points over the prior quarter, as demand has begun to recover from the relatively more severe impact of COVID-19-related disruptions to demand in this region.
Moreover, the company generated free cash flow for Q3 of negative $70 million, which is an improvement of $15 million year-over-year. The company ended the quarter with $2.7 billion in cash and marketable securities, up from $2.3 billion in the prior year.
The company expects continued momentum in user growth and forecast about 257 million daily active users in the fourth quarter. Snap projects current-quarter revenue could grow in the range of 47% to 50% over the year-ago period, but cautioned that it was unclear how the pandemic would affect year-end holiday advertising