Snapchat Daily Users Surge to Over 400 Million and It's All Thanks to AI

Snapchat has seen a surge in its user base, reaching a milestone of over 400 million users, according to its third-quarter earnings report.

Over the past quarter, the app welcomed nine million new users, pushing its total daily active users to 406 million, reflecting a 12 percent increase compared to the previous year.

This achievement comes slightly over a year after Snap implemented workforce reductions of about 20 percent, a move aimed at streamlining costs amid a slowdown in advertising revenue.

The combination of these measures, along with the introduction of new generative AI features, such as Snapchat's My AI, appeared to yield positive results.

Snapchat Returning to Positive Growth

In Snapchat's official statement, the company's CEO Evan Spiegel said, "Our revenue returned to positive growth in Q3, increasing 5% year-over-year and flowing through to positive adjusted EBITDA as our reprioritized cost structure demonstrated the leverage in our business model."

"We are focused on improving our advertising platform to drive higher return on investment for our advertising partners, and we have evolved our go-to-market efforts to better serve our partners and drive customer success," Spiegel added.

Snap's Chief Operating Officer Jerry Hunter has already informed the company of his decision to retire. Over his seven-year tenure at Snap, Hunter played a pivotal role in shaping the company's engineering and business frameworks.

His responsibilities will transition by the end of the month, and he will continue to support Snap through July 1, 2024. Additionally, Snap announced that its board of directors has greenlit a stock repurchase program of up to $500 million of its Class A common stock.

This program allows for the repurchasing of Class A common stock through various means, including open market or privately negotiated transactions, subject to applicable securities laws.

According to Snap's statement, the program's objective is to leverage the company's robust financial position to strategically offset a portion of the dilution resulting from the issuance of restricted stock units to employees, part of the broader compensation program aimed at creating an ownership culture.

Snapchat's Financial Performance

In terms of financial performance for Q3 2023, Snap reported revenue of $1,189 million, a 5% increase from the previous year's $1,128 million. Net loss stood at $368 million, compared to $360 million in the prior year. The adjusted EBITDA was $40 million, down from $73 million in the prior year.

Operating cash flow was $13 million, a decline from $56 million in the prior year, and Free Cash Flow was $61 million, in contrast to $18 million in 2022. The trailing 12 months operating cash flow was $207 million, and the trailing 12 months Free Cash Flow was $2 million.