Core Insights - The digital advertising industry has evolved to optimize feeds, but consumer communication is shifting towards more private and personal spaces, indicating a need for brands to adapt their strategies [3][5][10] - Snapchat's chat feature exemplifies this shift, with 880 billion chats exchanged in Q1, highlighting the importance of personal interactions in decision-making [4][6] - Sponsored Snaps represent a new approach that focuses on communication-led formats rather than traditional attention-seeking methods, aligning more closely with how users naturally engage [6][7] Industry Trends - There is a significant gap in digital advertising innovation for private communication spaces, which are crucial for influencing consumer behavior [5][10] - As Ramadan approaches, brands must prioritize the value of personal conversations over broadcasting, adapting their strategies to fit the context of social interactions [8][9] - The transition from feeds to chats emphasizes the importance of being a participant in conversations rather than a broadcaster, challenging brands to rethink their engagement strategies [10][11] Consumer Behavior - Consumers are increasingly selective about their attention, preferring relevant content that aligns with their personal communication styles [3][7] - Campaigns that utilize conversational design have shown improved brand metrics and more efficient purchasing paths, as they resonate better with users' daily habits [7][10] - Young audiences, particularly in MENA, favor experiences that reflect real social dynamics, suggesting that brands should engage thoughtfully to integrate into these environments [9][10]

We came across a bullish thesis on Snap Inc. on Investment Ideas by Antonio’s Substack by Antonio Linares. In this article, we will summarize the bulls’ thesis on SNAP. Snap Inc.'s share was trading at $7.62 as of December 2nd. SNAP’s forward P/E was 18.28 according to Yahoo Finance. Photo by geo uc on Unsplash Snap Inc. operates as a technology company in North America, Europe, and internationally.  SNAP continues to demonstrate strong execution in both user growth and monetization, positioning itself ...

Core Insights - Snap's recent innovations may provide a foundation for long-term recovery, particularly in response to Apple's privacy changes that have impacted ad targeting for social media platforms [1][2][3] Advertising Innovations - Snap has introduced tools like Sponsored Snaps, which allow businesses to reach users directly in their message inbox, leading to a conversion increase of up to 22% for advertisers [5][6] - The company launched Smart Campaign Solutions, an AI-powered advertising suite that includes Smart Targeting and Smart Budget features, resulting in an average conversion increase of 8.8% for ads utilizing these tools [7] Financial Performance - Snap reported $1.5 billion in revenue for Q3 2025, a 10% increase year-over-year, indicating an acceleration from previous growth rates [8] - The platform achieved a record 477 million daily active users in Q3, reflecting a 7.7% year-over-year growth, which is attractive for advertisers [9] Subscription Service Growth - Snap's subscription service, Snapchat+, reached nearly 17 million paying members by the end of Q3, marking a 35% year-over-year increase and contributing $750 million in annualized revenue [10] Valuation and Market Position - Snap's stock is currently trading at a price-to-sales (P/S) ratio of 2.2, near its lowest level since going public in 2017, despite steady revenue growth [11] - If Snap's advertising innovations lead to accelerating revenue growth in 2026, the current valuation may present a significant investment opportunity [13]

Core Insights - Snap (SNAP) reported a Q3 2025 loss of 6 cents per share, meeting the Zacks Consensus Estimate, compared to a loss of 9 cents per share in the same period last year [1][10] - Revenues increased by 10% year-over-year to $1.51 billion, surpassing the Zacks Consensus Estimate by 1% [1][10] Revenue Breakdown - North America, accounting for 60% of total revenues, saw a 5% year-over-year increase to $898 million [2] - Europe, representing 20% of revenues, experienced a 20% rise to $298 million [2] - Revenues from the Rest of World (ROW), making up 21% of revenues, reached $311 million, up 17% year-over-year [2] User Engagement and Growth - Snap's global daily active users (DAU) reached 477 million, an 8% increase year-over-year, with an addition of 8 million DAU quarter-over-quarter [4][10] - North America's DAU was 98 million, down 3% year-over-year, while Europe's DAU was 100 million, up 1% year-over-year; ROW's DAU was 280 million, up 15% year-over-year [5][10] - Monthly active users reached 943 million, reflecting a 7% year-over-year growth [5] Subscription and Other Revenues - Other revenues, primarily from Snapchat+ subscriptions, surged 54% year-over-year to $190 million, with an annualized run rate exceeding $750 million [3] - Snapchat+ subscribers approached 17 million, marking a 35% year-over-year growth [3][6] Advertising Performance - Direct response advertising revenue increased by 8% year-over-year, driven by strong demand from small and medium-sized business advertisers [8] - Purchase-related ad revenue grew over 30% year-over-year, aided by improved campaign performance [8] - Sponsored Snaps platform showed significant effectiveness, achieving up to 22% higher conversions and 19% lower cost per action [9][11] Financial Metrics - Adjusted cost of revenues rose 5% year-over-year to $671 million, while adjusted operating expenses increased by 8% to $654 million [12] - Adjusted EBITDA was $182 million, up 38% from the previous year, with an adjusted EBITDA margin expanding by 2 percentage points to 12% [13] Cash Flow and Balance Sheet - As of September 30, 2025, cash, cash equivalents, and marketable securities totaled $3 billion, up from $2.9 billion as of June 30, 2025 [14] - Operating cash flow was $146.49 million, compared to $115.87 million in the prior year, while free cash flow increased to $93 million from $72 million [14] Guidance - Snap anticipates a decline in daily active users in Q4, with projected revenues between $1.68 billion and $1.71 billion, indicating 8-10% year-over-year growth [15] - Adjusted EBITDA is expected to range between $280 million and $310 million, reflecting improved cost discipline [15][16]

Core Insights - Snap Inc. has announced a partnership with Perplexity AI Inc. valued at up to $400 million, integrating AI-driven search capabilities into Snapchat, which is expected to create a new growth avenue for the company [1][2] - Following the announcement and a better-than-expected earnings report, Snap's stock surged over 25% in after-hours trading [1][2] Financial Performance - Snap reported Q3 revenue of approximately $1.51 billion, reflecting a year-over-year growth of about 10%, slightly above Wall Street's expectations of around $1.49 billion [2] - The company anticipates Q4 revenue to be between $1.68 billion and $1.71 billion, aligning with analyst expectations of approximately $1.69 billion [2] User Growth and Engagement - Snapchat's daily active users reached 477 million in Q3, representing an 8% year-over-year increase, while monthly active users approached 943 million [3] - The company aims to reach a target of 1 billion monthly active users [3] Advertising Business - Snap's advertising revenue for Q3 was $1.32 billion, showing a year-over-year increase of about 5%, despite previous challenges [3] - The company is focusing on small to medium-sized advertisers and has introduced new ad formats to drive growth [4] Subscription Services - Snap's subscription service, Snapchat+, has nearly 17 million paying users, contributing significantly to the company's revenue diversification [5] - The "Other Revenue" category, which includes Snapchat+, generated approximately $190 million in Q3, marking a substantial year-over-year growth of 54% [6] Regulatory Challenges - Snap has warned that user engagement may decline due to regulatory changes, such as the upcoming social media age restrictions in Australia [6]

Financial Data and Key Metrics Changes - Total revenue increased by 10% year-over-year to $1.51 billion, driven by improved advertising demand and the expansion of direct revenue streams [5][30] - Advertising revenue reached $1.32 billion, up 5% year-over-year, with direct response advertising revenue increasing by 8% year-over-year [30][31] - Net loss reduced by more than 30% year-over-year to $104 million, reflecting progress toward sustained profitability [7][36] - Adjusted EBITDA was $182 million, with adjusted EBITDA margins expanding to 12% [7][35] Business Line Data and Key Metrics Changes - Other revenue, including Snapchat Plus subscription revenue, increased by 54% year-over-year to $190 million [5][30] - Direct response advertising revenue growth was driven by strong demand for pixel purchase and app purchase optimizations, particularly from small and medium-sized business clients [30][31] - The North America large client solutions business experienced a modest decline, while the SMB advertising business grew over 25% [31][64] Market Data and Key Metrics Changes - Advertising revenue growth accelerated in Europe and the rest of the world, with Europe growing by 12% and the rest of the world by 13% year-over-year [31][32] - North America accounted for approximately 43% of total global revenue, decreasing as a share of total revenue by roughly 10 percentage points over the past two years [32] - Global impression volume grew approximately 22% year-over-year, although total eCPMs decreased by about 13% due to increased inventory from Sponsored Snaps [33] Company Strategy and Development Direction - The company aims to reach 1 billion monthly active users globally, with a focus on enhancing user engagement through new features and conversation starters [4][15] - Investments in augmented reality and generative AI are central to the company's long-term strategy, with significant user engagement in AR experiences [15][16] - The company is recalibrating investments in community growth and cost structures to improve financial efficiency [12][13] Management's Comments on Operating Environment and Future Outlook - Management anticipates potential declines in daily active users in Q4 due to internal and external factors, including regulatory changes and age verification initiatives [15][56] - The company remains committed to improving monetization efficiency and ensuring compliance with evolving regulations [15][56] - Management expressed confidence in the long-term growth potential, supported by a robust balance sheet and cash flow generation [37] Other Important Information - The company has authorized a new share repurchase program of $500 million to manage share count for long-term shareholders [40] - A partnership with Perplexity AI will integrate conversational search into Snapchat, expected to enhance user experience and generate revenue starting in 2026 [29][44] Q&A Session Summary Question: On the Perplexity partnership, is the cash stock split already determined? - Management indicated that the cash and stock split for the Perplexity partnership is not finalized and will depend on future developments [42][44] Question: How do you see Snap's role evolving as a distribution channel? - Management highlighted the opportunity to distribute AI agents through the chat interface and Sponsored Snaps, enhancing customer experiences [50][52] Question: Can you provide an update on direct response advertising growth? - Direct response revenue grew by 8% year-over-year, with strong performance in Europe and the rest of the world, while North America lagged [60][63] Question: What is the conviction level on keeping infrastructure costs flat next year? - Management expressed confidence in maintaining flat infrastructure costs through improved capacity utilization and cost structure optimization [66][67] Question: What is the latest thinking on Spectacles and potential financial partners? - Management did not provide specific updates on financial partnerships but emphasized the advanced AR software stack and its potential [69]

Financial Data and Key Metrics Changes - In Q3 2025, total revenue increased by 10% year-over-year to $1.51 billion, driven by improved advertising demand and the expansion of direct revenue streams [5][29] - Advertising revenue reached $1.32 billion, up 5% year-over-year, primarily due to growth in direct response advertising revenue, which increased by 8% year-over-year [29][30] - Adjusted EBITDA was $182 million, an improvement of $50 million compared to the prior year, with a net loss reduced by over 30% year-over-year to $104 million [6][36] - Free cash flow was $93 million in Q3, with a total of $414 million over the trailing 12 months [6][37] Business Line Data and Key Metrics Changes - Direct response advertising revenue increased by 8% year-over-year, with strong demand from small and medium-sized business customers [5][29] - Other revenue, including Snapchat Plus subscription revenue, surged by 54% year-over-year to $190 million [5][29] - The community reached 477 million daily active users, an increase of 34 million or 8% year-over-year [4] Market Data and Key Metrics Changes - Advertising revenue growth in Europe accelerated to 12% year-over-year, while the rest of the world saw a 13% increase [30] - North America advertising revenue grew only 1% year-over-year, with the SMB segment growing over 25% [30][31] - Global impression volume grew approximately 22% year-over-year, although total eCPMs decreased by about 13% due to increased inventory [32] Company Strategy and Development Direction - The company aims to reach 1 billion monthly active users globally and is focusing on enhancing user engagement through new features and conversation starters [4][7] - Investments in augmented reality and AI are prioritized, with plans to introduce new monetization tools and premium offerings [5][20] - The strategy includes recalibrating investments in community growth and optimizing cost structures to improve financial efficiency [11][12] Management's Comments on Operating Environment and Future Outlook - Management anticipates potential declines in daily active users in Q4 due to regulatory changes and internal initiatives [13] - The company remains committed to long-term growth despite short-term engagement headwinds, focusing on monetization efficiency and compliance with regulations [12][13] - Future revenue guidance for Q4 is set between $1.68 billion and $1.71 billion, implying year-over-year growth of 8%-10% [37] Other Important Information - The company has approximately $3 billion in cash and marketable securities, providing financial flexibility for future investments [6][37] - A new share repurchase program of $500 million has been authorized to manage share count for long-term shareholders [39] Q&A Session Questions and Answers Question: On the Perplexity partnership, is the cash stock split already determined? - Management expressed excitement about the Perplexity partnership, emphasizing its potential to enhance Snapchat's role as a messaging service and the unique opportunity to distribute AI agents through the chat interface [41][43] Question: Should we presume that the reason for the leverage in cost of revenue is due to not paying out to content owners? - Management clarified that the improvement in gross margins is attributed to a mix shift towards higher-margin ad formats like Sponsored Snaps and Spotlight, which have lower associated costs [42][46] Question: How do you see Snap's role evolving as a distribution channel? - Management highlighted the opportunity to open up the chat interface to more AI agents and conversational commerce experiences, indicating a strategic focus on enhancing customer engagement through these channels [47][49] Question: Could you talk about your conviction level on keeping infrastructure costs flat next year? - Management indicated a strong focus on improving capacity utilization and efficiency in infrastructure costs, aiming to maintain flat costs into 2026 [60][61] Question: What is the latest thinking on Spectacles and potential financial partners? - Management is preparing for the public release of Spectacles and is considering various options to accelerate technical leadership in the AR space, including establishing a standalone subsidiary for better flexibility [63]

Core Thesis - Snap Inc. is viewed as an underappreciated social media platform with significant growth potential, particularly in augmented reality (AR) and monetization strategies [2][3][6] User Engagement - As of Q2 2025, Snap has 932 million monthly active users (MAUs) and over 350 million daily augmented reality (AR) users, indicating strong user engagement [2] - Snapchat+ subscribers increased from 15 million to 16 million quarter-over-quarter, while games engagement rose 40% year-over-year to 175 million MAUs [2] - Spotlight usage surged 23% year-over-year, accounting for nearly half of all time spent on the platform, and video chat time increased by 30% year-over-year [2] Financial Performance - Free cash flow per share has risen sharply, with an annual revenue run-rate from Snapchat+ reaching $700 million [3] - Snap is trading at just over 2 times sales, suggesting that the market has undervalued the company, creating an asymmetric investment opportunity [3] Augmented Reality Strategy - Snap's long-term strategy is centered around its AR-first philosophy, with over $3 billion invested in building a vertically integrated AR platform [4] - The company offers unique developer tools such as Easy Lens, real-time transcription APIs, and 3D object generation to enhance its AR capabilities [4] Advertising and Monetization - Early monetization improvements are evident with Sponsored Snaps, which have shown stronger engagement and conversion rates compared to traditional ad formats [5] - A Q2 2025 ad platform error caused a temporary 25% stock drop, but the issue has been resolved, and fundamentals are strengthening [6] Market Sentiment - Despite mixed perceptions of leadership, Snap's fundamentals are improving, with resilient engagement and rising monetization [6] - The stock price has appreciated approximately 8.9% since previous bullish coverage, reinforcing the positive outlook on Snap's fundamentals [7]

Core Insights - Pinterest, Inc. (PINS) is establishing a unique value proposition for advertisers, enhancing its competitive advantage through innovations in its advertising platform [1] - The company is experiencing growth momentum in the retail sector and emerging markets such as financial services, technology, and entertainment [1] Advertising Performance - Pinterest is bridging the gap between upper-funnel storytelling and lower-funnel conversion, improving campaign performance [2] - The integration of AI in the advertising process is enhancing personalization and efficiency, with the AI-powered Pinterest Performance+ suite gaining traction among advertisers [2] - Click-through and conversion rates are increasing, leading to sustained ROI for advertisers [2] Product Innovations - The management's decision to enhance the accessibility of the mobile deep linking (MDL) product has improved shoppability on the platform, significantly boosting shopping ads revenue [3] - The Direct Link product is gaining popularity among advertisers and retailers [3] Financial Metrics - In Q2, Pinterest's ad impressions grew by 55%, while ad pricing declined by 25% due to expansion into lower-priced international markets [4][8] - Pinterest's forward price-to-sales ratio is 5.22, which is below the industry average [9] Competitive Landscape - Pinterest faces competition from Meta Platforms, Inc. (META) and Snap, Inc. (SNAP) in the social commerce space, with both companies enhancing their advertising capabilities through AI [5][6] - Despite efforts to diversify, advertising remains a major revenue source for Snap, which has seen performance improvements in its advertising platform [6] Stock Performance - Pinterest's stock has gained 17.6% over the past year, compared to the industry's growth of 39.6% [7]

Core Viewpoint - Snap is taking strategic steps to recover from a significant stock decline, but these efforts will require time to show results [1][17]. Group 1: Advertising Innovations - Snap is investing in new features to enhance its advertising platform, utilizing artificial intelligence (AI) and machine learning to improve ad performance [5][6]. - The introduction of the Smart Campaign Solutions suite allows businesses to set target costs for actions, with real-time bid adjustments made by Snapchat's AI [6]. - A European sportswear brand experienced a 50% reduction in cost per action and doubled conversions using Smart Bidding, indicating potential effectiveness of Snap's innovations [7]. - The new "Sponsored Snaps" feature allows businesses to reach users in their chat inbox, leading to a conversion increase of up to 22% for those campaigns [8]. Group 2: User Growth and Revenue - Snap reported $1.34 billion in revenue for the second quarter, reflecting a 9% year-over-year increase [9]. - The platform achieved a record 469 million daily active users in the second quarter, marking a 9% increase year over year, which enhances its attractiveness to advertisers [10][12]. Group 3: Financial Position and Valuation - Snap's stock has declined significantly, trading at a price-to-sales (P/S) ratio of 2.1, the lowest since its IPO, despite steady revenue growth [13]. - The company has over $3.5 billion in debt, but only $557 million is due before the end of 2027, with $2.8 billion in cash and equivalents available, indicating a manageable financial situation for now [16].