Snap Inc. returned to profit in the third quarter of 2026, reporting revenue of $1.72 billion, up 14% from a year earlier, and net income of $56 million against a $104 million loss in the same period last year. The Snapchat parent said the swing showed it was building a more profitable business, even as its user growth came in below Wall Street's expectations and its shares fell in after-hours trading.
"In Q3, we generated positive net income as revenue grew 14% year-over-year to $1.72 billion, reflecting the progress we are making to build a more profitable business," co-founder and chief executive Evan Spiegel said in prepared remarks. "AI is becoming a significant advantage for our teams and advertising platform, and we continue to strengthen our business while investing in our long-term vision for augmented reality with the launch of SPECS."
A profit, but a user miss
The headline numbers were mixed. Revenue of $1,722 million compared with $1,507 million a year earlier, while adjusted earnings before interest, tax, depreciation and amortisation reached $383 million, above the $300 million to $350 million range Snap had guided to. Earnings per share of $0.03 beat the $0.00 analysts had expected, though revenue landed just below the $1.73 billion consensus estimate.
Daily active users rose 4% to 495 million, short of the 499 million analysts had projected, and shares fell about 10% after hours. Operating cash flow climbed 44% to $210 million and free cash flow jumped 76% to $164 million.
Snap also guided fourth-quarter revenue to between $1.95 billion and $1.99 billion, slightly above analyst expectations, and said paid subscriptions across Snapchat+, Memories Storage and Lens+ had passed 30 million. From the first quarter of 2027, the company will change how it reports engagement, making global monthly active users its primary metric instead of daily users.
Specs: the $2,195 bet on augmented reality
The product story in the quarter was Specs, Snap's see-through augmented reality glasses, priced at $2,195. Snap is taking orders, and Spiegel told investors shipments would begin soon. "We're really looking forward to beginning to ship Specs later this fall," he said, putting its biggest hardware bet into customers' hands before year-end.
Specs differ from Snap's earlier camera glasses: transparent waveguide lenses place digital content directly in the wearer's view, rather than simply recording video or playing audio. The launch is the clearest test yet of whether consumers will pay a premium price for AR glasses from a company best known for a messaging app.
The AR market is still waiting for a breakout consumer device, and rivals including Meta have pushed their own glasses without yet turning AR eyewear into a mass-market product. Snap's pitch is that its strength in AR advertising and lenses gives it a head start on software, even if the price limits first buyers to enthusiasts and developers.
What comes next
For Snap, the quarter's message is twofold: the advertising business is now generating real profit and cash, but growth in its core audience is slowing just as it asks investors to fund an expensive hardware future. The fourth-quarter outlook suggests the advertising recovery will continue into the holiday period, traditionally Snap's strongest season.
The next proof points will come quickly. If Specs ship on schedule, early reviews and demand will show whether the $2,195 price is a barrier or a badge of seriousness. And monthly-user reporting next year will give investors a new yardstick — one that may flatter a mature app, but will also make any future slowdown harder to hide.
