Snap Returns to Profit as Shares Fall After Earnings

Snap’s third-quarter revenue rose 14% from a year earlier to $1.72 billion, while the company turned a $104 million loss into $56.5 million in net income. Adjusted earnings were 15 cents per share, below the 16 cents expected by analysts surveyed by Zacks Investment Research. Revenue matched expectations, the survey found.

Snapchat had 495 million daily active users, a 4% increase from the same period last year and two million more than in the previous quarter. Despite the return to profit and user growth, Snap shares dropped nearly 10% in after-hours trading.

Chief Executive Evan Spiegel said the results reflected progress toward making the business more profitable. He also pointed to artificial intelligence as an advantage for Snap’s teams and advertising platform, while the company continues investing in augmented reality.

That investment includes SPECS, augmented-reality glasses with a built-in computer that Snap unveiled in June. The company has said the product draws on more than a decade of work across hardware, software and developer tools, and involves more than 7,000 patents. Preorders have been offered in the United States, United Kingdom and France for $2,195, with a refundable $200 deposit; deliveries were planned for this fall.

Snap has also named Robert Downey Jr. an honorary customer-experience officer for SPECS, with the aim of raising awareness and creating original content. Company executives were scheduled to take analysts’ questions on a call at 5 p.m. Eastern on November 4.