Snap (SNAP) reported its third quarter earnings Tuesday, beating estimates of the top and bottom lines – a win dampened by concerns about how conflict in the Middle East may affect advertiser spending.

Though Snap stock surged at least 11% in after-hours trading, shares dropped again in the aftermath of the company's earnings call. Snap CFO Derek Andersen told analysts that the company is responding to geopolitical uncertainty in its reluctance to issue formal Q4 guidance.

“We have had a number of primarily brand-oriented campaigns pause spending in the early period after the onset of the war there in the Middle East,” Snap CFO Derek Andersen told analysts. “…And I think when we look back historically to what we experienced at the onset of war in Ukraine – and the impact that had on our business and operating environment – it would be imprudent to provide a formal guide.”

The informal internal forecast that Snap did offer was relatively optimistic, with the company saying it sees its Q4 adjusted Ebitda coming in between $65 million and $105 million — it's a wide range, but the high-end is better than Wall Street's $100.6 million estimate.

Snap, owner of Snapchat, has become representative of the malaise that can affect an advertising-dependent tech company. The business has struggled since the launch of Apple's (AAPL) App Transparency Tracking, and was sent reeling by a digital advertising slowdown that's only just picking up again.

Many of Snap's plans for its future — for example, its repeated efforts to make mainstream AR glasses — have yet to fully take. The company this year released its own AI chatbot, My AI, but its rollout has reportedly raised fears among parents concerned for their children's safety.

In its earnings release, Snap revealed that over 200 million people have used My AI, sending more than 20 billion messages. It has also signed up 5 million people for its premium subscription Snapchat+, adding a potential annual income of more than $200 million.

“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," Snap CEO Evan Spiegel said in a statement.

The earnings rundown

Here are the key numbers that Snap reported, compared to Wall Street's expectations as compiled by Bloomberg:

Adjusted Earnings Per Share: $0.02 actual, versus -$0.04 expected

Revenue: $1.19 billion actual, versus $1.11 billion expected

Global Daily Active Users (DAUs): 406 million actual, versus 405.79 million expected

Snap's daily active user numbers are particularly notable — they mark growth of 12% year over year.

Snap COO Jerry Hunter is set to retire, the company revealed in its report. Snap also authorized a share buyback program up to $500 million, implying that management thinks the company's stock is undervalued.

Snap shares came into this earnings cycle up about 9% year to date, lagging the Nasdaq Internet Index, which is up about 34% in 2023. Its revenue had declined in the last two quarters before the latest reversal.

Despite the upswing in Snap's revenue and signals that the advertising market is recovering, the company's investor letter acknowledged that the third quarter was tough.

"Our business continued to face significant headwinds in the third quarter," the letter, published in conjunction with earnings, reads. "We believe that we can be successful in this new operating environment — with elevated inflation, increasing interest rates, and heightened geopolitical tensions — by rigorously prioritizing our investments."

Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on X, formerly Twitter, at @agarfinks and on LinkedIn.

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