What happened

Shares of Snap (SNAP 0.19%) have skyrocketed to all-time highs today, up by 36% as of 12:10 p.m. EDT, after the Snapchat parent reported blockbuster third-quarter earnings. Investors were impressed that the company swung to a surprise profit after crushing top-line expectations.

So what

Revenue in the third quarter increased by 52% to $678.7 million, well above the consensus estimate of $551.4 million. That resulted in adjusted earnings per share of $0.01, compared to the $0.05 per share in adjusted losses that analysts were expecting. The social media tech company added 11 million daily active users (DAUs) during the quarter, bringing its total DAUs to 249 million.

Two different hands holding smartphones showing examples of Snapchat's Friendship Profile interface

Image source: Snap.

"Our focus on delivering value for our community and advertising partners is yielding positive results during this challenging time," CEO Evan Spiegel said in a statement. "We're excited about the growth of our business in Q3 as we continue to make long-term investments in our future."

Now what

Monetization also improved dramatically, with average revenue per user (ARPU) hitting a record $2.73. That was primarily driven by a 46% jump in ARPU in North America, Snap's biggest market. Meanwhile, costs declined on an adjusted basis, which allowed Snap to squeeze out a modest profit.

Snap overhauled the Android version of Snapchat last year, and the company is now turning to revamping its messaging infrastructure in order to boost engagement further, Spiegel noted on the conference call with analysts. The company did not provide guidance for the fourth quarter given ongoing macroeconomic uncertainty due to the COVID-19 pandemic.