Snap Inc (SNAP) Q1 2025 Earnings Summary

Executive Summary

Revenue grew 14% year-over-year to $1.36B, with Adjusted EBITDA of $108M and Free Cash Flow of $114M; DAUs reached 460M and MAUs surpassed 900M .
Mix shift toward performance ads continued: Direct Response reached 75% of ad revenue; SMB-driven advertiser count rose 60% YoY; North America revenue growth accelerated to 12% YoY .
Management withheld formal Q2 guidance amid early-quarter headwinds and macro uncertainty (including de minimis changes) but lowered FY cost guidance (Adjusted OpEx and SBC) while maintaining infrastructure and cost-of-revenue ranges .
Balance sheet actions reduced total debt by ~$0.2B QoQ via repurchase of converts funded by $1.5B senior notes; cash and marketable securities ended at $3.2B, supporting ongoing free cash flow generation .
Results exceeded S&P Global consensus on revenue and “Primary EPS” for Q1 2025, potentially catalyzing narrative around execution in DR ads and SMB expansion while near-term caution on Q2 temper enthusiasm (S&P Global values noted in Estimates Context).*

What Went Well and What Went Wrong

What Went Well

Strong topline, profitability and cash generation: Revenue +14% YoY to $1.363B; Adjusted EBITDA $108M (flow-through 37%); Free Cash Flow $114M .
Subscriptions drove “Other Revenue” +75% YoY to $152M; Snapchat+ subscribers nearly 15M (run-rate just over $600M) .
Ad platform execution: DR ad revenue +14% YoY and reached 75% of total ad revenue; active advertisers +60% YoY; model learning speed +6x, training data +5x; CAPI adoption >60% of DR revenue .

“Q1 marked an important milestone…our community growing to over 900 million monthly active users…Revenue increased 14% YoY…adjusted EBITDA $108M and free cash flow $114M” — Evan Spiegel .

What Went Wrong

Brand-oriented ad revenue declined 3% YoY amidst softness in upper-funnel demand across regions .
Monetization pressure: total eCPMs down ~7% YoY as inventory growth exceeded demand; Sponsored Snaps testing contributed <$10M in revenue given limited scale .
Early Q2 headwinds and macro opacity (including advertiser impact from de minimis changes) led management to refrain from formal Q2 guidance; hiring pace to be managed given updated OpEx outlook .

“We do not intend to share formal financial guidance for Q2…we have experienced headwinds to start the current quarter” — Derek Andersen .

Financial Results

Headline Results vs Prior Quarters

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$1,372.6	$1,557.3	$1,363.2
GAAP Diluted EPS ($USD)	$(0.09)	$0.01	$(0.08)
Adjusted EBITDA ($USD Millions)	$132.0	$276.0	$108.4
Operating Loss Margin (%)	(13)%	(2)%	(14)%
Adjusted Gross Margin (%)	54%	57%	53%

Regional Revenue Mix (Q1 2025)

Region	Revenue ($USD Thousands)	YoY Growth (%)
North America	$831,691	12%
Europe	$224,015	14%
Rest of World	$307,511	20%

Revenue Composition (Q1 2025)

Metric	Q1 2025
Advertising Revenue ($USD Billions)	$1.211
Advertising Revenue YoY (%)	+9%
Direct Response Share of Advertising (%)	75%
Brand-Oriented Advertising YoY (%)	(3)%
Other Revenue ($USD Millions)	$152
Other Revenue YoY (%)	+75%

KPIs and Operating Metrics

DAU and ARPU trajectory:

Metric	Q3 2024	Q4 2024	Q1 2025
DAU Total (Millions)	443	453	460
DAU North America (Millions)	100	100	99
DAU Europe (Millions)	99	99	99
DAU Rest of World (Millions)	244	254	262
ARPU ($USD)	$3.10	$3.44	$2.96

Platform and monetization KPIs (Q1 2025):

Metric	Q1 2025
Global Impression Volume YoY (%)	~+17%
Total eCPM YoY (%)	~−7%
Snapchat+ Subscribers (Millions)	~15
Infrastructure Cost per DAU ($USD)	$0.82
Operating Cash Flow ($USD Millions)	$152
Free Cash Flow ($USD Millions)	$114
Active Advertisers YoY (%)	+60%
SKAdNetwork Reported App Purchases YoY (%)	>30%
Sponsored Snaps Revenue Contribution ($USD Millions)	< $10
DR Advertising Revenue YoY (%)	+14%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Infrastructure Cost per DAU (per quarter)	FY 2025	$0.82–$0.87	$0.82–$0.87	Maintained
Other Cost of Revenue (% of revenue)	FY 2025	19%–20%	19%–20%	Maintained
Adjusted Operating Expenses ($B)	FY 2025	$2.700–$2.750	$2.650–$2.700	Lowered
Stock-Based Compensation ($B)	FY 2025	$1.150–$1.200	$1.130–$1.160	Lowered
Revenue (Q2 2025)	Q2 2025	Not previously provided	No formal Q2 guidance	Withheld

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
AI/ML model scale and freshness	Expanded Easy Lens; model optimization; training improvements; ad objectives (Q3/Q4)	Model learning +6x; training data +5x; fresher, responsive models; Spotlight fresh content doubled <24h views	Accelerating platform performance
SMB advertiser growth and DR mix	Active advertisers more than doubled; DR momentum (Q3/Q4)	Active advertisers +60% YoY; DR = 75% of ad revenue; tCPA improvements and ROI case studies	Strengthening lower-funnel
Sponsored Snaps and new placements	Launched and testing Sponsored Snaps/Promoted Places; +30% reach in US (Q4)	Sponsored Snaps biddable testing; <$10M revenue; expansion planned	Early-stage monetization
Macro/upper funnel softness & de minimis	Brand softness concentrated among large clients; cautious Q4 outlook (Q3/Q4)	Early Q2 headwinds; subset of advertisers impacted by de minimis changes; no formal Q2 guide	Persistent headwinds
North America DAU and product UX	Simple Snapchat testing; 25M+ test cohort; content engagement gains (Q3/Q4)	Refined five-tab interface; NA DAU 99M; management not expecting further declines in Q2	Stabilizing
AR/Spectacles ecosystem	5th-gen Spectacles; Snap OS; expanded developer tools and geographies (Q3/Q4)	New hand tracking features; Spectacles community challenges; Sponsored AI Lenses for advertisers	Broadening capabilities

Management Commentary

“Our large, hard-to-reach audience, brand-safe environment and performant advertising platform have made us a valuable partner for businesses…we believe we are well positioned to deliver improved business performance and meaningful positive Free Cash Flow as we make further progress towards GAAP profitability.” — Evan Spiegel .
“Direct response advertising revenue contributed 75% of our total advertising revenue for the first time in Q1…Other revenue…increased 75% YoY to reach $152M…Snapchat+ subscribers reaching nearly 15M.” — Derek Andersen .
“Given the uncertainty…we do not intend to share formal financial guidance for Q2…we are lowering our full-year cost guidance for Adjusted Operating Expenses…to $2.650–$2.700B and SBC to $1.130–$1.160B.” — Derek Andersen .
“We improved the freshness of our models and the scale of training data, which increased the rate of model learning by 6x and grew the volume…by over 5x.” — Evan Spiegel .

Q&A Highlights

Macro and de minimis: Management cited early-Q2 growth headwinds and advertiser impacts from de minimis changes; visibility remains limited, driving cautious stance on Q2 guidance .
Path to >20% DR growth: Roadmap includes larger/fresher models, better signal utilization, product updates (app goal-based bidding, dynamic product ads), and extending DR objectives to Sponsored Snaps .
North America DAU and UX: Refined five-tab interface aims to balance casual-user gains with power-user preferences; management does not expect further NA DAU declines in Q2 .
Inventory/demand balance: Sponsored Snaps to expand inventory meaningfully over time; priority is bringing more goal-based bidding objectives to maximize monetization .
Cost discipline and hiring: Adjusted OpEx outlook trimmed; hiring focused on SMB go-to-market and engineering ML/AI competencies with pace calibrated to revenue growth .

Estimates Context

How results compared to S&P Global Wall Street consensus:

Metric	Q1 2025 Consensus	Q1 2025 Actual	Surprise
Revenue ($USD)	$1,344,976,050*	$1,363,217,000* [Actual per S&P]	Beat (~$18.2M)*
Primary EPS ($USD)	$0.036*	$0.080*	Beat (~$0.044)*
Primary EPS – # of Estimates	20*	—	—
Revenue – # of Estimates	32*	—	—

Note: Snap reported GAAP diluted net loss per share of $(0.08) in Q1 2025 ; “Primary EPS” above reflects S&P Global’s normalized EPS framework, not GAAP.
*Values retrieved from S&P Global.

Key Takeaways for Investors

Execution remains solid in DR and SMB channels; the mix shift (DR = 75% of ad revenue) and advertiser base expansion support sustained topline resilience even as brand demand softens .
Subscriptions are becoming a meaningful revenue source: Other Revenue +75% YoY with ~15M Snapchat+ subs and a >$600M run-rate, diversifying beyond ads .
Near-term caution is warranted: management withheld Q2 guidance and flagged early-quarter headwinds, including impacts from de minimis changes; expect estimate dispersion and potential intra-quarter revisions .
Cost discipline continues: FY 2025 Adjusted OpEx and SBC guidance lowered, maintaining infrastructure and cost-of-revenue ranges; this should underpin margin improvement through cycles .
Monetization catalysts: Sponsored Snaps and Sponsored AI Lenses expand inventory and formats; as DR objectives scale into new placements, revenue contribution should grow from <$10M in Q1 .
Balance sheet de-risking: Converts repurchased and senior notes issued reduced total debt ~$0.2B QoQ; $3.2B cash/marketable securities provide flexibility to invest and manage dilution .
Trading lens: Near-term stock reaction likely hinges on Q2 demand signals and macro clarity; medium-term thesis centers on DR performance, ML/signal improvements, and subscription growth, with operating leverage from lowered cost base .

Additional Q1 2025 Relevant Press Releases

Later partnership integrating Snapchat APIs for creator discovery and publishing — supports ecosystem and creator monetization/access for brands .
Meltwater integration with Snapchat for social publishing and analytics — strengthens marketer tooling and workflow integrations .