Snap Inc (SNAP) Q2 2025 Earnings Summary

Executive Summary

Revenue grew 9% year-over-year to $1.345B, but advertising revenue growth slowed to 4% YoY as added Sponsored Snaps inventory and an ad platform change reduced auction eCPMs; Adjusted EBITDA was $41M and GAAP diluted EPS was -$0.16 .
Q3 guidance: revenue $1.475B–$1.505B, DAU ~476M, Adjusted EBITDA $110M–$135M; FY cost structure maintained except SBC lowered to $1.10B–$1.13B (from $1.13B–$1.16B) .
Wall Street revenue consensus for Q2 was $1.346B*, making the actual a slight miss; Primary EPS consensus 0.016* vs actual 0.006*, also a miss. Management flagged temporary auction pricing error and Ramadan timing as transitory headwinds, with revenue growth trends improving as changes were reverted .
Near-term stock reaction catalysts: Sponsored Snaps supply vs demand normalization (eCPM recovery), SMB DR strength, and Q3 execution against guidance; balance sheet reinforced by a $550M 2034 senior notes offering to retire converts .

What Went Well and What Went Wrong

What Went Well

Community growth: DAU reached 469M (+9% YoY), MAU 932M (+7% YoY); Spotlight monthly active users averaged >550M and time spent grew 23% YoY, now >40% of total content time .
Subscription momentum: Other Revenue rose 64% YoY to $171M, with Snapchat+ subscribers approaching 16M; Lens+ launched to expand paid AR experiences .
Advertiser performance improvements: Sponsored Snaps drove up to 22% incremental conversions; app campaigns saw 18% lift in unique converters; Smart Bidding case study doubled ROAS with +80% conversions and -50% CPA .
- CEO: “We’re excited about the opportunity to translate improved advertiser performance into topline acceleration” .

What Went Wrong

Auction pricing change: A platform change caused some campaigns to clear at substantially reduced prices, compressing eCPM; change was reverted mid-quarter, with growth improving thereafter .
Mix-driven margin pressure: Total impressions +15% YoY while average eCPM -10% YoY; Adjusted EBITDA fell to $41M vs $55M last year; operating margin deteriorated to -19% .
Brand demand softer and region mix: Brand advertising was flat, DR up 5% YoY; North America revenue fell sequentially despite SMB DR strength; Rest of World ARPU declined YoY .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$1.558	$1.363	$1.345
GAAP Diluted EPS ($)	N/A	-0.08	-0.16
Primary EPS (S&P normalized) ($)	0.16*	0.080*	0.006*
Operating Margin (%)	-2%	-14%	-19%
Adjusted EBITDA ($USD Millions)	$276	$108	$41
Adjusted EBITDA Margin (%)	18%	8%	3%
Advertising Revenue ($USD Billions)	N/A	$1.211	$1.174
Other Revenue ($USD Billions)	N/A	$0.152	$0.171

Values marked with * retrieved from S&P Global.

Segment revenue by region

Metric	Q4 2024	Q1 2025	Q2 2025
North America Revenue ($USD Billions)	$0.969	$0.832	$0.821
Europe Revenue ($USD Billions)	$0.287	$0.224	$0.265
Rest of World Revenue ($USD Billions)	$0.301	$0.308	$0.259

KPIs

KPI	Q4 2024	Q1 2025	Q2 2025
DAU (Millions)	453	460	469
MAU (Millions)	895	913	932
ARPU ($)	3.44	2.96	2.87
North America ARPU ($)	9.73	8.41	8.33
Europe ARPU ($)	2.89	2.26	2.65
Rest of World ARPU ($)	1.19	1.17	0.96

Estimate comparisons (Wall Street consensus vs actual)

Metric	Q1 2025	Q2 2025
Revenue Consensus ($USD Billions)	$1.345*	$1.346*
Revenue Actual ($USD Billions)	$1.363	$1.345
Primary EPS Consensus ($)	0.036*	0.016*
Primary EPS Actual ($)	0.080*	0.006*

Values marked with * retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q3 2025	N/A	$1.475B–$1.505B	New
DAU	Q3 2025	N/A	~476M	New
Infrastructure Cost per DAU (quarterly)	FY 2025	$0.82–$0.87 per quarter	$0.82–$0.87 per quarter; expect top half in Q3	Maintained; Q3 skew higher
Other Cost of Revenue (% of revenue)	FY 2025	19%–20%	19%–20%; within range in Q3	Maintained
Adjusted Operating Expenses ($)	FY 2025	$2.650B–$2.700B	$2.650B–$2.700B	Maintained
Stock-Based Compensation ($)	FY 2025	$1.130B–$1.160B	$1.10B–$1.13B	Lowered
Adjusted EBITDA ($)	Q3 2025	N/A	$110M–$135M	New

Earnings Call Themes & Trends

Topic	Q4 2024 (Previous Mentions)	Q1 2025 (Previous Mentions)	Q2 2025 (Current Period)	Trend
Sponsored Snaps	Initial takeover buys; early testing contemplated	Limited auction testing; <$10M revenue impact	Broadened rollout; strong conversion lifts; inventory growth lowering eCPM near term	Scaling; demand-building needed
DR vs Brand	DR share rising; brand softness	DR +14% YoY; brand -3% YoY	DR +5% YoY; brand flat; SMBs largest contributor	DR-led growth; brand stabilizing
Ad Platform/AI/ML	Model freshness and training scale gains	tCPA improvements; DPA formats; signal quality upgrades	Attribution/personalization improvements; Smart Campaign Solutions rollout	Continued AI-driven performance
AR & Specs	5th-gen Spectacles developer momentum	AR creator ecosystem growth; hand tracking features	Consumer-ready Specs planned for 2026; Snap OS updates; WebXR/Niantic Spatial	Strategic investment; path to consumer launch
Community/Content	Spotlight expansion; creator onboarding	Spotlight views <24h doubled; simplified onboarding UI testing	Spotlight MAU >550M; time spent +23% YoY; >40% share of content time	Strengthening engagement

Management Commentary

CEO on topline acceleration: “With meaningful inventory and conversions growth this quarter, including the broader rollout of Sponsored Snaps, we’re excited about the opportunity to translate improved advertiser performance into topline acceleration.”
CFO on auction change: “We shipped a change that caused some campaigns to clear the auction at substantially reduced prices… we have since reverted this change and advertising revenue growth has improved as advertisers adjust their bid strategies” .
CEO on Sponsored Snaps impact: “Users exhibit significantly higher engagement per full screen ad view, driving a 2x increase in conversion… and a 2x increase in website dwell times compared to other inventories.” .
CEO on Specs strategy: “We announced plans to publicly launch our first fully standalone lightweight Specs AR glasses in 2026… our tight control over each aspect of the hardware and software allow us to deliver a product experience that is unmatched.” .

Q&A Highlights

Sponsored Snaps mechanics and auction issue: Management detailed early success metrics and acknowledged the pricing change’s impact on eCPM/auction contestation, with growth recovering after reverting the change .
DR vs Brand split: DR +5% YoY; Brand flat in Q2; auction impact accrued largely to DR line .
AR/Specs differentiation and capital: Vertical integration across the AR stack and robust developer ecosystem; ability to fund via internal FCF with openness to partners .
North America engagement and DAU: Slightly fewer active days; focus on conversation starters through content sharing; calling up ~30% YoY .
Guidance cadence: Q3 revenue growth trajectory consistent with early 3–4% ad revenue growth pace, with potential improvement as Sponsored Snaps demand scales and comps normalize .

Estimates Context

Q2 revenue: $1.345B actual vs $1.346B consensus* (slight miss); Primary EPS 0.006 actual* vs 0.016 consensus* (miss). GAAP diluted EPS reported at -$0.16, noting Snap emphasizes Adjusted EBITDA and does not provide EPS guidance .
Q1 revenue: $1.363B actual vs $1.345B consensus* (beat); Primary EPS 0.080 actual* vs 0.036 consensus* (beat) .
Forward look: Q3 consensus revenue $1.490B*, management guided $1.475B–$1.505B; monitoring estimate revisions around Sponsored Snaps demand ramp and eCPM recovery is warranted*.
Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Sponsored Snaps are strategically important and early data show strong performance lifts; near-term eCPM pressure from increased supply should abate as demand scales, making the unit accretive over time .
SMB-led DR strength remains a growth pillar; Smart Campaign Solutions (Smart Bidding/Budget/Auto-Targeting) should improve ROAS and advertiser retention, supporting topline trends .
Q3 guide brackets consensus and implies stabilization; execution focus: DAU ~476M, AI/ML investments, and demand-building for new inventory .
Margin dynamics: high impressions growth vs lower eCPM compressed Adjusted EBITDA margin (3%); watch for margin normalization as pricing stabilizes and subscription revenue scales .
Subscription revenue is a meaningful diversification lever (64% YoY growth; nearly 16M subs) and provides monetization beyond ads; Lens+ expands AR monetization .
Capital structure strengthened: $550M 2034 senior notes to retire converts, potentially reducing dilution over time; ratings B1/BB/B+ with mixed outlooks .
Trading setup: anticipate volatility around eCPM recovery cadence and Sponsored Snaps demand; catalysts include Q3 print vs guide, DR momentum, and any brand demand improvement .

Notes on non-GAAP: Adjusted EBITDA, Adjusted Cost of Revenue, and Free Cash Flow are defined and reconciled in filings; management’s emphasis on Adjusted EBITDA reflects core operating trends while GAAP diluted EPS remains negative due to SBC, interest expense, and other items .