Snap Inc (NYSE:SNAP) saw its shares fall more than 16% in premarket trading following the release of its second-quarter 2025 results, which showed a larger-than-expected loss and renewed doubts about the company’s journey toward consistent profitability.
Though revenue met analyst forecasts and user numbers continued to grow steadily, investors responded coolly to the pressures on profit margins and declining earnings.
The company reported an adjusted loss per share of $0.16, slightly worse than the $0.15 loss analysts had predicted. Revenue totaled $1.35 billion, up 9% year-over-year and in line with expectations, driven by gains in advertising and subscription services.
Engagement remained strong, with Daily Active Users increasing 9% to 469 million and Monthly Active Users rising 7% to 932 million. Free cash flow turned positive, hitting $24 million compared to a negative $73 million a year prior, though adjusted EBITDA dropped 25% to $41 million.
“Our global community continued to grow in Q2, reaching 932 million Monthly Active Users as we continued to invest in AI and augmented reality,” said CEO Evan Spiegel. “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.”
Snap is doubling down on augmented reality and AI initiatives as key differentiators in a highly competitive digital advertising space. Its Spotlight vertical video feature attracted over 550 million average monthly users and now represents more than 40% of total content consumption time on the platform.
While Snap’s global average revenue per user (ARPU) remains below bigger competitors like Meta Platforms (NASDAQ:META), the company is making progress in monetizing its audience. Non-advertising revenue, primarily from Snapchat+ subscriptions, surged 64% year-over-year in the quarter, reflecting success in diversifying beyond advertising.
Nevertheless, investors remain cautious as the increase in user engagement has yet to translate into meaningful margin gains. Snap’s Q3 2025 outlook was not provided in detail, leaving the market eager for clearer guidance on advertising recovery and profitability prospects.
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