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Snap Inc reported revenue of $1.34 billion for Q2 2025, up just 8.7% year-over-year. This is its slowest increase in over a year, thanks to an ad error. While the total matched analyst expectations, it fell short of the double-digit growth seen in previous quarters.
Snap attributed the slowdown to a glitch in its advertising system that sold ads at discounted rates, external factors like Ramadan seasonal timing, and elimination of a U.S. duty-free import cushion that reverberated through ad budgets.
In response to the miss, Snap’s shares plunged nearly 17% during after-hours trading. Analysts warned that tight advertiser margins and growing competition from Meta, TikTok, and Reddit have dampened Snap’s monetization gains.
Despite Ad Error, User Growth Remains Positive
Even amid financial strain, Snap continued to grow its user base. Daily active users (DAUs) rose 9% to 469 million, while monthly active users (MAUs) reached 932 million, a 7% annual gain. Notably, growth came primarily from international markets, while North American engagement remained flat or declined.
Snap’s premium subscription product, Snapchat+, surged 42% to nearly 16 million subscribers, signaling progress in diversifying revenue beyond advertising.
Ad Error, Advertising Tools and User Features
Snap rolled out Sponsored Snaps, a video ad format embedded in chat inboxes. These ads delivered up to an 18–22% increase in unique conversions, especially relevant for app installs.
Its short-form feed Spotlight continued to expand, driving over 40% of total video engagement on the platform. Snap Stars (creator-sourced content) heightened output in North America by 145% annually, fueling ad exposure growth.
Beyond ads, Snapchat also launched features like an Apple Watch app, creator tools tapping into Memories templates, and refreshed insights for Stories and Spotlight that help optimize creators’ earnings.
Financial Metrics: Profit Still Elusive
Snapchat recorded a quarterly net loss of $263 million, slightly wider than the same quarter in 2024. Adjusted EBITDA dropped to $41 million from $55 million, though free cash flow turned positive at $24 million. Operating cash flow improved substantially to $88 million, reversing last year’s negative $21 million.
Snap projects Q3 revenue of $1.48–$1.51 billion and adjusted EBITDA between $110 and $135 million, signaling confidence in advertiser recovery and user monetization.
