Categories Analysis, Technology
Snap’s (SNAP) 1Q25 performance overshadowed by grim portent for ad business
Shares of Snap Inc. (NYSE: SNAP) plunged over 14% on Wednesday after the company reported its first quarter 2025 earnings results but did not provide guidance for the second quarter, citing concerns over the economic uncertainty and its impacts on its advertising business. Snap saw revenues grow double-digits and losses narrow in the first quarter.
Q1 performance
In Q1 2025, Snap’s revenue grew 14% year-over-year to $1.36 billion. The top line growth was driven by momentum in the direct-response (DR) advertising business and the growth of the Snapchat+ subscription business. Net loss of $0.08 per share was narrower than the loss of $0.19 per share reported last year.
MAU milestone
In Q1, Snap reached a milestone with 900 million monthly active users (MAU), as it aims to reach a target of 1 billion MAU. Daily active users (DAU) increased 9% YoY to 460 million. While DAU in North America dipped 1%, Europe and Rest of World recorded increases of 3% and 16% respectively.
The company’s efforts to drive engagement are yielding positive results, with a rise in global time spent watching content. The total number of Snap Star Spotlight posts grew over 125% YoY in the first quarter.
Advertising
Snap’s advertising revenue grew 9% YoY to $1.21 billion in Q1 2025, driven by a 14% increase in DR advertising revenue. Brand-oriented advertising revenue was down 3% YoY. The small and medium business client segment helped in driving a 60% growth in total active advertisers during the quarter.
No Outlook
Due to the ongoing macroeconomic uncertainty and its impact on advertising demand, Snap decided not to provide guidance for the second quarter of 2025. In its earnings report, the company stated that while its top line revenue has continued to grow, it has experienced headwinds to start the current quarter, and believes it is prudent to continue to balance its level of investment with realized revenue growth. Snap expects DAU to reach 468 million in Q2 2025.
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