Snap delivered a stronger-than-expected second quarter on Tuesday, with its shares jumping around 8% in extended trading after the social media company cleared analyst forecasts on revenue, earnings and user growth.
Revenue for the period reached $1.6 billion, a 19% rise from $1.34 billion in the same quarter a year earlier, against analyst expectations of $1.54 billion according to LSEG. Adjusted earnings came in at $250 million, well ahead of the $192 million analysts had projected. The company’s net loss narrowed to $164 million from $262.6 million the year before.
As reported by CNBC, global daily active users reached 493 million, topping forecasts of 487 million, while average revenue per user climbed to $3.25 against an expected $3.16. Forward guidance was equally encouraging, with third-quarter revenue forecast between $1.7 billion and $1.74 billion, edging past consensus estimates.
Chief executive Evan Spiegel pointed to a meaningful turnaround in the advertising business. In an investor letter, he described better traction with large North American advertisers, stronger international revenue growth and a tailwind from World Cup-related ad spending. The improvement is notable given that Snap had flagged large North American advertisers as a drag on growth as recently as its May earnings call.
Not everything moved in the right direction. North American daily active users fell 7% year on year to 92 million, a figure that has unsettled investors for several quarters. Global DAU growth of 5% and a recovering ad business helped absorb that concern, though Spiegel also noted on the earnings call that Snap is monitoring the regulatory environment around age assurance, privacy and online safety, areas he said could affect product experiences and user growth over time.
Snap raised its full-year infrastructure cost guidance by $50 million to between $1.65 billion and $1.7 billion, citing additional investment in the artificial intelligence and machine learning infrastructure supporting its ad products.
The Snapchat+ subscription service continued to expand rapidly, with Snap’s other revenue category climbing 85% year on year to $316 million. The company’s newly unveiled augmented reality glasses, Specs, priced at $2,195, are expected to ship later this year, though Spiegel was candid that widespread consumer adoption is unlikely before the end of the decade, with cost and weight still significant barriers to meaningful volume.
The results landed at an awkward moment for Snap’s peers. Reddit shares fell sharply after the company flagged choppy search referral traffic, and Meta’s stock slipped on a weaker-than-expected sales outlook weighed down by heavy AI spending. Snap, a company many in the market had long since written off, produced the strongest result of the three.
