Sophie Blake
Snap Inc. is under pressure once again. On Tuesday, the social media company reported stronger-than-expected revenue for the first quarter of 2025, yet its shares plummeted 14% in after-hours trading as executives declined to issue guidance for the current quarter, citing ongoing macroeconomic uncertainty and early-quarter “headwinds.”
Despite delivering a 14% year-over-year jump in revenue to $1.36 billion—surpassing Wall Street expectations of $1.35 billion—Snap chose not to provide a revenue outlook for Q2. The company cited unpredictability in the global economy, especially as it pertains to advertising demand, a key source of its revenue.
“While our topline revenue has continued to grow, we have experienced headwinds to start the current quarter,” Snap stated in its letter to investors. “We believe it is prudent to continue to balance our level of investment with realized revenue growth.”
Snap’s net loss narrowed to $140 million, or 8 cents per share, a significant improvement from the $305 million loss, or 19 cents per share, reported in the same period last year. The company attributed much of the loss to a $70.1 million charge tied to severance packages, stock-based compensation, and other restructuring-related costs from 2024.
User engagement metrics offered some optimism. Daily active users grew to 460 million, slightly above estimates, and monthly active users climbed to 900 million, up from 850 million in August 2024. Average revenue per user also saw a modest increase, reaching $2.96, just ahead of projections.
However, Snap’s advertising business, which remains its financial backbone, showed mixed results. Direct response advertising drove much of the 9% annual growth in ad revenue, reaching $1.21 billion. In contrast, brand advertising revenue declined 3% year over year—a sign that companies may be pulling back larger campaign budgets amid economic uncertainty and geopolitical shifts, including ongoing concerns around trade policy under the current U.S. administration.
The company revised its full-year guidance for adjusted operating expenses, now expecting costs to fall between $2.65 billion and $2.70 billion—slightly lower than its previous range. Stock-based compensation guidance was also lowered.
Snap isn’t alone in navigating these choppy waters. Alphabet, which reported strong quarterly revenue of $90.23 billion last week, warned investors of potential pressure on its advertising business in the Asia-Pacific region, underscoring broader industry volatility.
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