Maya Robertson
Snap Inc. closed the 2025 holiday quarter with revenue ahead of market expectations, even as its global user base contracted for the first time in several years. The Snapchat parent reported fourth-quarter revenue of $1.72 billion, up 10% year over year and slightly above analyst forecasts, driven by stronger advertising demand during the holiday season and rapid growth in paid subscriptions.
Advertising remained Snap’s largest revenue stream, generating $1.48 billion in the quarter, a 5% annual increase. Growth was led by direct-response formats such as Sponsored Snaps and Promoted Places, alongside a 28% rise in active advertisers. Small- and mid-sized businesses were the primary contributors, while large enterprise advertisers in North America continued to lag.
Subscriptions played a growing role in diversifying Snap’s revenue mix. Paid subscribers across Snapchat+ and newer storage plans rose 71% year over year to 24 million, lifting “other revenue” to $232 million in the quarter, up 62% from a year earlier. The company reported net income of $45 million, compared with $9 million a year earlier, and posted adjusted EBITDA well above expectations.
Despite the financial gains, user trends moved in the opposite direction. Snapchat ended the quarter with 474 million daily active users, down 3 million from the prior quarter and below analyst estimates. Snap attributed the decline to a deliberate reduction in growth-focused marketing spend as it shifts toward profitability, as well as the removal of roughly 400,000 accounts in Australia following the introduction of under-16 social media restrictions.
Looking ahead, Snap forecast first-quarter revenue between $1.50 billion and $1.53 billion, slightly below market expectations. The outlook excludes any contribution from its $400 million partnership with Perplexity AI, which remains without a confirmed timeline for broader rollout.
Beyond its core platform, Snap continues to invest in augmented reality hardware. The company recently established Specs Inc., a standalone subsidiary to develop and commercialize its upcoming AR glasses, expected to launch later this year. The product is positioned as a separate brand and does not require a Snapchat account, signaling Snap’s intent to reach audiences beyond its social app.
Snap also announced a $500 million share repurchase program, even as executives acknowledged ongoing regulatory scrutiny across multiple markets. While management downplayed the direct revenue impact of youth-focused regulations, the company noted that policy changes could continue to influence engagement trends in the near term.
Taken together, the quarter highlighted a company leaning on advertising efficiency, subscriptions, and new hardware bets to support revenue growth, while accepting slower — and in some regions declining — user expansion as part of a broader pivot toward profitability.
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