Snap rises on surprise profit beat, despite falling global daily active users
Snap shares are up 7% in premarket trading on Thursday after the owner of the popular social media app reported better-than-expected sales and earnings in its Q4 results, released Wednesday evening.
For the quarter ending December 31, 2025, the company reported:
Revenue of $1.72 billion, marginally above analyst estimates of $1.702 billion (consensus compiled by Bloomberg).
Adjusted EPS of $0.183, topping expectations of $0.153 by 20%.
“Our Q4 results began to reflect the impact of our strategic pivot toward profitable growth, translating into revenue diversification and meaningful margin expansion,” said CEO Evan Spiegel in a press release.
Investors seem to be pleased about the increased focus on the bottom line, with topline guidance actually coming in a little softer: Snap expects Q1 revenue to be between $1.5 billion and $1.53 billion, marginally below consensus forecasts for $1.526 billion at its midpoint.
However, the company also noted that the guidance excludes potential revenue from any deal with Perplexity AI’s answer engine in its app — a tie-up which would offer Snap $400 million a year in cash and equity — as the two parties are “yet to mutually agree on a path to a broader roll out.”
The bad news was that the company’s user base shrunk, with global daily active users, long a key metric for the social media company, dropping to 474 million from 477 million last quarter, lower than the previous quarter and analysts’ projections. In a letter to investors, the company addressed the slowdown as the result of a broader strategy change announced last year to focus on “profitable growth” that included plans to “substantially reduce our community growth marketing investments.” Snap also detailed its plans to invest in higher-margin ad products like Sponsored Snaps, and doubling down on its subscription business to boost its bottom line.
Snap has also been expanding into wearables and ARs in recent years, including creating a standalone subsidiary dedicated for its Specs AR glasses in January.
