Snap beats Q2 estimates as shares jump 17% on ad growth

Snap reported Q2 revenue of $1.6 billion, up 19% and ahead of the $1.54 billion consensus, helped by World Cup ad spending and AI-powered advertising tools.

"The improvement in Q2 really reflects progress across both the advertising platform and the go-to-market execution," Chief Financial Officer Doug Hott said on the earnings call.

Metric	Actual	Consensus	Beat/Miss
Revenue	$1.60B	$1.54B	+3.9%
EPS	-$0.10	-$0.12	+$0.02
DAU	493M	487M	+1.2%

Advertising revenue rose 9% to $1.28 billion, while other revenue surged 85% to $316 million on Snapchat+, Memories Storage and the new Lens+ subscription. Gross margin expanded seven percentage points to 58%, and adjusted EBITDA climbed to $250 million from $41.3 million a year earlier. Net loss narrowed to $164 million from $262.6 million. Free cash flow was $121 million, an eighth straight positive quarter, with $706 million over the trailing 12 months.

Shares rose 7.46% to $5.04 in regular trading, then gained another 9.13% after hours to $5.50, about 17.3% above the prior close. The stock remains 42.4% below its 52-week high of $9.55.

For Q3, Snap guided revenue of $1.70 billion to $1.74 billion, implying about 19% growth at the midpoint, with adjusted EBITDA of $300 million to $350 million. The outlook reflects normalization after World Cup-related spending and tougher year-over-year comparisons. Management raised full-year infrastructure cost guidance to $1.65 billion to $1.70 billion, citing added AI and machine learning investment, while keeping adjusted operating expenses near $2.75 billion.

Daily active users reached 493 million, up 5.1%, with North American DAU stabilizing at 92 million. Monthly active users hit 971 million, approaching the 1 billion mark. Global ARPU rose to $3.25, beating the $3.16 estimate, with North American ARPU climbing 23% to $10.26.

The beat signals management's restructuring and AI push are translating into operating leverage, with revenue growing 19% while adjusted costs rose just 4%. Investors will watch the Sept. 16 Spectacles launch event in Los Angeles, where Snap plans to detail its $2,195 AR glasses ahead of a commercial launch later this fall.

This article is for informational purposes only and does not constitute investment advice.