SNAP Earnings Miss Estimates in Q2, Revenues Increase Y/Y

Snap SNAP reported a second-quarter 2025 loss of a penny per share, missing the Zacks Consensus Estimate for earnings of a penny. The company had registered earnings of 2 cents per share in the year-ago period.Revenues rose 8.7% year over year to $1.35 billion and beat the Zacks Consensus Estimate by 0.66%.Snap Inc. Price, Consensus and EPS Surprise  Snap Inc. price-consensus-eps-surprise-chart | Snap Inc. QuoteTop-line Details of SNAPRevenues from North America (61% of total revenues) rose 6.9% year over year to $820.6 million. Revenues from Europe (19.7% of revenues) jumped 15.4% to $265.34 million. Revenues from Rest of the World (ROW) were $258.99 million, up 8.2% year over year.The average revenue per user (ARPU) increased 0.3% year over year to $2.87. The ARPU of North America and Europe climbed 8.6% and 12.3% on a year-over-year basis, respectively, while ARPU for ROW declined 5.9%.User Engagement Growth for Snap Aids Q2 SalesSNAP’s global community reached 469 million daily active users (DAU) in the second quarter, up 8.6% year over year. Snap added 9 million DAU on a quarter-over-quarter basis. North America’s DAU was 98 million, which decreased 2% year over year. Europe’s DAU was 100 million, up 3.1% year over year. ROW’s DAU was 271 million at the end of the reported quarter, which jumped 15.3% year over year. Snap reached more than 932 million monthly active users in the second quarter.Snapchat+ approached 16 million subscribers in the second quarter and was the primary driver of a 64% year-over-year surge in other revenue to reach an annualized run rate of nearly $700 million. To build on this momentum, the company introduced Lens+, a new Snapchat+ subscription tier that offers access to exclusive new AI video Lenses, Bitmoji Game Lenses, and early access to new features.Snap’s Advertising Details in Q2In the second quarter, Snap's advertising platform demonstrated significant performance improvements through enhanced AI capabilities and optimization tools. Purchase volume for commerce advertisers increased 39% year over year, while total purchase-related advertising revenues grew more than 25% from the prior-year period.The company's Sponsored Snaps format proved particularly effective at driving incremental conversions, generating up to 22% higher conversion rates when integrated into broader advertising campaigns, and delivering an 18% improvement in unique converters across app installations and in-app purchases.Snap’s Operating DetailsAdjusted cost of revenues increased 11% year over year to $650.1 million.  In the second quarter, adjusted operating expenses were $631.1 million, up 2.2% year over year. Sales and marketing expenses decreased 2% year over year to $202.2 million, while general and administrative expenses declined 10.5% year over year to $183.8 million. Research and development expenses rose 18.9% year over year to $245.1 million.Adjusted EBITDA was $41.3 million, down 24.9% from the year-ago quarter, reflecting revenue growth deceleration and increased investment spending that offset operational improvements.Balance Sheet & Cash FlowAs of June 30, 2025, cash and cash equivalents, and marketable securities were $2.9 billion compared with $3.2 billion as of March 31, 2025.The operating cash flow was $88.4 million against a negative cash flow of $21.3 million in the prior year.The free cash flow was $23.7 million against a negative $73.4 million reported in the year-ago quarter.GuidanceSNAP expects the third-quarter DAU to reach 476 million and projects revenues of $1.48-$1.51 billion. For infrastructure costs per DAU, Snap maintained its full-year guidance of 82-87 cents per quarter and anticipated operating in the top half of this range for the third quarter, as it continued prioritizing investments in machine learning and AI infrastructure.EBITDA is expected to be between $110 million and $135 million in the third quarter.Zacks Rank & Other Stocks to ConsiderSNAP currently carries a Zacks Rank #2 (Buy).Some other top-ranked stocks in the broader Zacks Computer and Technology sector are StoneCo STNE, Applied Materials AMAT and Cisco Systems CSCO.StoneCo currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.StoneCo is set to report second-quarter 2025 results on Aug. 07.Applied Materials currently carries a Zacks Rank #2. Applied Materials is set to report third-quarter 2025 results on Aug. 14.Cisco Systems currently carries a Zacks Rank #2. Cisco Systems is set to report fourth-quarter 2025 results on Aug. 13.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cisco Systems, Inc. (CSCO): Free Stock Analysis Report Applied Materials, Inc. (AMAT): Free Stock Analysis Report Snap Inc. (SNAP): Free Stock Analysis Report StoneCo Ltd. 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