Snap Inc. reported third‑quarter 2025 results that surpassed revenue expectations and narrowed its net loss. Total revenue reached $1.507 billion, up 10% from $1.373 billion in Q3 2024, driven by a 5% rise in advertising revenue and a 54% jump in “Other Revenue” to $190 million, largely from Snapchat+ subscriptions. Net loss narrowed to $104 million, while adjusted EBITDA climbed to $182 million, a 46% increase from the prior year. Free cash flow hit $93 million, beating the $66.8 million consensus estimate. Earnings per share were a loss of $0.06, exactly matching the $0.06 loss forecasted by analysts.
The revenue lift was anchored by continued demand for Snap’s advertising platform, which benefited from higher ad spend in the U.S. and international markets. The surge in “Other Revenue” reflects the rapid growth of Snapchat+, with subscriber numbers rising sharply, providing a higher‑margin revenue stream that offsets the lower‑margin advertising business. Management highlighted the role of AI and AR investments, noting that new AI‑powered features and the partnership with Perplexity AI are expected to deepen user engagement and open new monetization pathways.
Margin performance improved across the board. Adjusted gross margin expanded to 55% from 52% in the prior quarter, driven by pricing power in high‑margin subscription services and cost efficiencies in content delivery. Adjusted EBITDA margin rose to 12% from 10% year‑over‑year, reflecting disciplined cost management amid increased spending on AI and AR initiatives. The company’s free cash flow beat expectations, underscoring its ability to generate cash even while investing heavily in future growth.
For the fourth quarter, Snap guided revenue of $1.68 to $1.71 billion and adjusted EBITDA of $280 to $310 million, signaling confidence in sustained demand for its advertising and subscription businesses. While the company did not disclose specific guidance for daily active users, it reiterated that it expects some short‑term pressure on engagement metrics as new monetization features roll out globally. The guidance represents a modest 8–10% year‑over‑year growth, indicating steady but not explosive momentum.
Investors responded positively to the earnings, citing the revenue beat, EPS meeting expectations, and strong forward guidance. The announcement of a $500 million stock buyback program reinforced confidence in the company’s financial health. The Perplexity AI partnership, a $400 million deal to embed AI‑powered search into Snapchat, was highlighted as a strategic catalyst for future user engagement and revenue diversification. Management acknowledged potential headwinds, including regulatory age‑verification requirements and the impact of monetization initiatives on user engagement, but emphasized that the company’s focus on performance, creativity, and long‑term growth remains intact.
Evan Spiegel, Snap’s CEO, said, “Our focus on performance, creativity, and simplicity is helping advertisers achieve stronger results while giving our community more ways to communicate.” He added that the company’s investments in AR and AI are key drivers of long‑term growth and that “we expect some adverse impact on engagement metrics as these experiences are rolled out globally,” underscoring a balanced view of short‑term challenges and long‑term opportunities.
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