Social network Snapchat (NYSE: SNAP) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 8.7% year on year to $1.34 billion. Its GAAP loss of $0.16 per share was in line with analysts’ consensus estimates.

Is now the time to buy Snap? Find out by accessing our full research report, it’s free.

“Our global community continued to grow in Q2, reaching 932 million Monthly Active Users as we continued to invest in AI and augmented reality,” said Evan Spiegel, CEO.

Company Overview

Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last three years, Snap grew its sales at a tepid 7.5% compounded annual growth rate. This was below our standard for the consumer internet sector and is a poor baseline for our analysis.

This quarter, Snap grew its revenue by 8.7% year on year, and its $1.34 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 9.1% over the next 12 months. While this projection suggests its newer products and services will fuel better top-line performance, it is still below average for the sector.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories.

Daily Active Users

User Growth

As a social network, Snap generates revenue growth by increasing its user base and charging advertisers more for the ads each user is shown.

Over the last two years, Snap’s daily active users, a key performance metric for the company, increased by 9.7% annually to 469 million in the latest quarter. This growth rate is solid for a consumer internet business and indicates people are excited about its offerings.

In Q2, Snap added 37 million daily active users, leading to 8.6% year-on-year growth. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t accelerating user growth just yet.

Revenue Per User

Average revenue per user (ARPU) is a critical metric to track because it measures how much the company earns from the ads shown to its users. ARPU can also be a proxy for how valuable advertisers find Snap’s audience and its ad-targeting capabilities.

Snap’s ARPU growth has been subpar over the last two years, averaging 2.6%. This isn’t great, but the increase in daily active users is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Snap tries boosting ARPU by taking a more aggressive approach to monetization, it’s unclear whether users can continue growing at the current pace.

This quarter, Snap’s ARPU clocked in at $2.87. It was flat year on year, worse than the change in its daily active users.

Key Takeaways from Snap’s Q2 Results

It was good to see Snap increase its number of users this quarter. On the other hand, its EBITDA missed and its revenue was in line with Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 15% to $7.97 immediately following the results.

Snap’s earnings report left more to be desired. Let’s look forward to see if this quarter has created an opportunity to buy the stock. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.