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SNAP Earnings Meet Estimates in Q3, Revenues Increase Y/Y
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Key Takeaways
SNAP posted a Q3 loss of 6 cents per share on $1.51B revenues, up 10% Y/Y and ahead of consensus.
Global DAUs rose 8% Y/Y to 477M, driven by 15% growth in Rest of World despite a 3% drop in North America.
SNAP expects Q4 revenues of $1.68B$1.71B, reflecting 810% Y/Y growth despite a DAU decline forecast.
Snap (SNAP - Free Report) reported a third-quarter 2025 loss of 6 cents per share, meeting the Zacks Consensus Estimate. The company had registered a loss of 9 cents per share in the year-ago period.
Revenues rose 10% year over year to $1.51 billion and beat the Zacks Consensus Estimate by 1%.
Top-line Details of SNAP
Revenues from North America (60% of total revenues) rose 5% year-over-year to $898 million. Revenues from Europe (20% of revenues) jumped 20% to $298 million. Revenues from Rest of World (ROW) (21% of revenues) were $311 million, up 17% year-over-year.
The average revenue per user (ARPU) increased 2% year over year to $3.16. The ARPU of North America and Europe climbed 8% and 19% on a year-over-year basis, respectively, while ARPU for ROW increased 2%.
Other revenues, the majority of which consists of Snapchat+ subscription revenues, increased 54% year over year to $190 million in the third quarter, reaching an annualised run rate of more than $750 million. Snap approached 17 million Snapchat+ subscribers in the quarter, representing 35% year-over-year growth.
SNAP's global community reached 477 million daily active users (DAU) in the third quarter, up 8% year over year. Snap added 8 million DAU on a quarter-over-quarter basis.
North America's DAU was 98 million, which decreased 3% year over year. Europe's DAU was 100 million, up 1% year over year. The ROW's DAU was 280 million at the end of the reported quarter, which increased 15% year over year. Snap reached 943 million monthly active users in the third quarter, representing 7% year-over-year growth.
Snapchat+ approached 17 million subscribers in the third quarter, growing 35% year over year, and was the primary driver of the 54% year-over-year surge in other revenues. To build on this momentum, the company expanded its premium offerings by introducing Lens+, a new subscription tier that offers access to exclusive AI-powered augmented reality Lenses and early access to new features.
Global time spent watching content and the number of content viewers increased year-over-year in the third quarter, reflecting multiyear investment in machine learning infrastructure and continued growth in Spotlight. The share of total Spotlight views from content posted in the last 24 hours increased more than 300% year over year in the United States as models better surface topical and trending content.
Snap’s Advertising Details in Q3
In the third quarter, direct response advertising revenue increased 8% year over year, driven by strong demand for pixel purchase and app purchase optimisations, along with continued momentum from small and medium-sized business advertisers. Purchase-related ad revenue grew more than 30% year over year, reflecting higher attribution accuracy and improved campaign performance enabled by enhanced Dynamic Product Ads using large language models.
The Sponsored Snaps platform continued to gain momentum as one of Snap’s most effective ad formats, driving up to 22% higher conversions and 19% lower cost per action when integrated into campaigns.
Global impression volume rose 22% year over year, supported by expanded ad delivery in Sponsored Snaps and Spotlight, while total effective CPMs declined 13% due to higher impression supply. Sponsored Snaps delivered up to 22% higher conversions and 19% lower cost per action, while Promoted Places campaigns produced double-digit visitation lifts, including a 15% incremental lift for Panda Express. The App Power Pack generated over 25% lift in iOS app installs, underscoring Snap’s growing appeal for app-based advertisers. Small and medium-sized businesses remained the largest contributors to ad revenue growth, aided by improved onboarding tools and partnerships with commerce platforms such as WooCommerce.
Snap’s Operating Details
Adjusted cost of revenues increased 5% year-over-year to $671 million.
In the third quarter, adjusted operating expenses were $654 million, up 8% year-over-year. Research and development expenses rose to $250 million, sales and marketing expenses decreased to $198 million, and general and administrative expenses increased to $206 million.
Adjusted EBITDA was $182 million, up 38% from the year-ago quarter. Adjusted EBITDA margin expanded 2 percentage points to 12%. Adjusted EBITDA flow-through was 37% in the quarter.
Infrastructure costs increased 8% year over year, driven by investments in machine learning and AI compute, as well as the 8% year-over-year increase in global DAUs. Infrastructure cost per DAU was 85 cents in the third quarter.
Balance Sheet and Cash Flow
As of Sept. 30, 2025, cash, cash equivalents and marketable securities were $3 billion compared with $2.9 billion as of June 30, 2025.
The operating cash flow was $146.49 million compared to $115.87 million in the prior year.
The free cash flow was $93 million compared to $72 million reported in the year-ago quarter.
Guidance
Snap expects daily active users to decline in the fourth quarter, with revenues in the range of $1.68-$1.71 billion, indicating 8-10% year-over-year growth. The company projects adjusted EBITDA between $280 million and $310 million, reflecting improved cost discipline and operating leverage.
Infrastructure costs are expected to rise modestly to $420-$435 million, with full-year per-user costs maintained at 82-87 cents per DAU. All other cost of revenue is projected at 18-19% of total revenue, below the full-year range of 19-21%. Adjusted operating expenses are estimated near the low end of $2.65-$2.7 billion, while stock-based compensation is expected between $1.08 billion and $1.10 billion for the full year.
The Zacks Consensus Estimate for Reddit’s 2025 earnings is pegged at $2.35 per share, revised upward by 25.7% over the past 30 days and suggests a year-over-year increase of 170.57%. Reddit shares have soared 20.1% year to date.
The Zacks Consensus Estimate for Credo Technology Group’s fiscal 2026 earnings has been revised upward by a cent over the past 30 days to $2.04 per share, calling for an increase of 191.43% year over year. Credo Technology Group shares have rallied 157.6% year to date.
The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings has been revised upward to $3.22 per share from $3.03 per share over the past 30 days, implying 70.4% year-over-year growth. Amphenol shares have risen 100% year to date.
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SNAP Earnings Meet Estimates in Q3, Revenues Increase Y/Y
Key Takeaways
Snap (SNAP - Free Report) reported a third-quarter 2025 loss of 6 cents per share, meeting the Zacks Consensus Estimate. The company had registered a loss of 9 cents per share in the year-ago period.
Revenues rose 10% year over year to $1.51 billion and beat the Zacks Consensus Estimate by 1%.
Top-line Details of SNAP
Revenues from North America (60% of total revenues) rose 5% year-over-year to $898 million. Revenues from Europe (20% of revenues) jumped 20% to $298 million. Revenues from Rest of World (ROW) (21% of revenues) were $311 million, up 17% year-over-year.
The average revenue per user (ARPU) increased 2% year over year to $3.16. The ARPU of North America and Europe climbed 8% and 19% on a year-over-year basis, respectively, while ARPU for ROW increased 2%.
Other revenues, the majority of which consists of Snapchat+ subscription revenues, increased 54% year over year to $190 million in the third quarter, reaching an annualised run rate of more than $750 million. Snap approached 17 million Snapchat+ subscribers in the quarter, representing 35% year-over-year growth.
Snap Inc. Price, Consensus and EPS Surprise
Snap Inc. price-consensus-eps-surprise-chart | Snap Inc. Quote
User Engagement Growth for Snap Aids Q3 Sales
SNAP's global community reached 477 million daily active users (DAU) in the third quarter, up 8% year over year. Snap added 8 million DAU on a quarter-over-quarter basis.
North America's DAU was 98 million, which decreased 3% year over year. Europe's DAU was 100 million, up 1% year over year. The ROW's DAU was 280 million at the end of the reported quarter, which increased 15% year over year. Snap reached 943 million monthly active users in the third quarter, representing 7% year-over-year growth.
Snapchat+ approached 17 million subscribers in the third quarter, growing 35% year over year, and was the primary driver of the 54% year-over-year surge in other revenues. To build on this momentum, the company expanded its premium offerings by introducing Lens+, a new subscription tier that offers access to exclusive AI-powered augmented reality Lenses and early access to new features.
Global time spent watching content and the number of content viewers increased year-over-year in the third quarter, reflecting multiyear investment in machine learning infrastructure and continued growth in Spotlight. The share of total Spotlight views from content posted in the last 24 hours increased more than 300% year over year in the United States as models better surface topical and trending content.
Snap’s Advertising Details in Q3
In the third quarter, direct response advertising revenue increased 8% year over year, driven by strong demand for pixel purchase and app purchase optimisations, along with continued momentum from small and medium-sized business advertisers. Purchase-related ad revenue grew more than 30% year over year, reflecting higher attribution accuracy and improved campaign performance enabled by enhanced Dynamic Product Ads using large language models.
The Sponsored Snaps platform continued to gain momentum as one of Snap’s most effective ad formats, driving up to 22% higher conversions and 19% lower cost per action when integrated into campaigns.
Global impression volume rose 22% year over year, supported by expanded ad delivery in Sponsored Snaps and Spotlight, while total effective CPMs declined 13% due to higher impression supply. Sponsored Snaps delivered up to 22% higher conversions and 19% lower cost per action, while Promoted Places campaigns produced double-digit visitation lifts, including a 15% incremental lift for Panda Express. The App Power Pack generated over 25% lift in iOS app installs, underscoring Snap’s growing appeal for app-based advertisers. Small and medium-sized businesses remained the largest contributors to ad revenue growth, aided by improved onboarding tools and partnerships with commerce platforms such as WooCommerce.
Snap’s Operating Details
Adjusted cost of revenues increased 5% year-over-year to $671 million.
In the third quarter, adjusted operating expenses were $654 million, up 8% year-over-year. Research and development expenses rose to $250 million, sales and marketing expenses decreased to $198 million, and general and administrative expenses increased to $206 million.
Adjusted EBITDA was $182 million, up 38% from the year-ago quarter. Adjusted EBITDA margin expanded 2 percentage points to 12%. Adjusted EBITDA flow-through was 37% in the quarter.
Infrastructure costs increased 8% year over year, driven by investments in machine learning and AI compute, as well as the 8% year-over-year increase in global DAUs. Infrastructure cost per DAU was 85 cents in the third quarter.
Balance Sheet and Cash Flow
As of Sept. 30, 2025, cash, cash equivalents and marketable securities were $3 billion compared with $2.9 billion as of June 30, 2025.
The operating cash flow was $146.49 million compared to $115.87 million in the prior year.
The free cash flow was $93 million compared to $72 million reported in the year-ago quarter.
Guidance
Snap expects daily active users to decline in the fourth quarter, with revenues in the range of $1.68-$1.71 billion, indicating 8-10% year-over-year growth. The company projects adjusted EBITDA between $280 million and $310 million, reflecting improved cost discipline and operating leverage.
Infrastructure costs are expected to rise modestly to $420-$435 million, with full-year per-user costs maintained at 82-87 cents per DAU. All other cost of revenue is projected at 18-19% of total revenue, below the full-year range of 19-21%. Adjusted operating expenses are estimated near the low end of $2.65-$2.7 billion, while stock-based compensation is expected between $1.08 billion and $1.10 billion for the full year.
Zacks Rank & Stocks to Consider
SNAP currently carries a Zacks Rank #4 (Sell).
Reddit Inc. (RDDT - Free Report) , Credo Technology Group (CRDO - Free Report) and Amphenol (APH - Free Report) are some better-ranked stocks that investors can consider in the Zacks Computer and Technology sector.
Reddit, Credo Technology Group and Amphenol sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Reddit’s 2025 earnings is pegged at $2.35 per share, revised upward by 25.7% over the past 30 days and suggests a year-over-year increase of 170.57%. Reddit shares have soared 20.1% year to date.
The Zacks Consensus Estimate for Credo Technology Group’s fiscal 2026 earnings has been revised upward by a cent over the past 30 days to $2.04 per share, calling for an increase of 191.43% year over year. Credo Technology Group shares have rallied 157.6% year to date.
The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings has been revised upward to $3.22 per share from $3.03 per share over the past 30 days, implying 70.4% year-over-year growth. Amphenol shares have risen 100% year to date.