Snap Inc. (SNAP Quick QuoteSNAP - Free Report) reported a first-quarter 2026 net loss of 5 cents per share. Adjusted earnings came in at 10 cents per share compared with the Zacks Consensus Estimate of 9 cents. 

Revenues rose 12% year over year to $1.529 billion and beat the Zacks Consensus Estimate by 0.55%. The figure came in at the top end of the company's prior guidance range of $1.5-$1.53 billion.

Adjusted EBITDA more than doubled, climbing 115% year over year to $233 million, materially favorable to the company's prior guidance.

Snap returned to growth in daily active users, accelerated revenue growth, expanded margins and generated strong free cash flow in the reported quarter.

Top-Line Details of SNAP

Revenues from North America (56% of total revenues) rose 2% year over year to $851 million. Revenues from Europe (21% of revenues) jumped 45% to $324 million. Revenues from the Rest of World (ROW) (23% of revenues) were $354 million, up 15% year over year.

The average revenue per user (ARPU) increased 7% year over year to $3.17. North America's ARPU climbed 10% to $9.23, while Europe's ARPU surged 48% to $3.34. ARPU for ROW rose 3% year over year to $1.20.

Advertising revenues reached $1.24 billion in the quarter, up 3% year over year, driven primarily by growth in direct response advertising. The performance was partially offset by continued headwinds in the North America large-client advertising business and an estimated $20-$25 million impact from geopolitical headwinds in the Middle East during March. Global impression volume increased approximately 17% year over year, while total eCPMs declined approximately 12% year over year.

Other Revenue, which includes Snapchat+ subscriptions, Memories Storage and the newly introduced Lens+ tier, increased 87% year over year to $285 million in the first quarter, reaching an annualized run rate of approximately $1.14 billion. Memories Storage was a key driver of acceleration, with a larger-than-anticipated share of new subscribers acquired through Memories choosing higher-ARPU subscription offerings, including Snapchat+.

Snap's Q1 User Engagement Metrics

SNAP's global community reached 483 million daily active users (DAU) in the first quarter, up 5% year over year, marking a return to DAU growth following a sequential decline in the prior quarter. Snap added nine million DAU on a quarter-over-quarter basis.

North America's DAU was 92 million, which decreased 7% year over year. Europe's DAU was 97 million, down 2% year over year. The ROW's DAU was 294 million at the end of the reported quarter, which increased 12% year over year. Snap reached 956 million monthly active users in the first quarter, representing 5% year-over-year growth.

The number of Spotlight posters in the United States grew nearly 74% year over year, while global Spotlight posters increased more than 61% year over year. Spotlight shares and reposts grew 62% year over year globally and 124% year over year in the United States. Total time spent watching Spotlight increased 11% year over year. Games on Snapchat reached 255 million monthly active users.

Snap's augmented reality ecosystem also expanded, with more than 75% of Snapchatters engaging with AR every day on average and Lenses being used in the Snapchat camera 9 billion times per day on average. More than 400,000 Lenses were submitted in the quarter, up over 150% year over year, driven primarily by the adoption of new creation tools such as Easy Lens. The Snap Map reached over 450 million global monthly active users.

Snap's Advertising Details in Q1

Sponsored Snaps drove strong performance gains, with per-impression click-through rates increasing 226% and 7-day conversion volume rising 59% in the first quarter. Nearly 75% of U.S. Chat DAU viewed ads in Chat, and roughly one-third of the Sponsored Snaps reach was unique to Chat. The company launched AI Sponsored Snaps, a new format that enables brands to engage Snapchatters through interactive, AI-powered conversations in Chat.

Promoted Places campaigns generated more than 20 million incremental visits and double-digit growth in foot traffic, with Carl's Jr. achieving an 18% lift in incremental visits.
Dynamic Product Ads revenues grew more than 30% year over year, while adoption among small and medium-sized customers more than doubled. App goal-based bidding revenues grew 27% year over year, and App Purchases revenues grew 87% year over year. Across Pixel Purchase campaigns, 7-0 purchases generated per dollar of revenues grew more than 23% year over year. Nearly 70% of advertising spend now uses at least one of Snap's AI-powered automation solutions, including Smart Audience, Smart Budget or Smart Placement.

Small and medium-sized businesses (SMBs) grew spending by more than 30% year over year in North America and accounted for over 30% of global ad revenues, remaining the largest ad-growth driver for the seventh consecutive quarter. North America upfront commitments for 2026 grew approximately 10% year over year. Large advertisers in North America remained a headwind, but Snap noted early signs of improvement.

Snap's Operating Details

Cost of revenues increased 4% year over year to $665 million. In the first quarter, research and development expenses rose 13% to $478 million, sales and marketing expenses decreased 7% to $239 million, and general and administrative expenses declined 6% to $221 million.

Adjusted EBITDA was $233 million, up 115% from the year-ago quarter. Adjusted EBITDA margin expanded approximately 7 percentage points to 15%. Adjusted Gross Margin improved 3 percentage points year over year to 57%.

Operating loss narrowed to $74 million from $194 million in the prior year. Net loss was $89 million compared with a net loss of $140 million in the prior-year quarter.

Significant Q1 2026 Developments

Snap announced that it had amicably ended its previously announced relationship with Perplexity in the first quarter, and its forward guidance assumes no contribution from this partnership. The company also disclosed that, in April, it took action to make Snap a faster, more focused and more efficient company, with the restructuring expected to reduce its annualized cost structure by more than $500 million in the second half of 2026.

Balance Sheet and Cash Flow

As of March 31, 2026, cash, cash equivalents and marketable securities were approximately $2.8 billion compared with approximately $2.9 billion as of Dec. 31, 2025.
Operating cash flow was $327 million compared with $270 million in the prior quarter and $152 million in the year-ago quarter. Free cash flow was $286 million compared with $206 million in the prior quarter and $114 million in the year-ago quarter.

Snap completed $350 million in share repurchases during the first quarter, with $400 million remaining under its previously authorized share repurchase program at quarter-end.

Guidance

Snap expects second-quarter 2026 revenues to be in the range of $1.52-$1.55 billion. The guidance assumes no contribution from Perplexity and that the operating environment in the Middle East region remains consistent with the magnitude of headwinds experienced in March and April. The company projects adjusted EBITDA between $175 million and $200 million for the second quarter.

Snap also expects to incur pre-tax restructuring charges of $95-$130 million related to its recent restructuring, with the majority to be incurred in the second quarter. Infrastructure costs are expected to grow modestly year over year in the second quarter, while All Other Cost of Revenue is expected to remain at 16-17% of revenues.

SNAP’s Zacks Rank and Stocks to Consider

Currently, SNAP carries a Zacks Rank #3 (Hold).

Some better-ranked stocks worth considering in the broader Zacks Computer and Technology sector are Micron Technology (MU Quick QuoteMU - Free Report) , Broadcom (AVGO Quick QuoteAVGO - Free Report) and NVIDIA (NVDA Quick QuoteNVDA - Free Report) . Micron Technology sports a Zacks Rank #1 (Strong Buy) at present, while Broadcom and NVIDIA each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Micron Technology’s fiscal 2026 earnings has been revised upward by a penny to $58.36 per share in the past 30 days, suggesting an increase of 604% from fiscal 2025’s reported figure. Micron Technology shares have surged 124.3% year to date (YTD).

The Zacks Consensus Estimate for Broadcom’s fiscal 2026 earnings has moved northward by 9 cents to $11.45 per share over the past 30 days and calls for a year-over-year jump of 67.9%. Broadcom shares have soared 25.8% YTD.

The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 earnings has moved upward by 4 cents to $8.07 per share in the past 30 days, implying a year-over-year improvement of approximately 69.2%. NVIDIA shares have risen 5.3% YTD.