Snap shares climb after surpassing fourth-quarter sales expectations

• Global daily active users reached 474 million, missing the 478 million estimate, with a 3 million sequential decline attributed to reduced marketing spending and age verification measures that removed 400,000 accounts
• Average revenue per user (ARPU) was $3.62, exceeding the $3.56 estimate, as Snap focuses on growing subscription offerings like Snapchat+ to diversify revenue streams
• The company announced a $500 million stock repurchase program and reported adjusted EBITDA of $358 million, beating the $300 million estimate

Summary: Snap Q4 2025 Earnings Report

Financial Performance:

Snap exceeded Q4 revenue expectations, reporting $1.72 billion versus the $1.70 billion consensus. Revenue grew 10% year-over-year, while net income surged nearly 400% to $45.2 million from $9.1 million in the prior year. Adjusted EBITDA reached $358 million, beating the $300 million estimate.

Key Metrics:

• Global daily active users (DAU): 474 million, missing expectations of 478 million
• Global average revenue per user (ARPU): $3.62, exceeding the $3.56 estimate
• Q4 DAU declined by 3 million quarter-over-quarter due to reduced marketing spending focused on "more profitable growth"
• North American DAU: 94 million, below the 97 million forecast
• Approximately 400,000 accounts were removed following platform-level age verification implementation

Forward Guidance:

Q1 2026 revenue guidance of $1.50-$1.53 billion falls short of the $1.55 billion analyst estimate. However, Q1 adjusted EBITDA guidance of $170-$190 million (midpoint above consensus of $178 million) suggests improved profitability focus.

Strategic Initiatives:

• Announced $500 million stock repurchase program
• Plans to expand subscription offerings including Snapchat+ and Memories Storage Plans
• Recently created a separate entity to develop and market augmented reality glasses

Market Implications:

Despite mixed user metrics and conservative Q1 revenue guidance, Snap shares climbed on stronger profitability and the company's strategic pivot toward revenue diversification and operational efficiency. The focus on monetization over user growth signals a maturation strategy in the competitive social media landscape.