Snap, the Santa Monica, California-based company reported its Q2 earnings on Tuesday showing slow quarterly revenue growth in more than a year. Snaps Q2 earnings were affected by a temporary glitch in its ad platform and the advertisers preferred its bigger rivals like Meta. Having missed the expectation of revenue growth for Q2, Snap’s stock tumble over 16% in extended trading.
The Snapchat parent said the glitch that unintentionally allowed some ads to run at much lower prices is resolved. Snap is also facing tough competition from big competitors like TikTok, Facebook and Instagram, as a preference for advertisers. Both rivals Meta and Reddit reported a good Q2 results last week.
Snap’s Q2 revenue and earnings report
Let’s look at how Span did when compared with Wall Street’s expectations:
Snap’s earnings per share: Loss of 16 cents. That figure is not comparable to analysts’ estimates.
Snap’s revenue: $1.34 billion vs. $1.35 billion expected, according to LSEG
As per Snap’s CEO Evan Spiegel the company’s “topline growth” was affected by a bungled update to its adverting platform that has since been addressed, the “timing of Ramadan” and the “effects of the de minimis changes,” referring to Trump’s trade policies.
Snap’s Q2 revenue was up around 8.7% to $1.34 billion from last year and largely in line with estimates, but much lower than the double-digit growth it recorded in the last five quarters. Along with this Snap’s net loss widened to $263 million from $249 million a year ago.
Snapchat+ subscription for Q2
For Snap small and medium-sized businesses were the largest contributors to ad revenue growth and its subscription service Snapchat+ remained a key driver for diversifying revenue beyond ads.
Snapchat+ subscribers was up nearly 42% about 16 million for the quarter ended June 30. Daily active users rose 9% to 469 million, compared with estimates of 467.9 million.
Snap’s Q3 forecast
As per data collected by LSEG, Snap’s Q3 revenue forecast is between $1.48 billion and $1.51 billion, compared with analysts’ average estimate of $1.48 billion.
Surge in digital ads
Snap’ ad revenue declined about 1% before “largely recovering” through May, leading the company to roll out Sponsored Snaps – a new video ads format that appears in user inboxes. Snap Inc. stated that its broader deployment of Sponsored Snaps across the U.S. and various international markets is resulting in increased user interaction and more meaningful engagement with advertising content.
This trend reflects a broader surge in digital ad spending across major platforms. Amazon, for instance, reported a 23% year-over-year increase in online ad sales for the Q2, reaching $15.69 billion. Reddit saw its Q2 revenue climb by an impressive 78%, totaling $500 million. Alphabet exceeded expectations with its July 23 Q2 earnings, while Meta announced a 22% year-over-year increase in Q2 revenue to $47.52 billion. Pinterest is scheduled to release its quarterly results on Thursday, rounding out a season of strong advertising performance across tech companies.
