Snapchat parent Snap saw its stock droop in late trade after reporting first-quarter financials accompanied by a dose of realism even as monthly active users hit 900 million in the first quarter of 2025.
“Given the uncertainty with respect to how macro economic conditions may evolve in the months ahead, and how this may impact advertising demand more broadly, we do not intend to share formal financial guidance for Q2,” the company said in its letter to shareholders. “While our topline revenue has continued to grow, we have experienced headwinds to start the current quarter, and we believe it is prudent to continue to balance our level of investment with realized revenue growth.”
Snap decided instead to update cost structure guidance including current investment plans of 82 to 87 cents a quarter per daily active user, with the number estimated to be 468 million.
Daily active users (DAUs) for the first quarter rose 9% to 460 million.
“While there is uncertainty regarding the macro operating environment, we remain optimistic about the long-term prospects for our business. We remain optimistic because of the progress we have made with our ad platform to improve performance for our advertising partners, because of the progress we have made to diversify our advertiser base as well as our revenue sources with the growth of Snapchat+, because of our demonstrated ability to prioritize our cost structure to balance investment with topline growth over time, and because we have built a strong balance sheet with the financial flexibility necessary to maintain strategic focus through volatile macro conditions.”
Snap is mostly driven by advertising. Its shares, which tend to be volatile, closed up 3% but are now down by over 14% after the Q1 report. It’s the second tech company to see its shares pummeled today after earnings. Spotify shares fell 9% after early morning earnings but recovered much of that by the end of trading. Spotify has both ad-supported and subscription plans. But CEO Daniel Ek also spooked investors with talk of economic uncertainty and “short-term noise.” The one-two punch doesn’t bode well for a stream of tech and social media earnings coming later this week.
CEOs and investor are frantically trying to asses the impact of Donald Trump’s tariffs on businesses across sectors. Import taxes, which for now are global but heaviest on goods from China, will likely raise prices and depress advertising. And there are potentially more aggressive tariffs coming against major trading partners if the administration does not manage to strike deals. The overhang has pummeled financial markets.
At Snap, revenue rose 14% for the three months ended in March to $1.36 billion and the company narrowed its net loss to $140 million from $305 million. Free cash flow of $114 million compared to $38 million year on year.
Executives led by CEO Evan Spiegel will dig into the numbers on a call with analysts at 5 pm ET.
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