Ever volatile Snap shares fell 17% after market close as second quarter revenue growth was slower than it has been due in part to a mistake that made it cheaper than intended for advertisers to clear at auction.
The company said its SVP of Engineering Eric Young is departing to pursue a new opportunity.
“Unfortunately, in our efforts to improve advertiser performance, we shipped a change that caused some campaigns to clear the auction at substantially reduced prices,” said Snap’s earnings release. “We have since reverted this change and advertising revenue growth has improved as advertisers adjust their bid strategies to achieve their objectives.”
Daily active users rose 9% year-over-year to 469 million.
Revenue grew 3 9% year-over-year to $1.34 billion. Advertising revenue of $1.174 billion rose 4%. The number was also impacted by the timing of Ramadan, a big holiday for Snapchat which has a robust following in the Middle East. The holiday fell more in the first quarter this year instead of the second in 2024, squeezing year-on-year comparisons.
And the overall impact of global tariffs meant some advertisers grew more cautious. Other social media and tech companies saw strong ad revenue growth but Snap, a smaller player, may be more sensitive to any shifts.
The company sees Q3 revenue in the range of $1.475 billion to $1.505 billion. It expects daily active users of 476 million.
Snap’s delivered adjusted earnings before interest, taxes, depreciation and amortization (ebitda) of $41 million and $24 million of free cash flow.
Time spent on Spotlight grew 23% year-over-year in Q2 and now contributes more than 40% of total time spent watching content.
Snapchat+ subscribers approached 16 million in Q2.
Snap announced plans to launch its first fully standalone lightweight Specs AR glasses in 2026, calling it a critical step toward realizing a long-term vision for augmented reality, where the company has been a pioneer.In Q2, 350+ million Snapchat users engaged with AR every day on average.
Sponsored Snaps are a major new initiative and proving highly effective in driving incremental conversions, the company said, delivering up to a 22% increase when included in an advertiser’s broader Snap campaign mix. Snapchat introduced Sponsored Snaps from creators, enabling advertisers to send a Sponsored Snap directly from a creator’s handle to Snapchat users in the chat feed.
