The news: Snap exceeded revenue expectations and reported healthy user and advertiser growth in its most recent quarterly financial results as it shifts from “growth at all costs” to high-efficiency performance.

• Revenues reached $1.72 billion, up 10.6% YoY and well above analysts’ expectation of 9.1% growth.
• Total active advertisers grew 28% YoY.
• Monthly active users (MAUs) grew 6% YoY to 946 million, although daily active users (DAUs) dropped by 3 million quarter over quarter.

The company attributed the DAU decline to a substantial reduction in marketing investments to focus on “more profitable growth.” That included boosting average revenues per user (ARPU) through direct monetization via subscriptions like Snapchat+, expanding Sponsored Snaps, and adding Lens+ and Memories Storage Plans.

What it means: Snap is on a mission to diversify its revenue sources, moving from a business model in which it largely chases ad revenues to one where it can also make money through subscriptions—and, eventually, AR hardware, despite the previously muted success of products like its Spectacles camera glasses. This latest earnings report shows that the company is having moderate success with that strategy.

Its 89% YoY revenue surge from in-app optimizations and 19% jump in Dynamic Product Ads revenues also demonstrates Snap is now a serious bottom-funnel contender.

However, Snapchat is still far behind players like TikTok and Meta in the social media field—its share of total US social network ad spending will dip below 2% in 2026, down from 2.6% in 2023, per our data.

Looking ahead: Advertiser growth outpacing user growth implies Snap is monetizing intent, not just attention. Snap is focusing on a durable and diverse platform over a single-revenue business.

• The pullback in marketing spend and focus on subscription earnings shows Snap is prioritizing higher-value users and advertiser ROI over straight-up audience growth.
• For marketers, that could mean a smaller but more monetizable user base, with better targeting and more efficient inventory.

Implications for marketers: Snap’s push beyond ads—subscriptions now, hardware long-term—suggests a platform investing in ecosystem stickiness. For marketers, that lowers platform risk and points to more durable ad products, even if Specs and wearables remain a market gamble rather than an immediate revenue opportunity.

Go further: Visit our live advertising earnings tracker for insights into how the ad industry performed in Q4.