The news: Snapchat’s parent company posted a 9% rise in revenues YoY for Q2 2025, reaching $1.35 billion, but that marked its slowest growth in over a year. The company cited a technical issue in its ad platform that briefly allowed some ads to run at significantly discounted rates—an error it says has been resolved. Still, the revenue miss sent Snap shares down more than 16% in after-hours trading.
User metrics, however, remained strong. DAUs climbed 9% YoY to 469 million, with monthly actives hitting 932 million. The Rest of World segment again led user growth, growing 15% YoY. Time spent on the platform also increased, with TikTok-style Spotlight content now accounting for over 40% of total time spent. Spotlight MAUs surpassed 550 million, up 23% YoY.
Zooming out: Snap’s muted results stand in contrast to stronger quarters from larger peers. Meta posted double-digit ad growth, Google’s ad business reaccelerated, Reddit’s 84% ad revenue growth crushed expectations, and Microsoft saw ad revenues surge. Snap’s deceleration stands out in an otherwise bullish digital ad season.
Why it matters: Snap is adding users and deepening engagement, but its monetization is lagging.
- Europe led all regions in revenue growth at 15%, while North America (7%) and Rest of World (8%) posted more muted results.
- Global ARPU was flat at $2.87. In Rest of World—Snap’s fastest-growing segment—ARPU declined 6% YoY to just $0.96.
- The brief underpricing glitch in Snap’s ad auctions added more pressure to already-tight margins, with the company’s net loss widening to $263 million.
Yet there were bright spots:
- Snap’s AI-powered “7-0 Purchase” flow drove a 39% YoY boost in commerce ad volume.
- Sponsored Snaps increased incremental conversions by 22% and unique converters by 18%.
- Snapchat+ subscription revenues jumped 64% YoY, with premium tiers like Lens+ offering new monetization routes beyond ads.
Our take: Snap is winning on engagement but falling behind on monetization and margin. In a competitive ad market where Meta, Google, and Reddit are accelerating, Snap’s ad glitch and slowing growth have amplified investor concerns.
To stay relevant to advertisers, Snap must convert usage into yield—especially in fast-growing, undermonetized regions. Strong products are in place, but without better revenue execution, Snap risks being left out of the digital ad rebound.