Snap Inc. reported stronger-than-expected first-quarter revenue Tuesday, but its shares fell more than 14% in after-hours trading after the company declined to provide forward guidance, citing macroeconomic concerns and volatility in the advertising market. The company said it anticipates continued pressure from economic conditions that could weigh on advertiser spending through the second quarter.
Revenue for the first quarter reached $1.36 billion, slightly surpassing Wall Street's forecast of $1.35 billion, according to LSEG. Daily active users hit 460 million, ahead of the 459 million projected by StreetAccount. Global average revenue per user was $2.96, also ahead of the expected $2.93.
Despite the growth, Snap declined to issue a second-quarter forecast, a move that drew concern from investors. "Given the uncertainty with respect to how macroeconomic 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 wrote in a letter to shareholders.
Snap expects daily active users in the second quarter to reach the midpoint of a projected range of 468 million. However, the company acknowledged a "challenging start" to the current quarter, citing slower revenue momentum and ongoing pressure on brand advertising. Direct response ad revenue rose 14% year-over-year, while brand advertising declined by 3%.
"While our topline revenue has continued to grow, we have experienced headwinds to start the current quarter," the company noted. Snap's finance chief, Derek Andersen, said during the earnings call that advertisers were feeling the impact of upcoming changes to the de minimis exemption, which allows duty-free shipments under $800 into the U.S. The loophole is scheduled to end Friday, creating new trade friction that could affect advertising spend.
The company's net loss narrowed to $140 million, or 8 cents per share, from $305 million, or 19 cents, a year ago. The loss included a $70.1 million charge tied to a 2024 restructuring effort involving severance and stock-based compensation. Adjusted EBITDA reached $108 million, beating StreetAccount's forecast of $64 million.
Snap also reported that its subscription service, Snapchat+, grew to 15 million subscribers, up from 14 million in the prior quarter. The product, launched in 2022, drove a 75% year-over-year increase in "other revenue," totaling $152 million.
Snap said its total monthly active users surpassed 900 million, up from 850 million in August. However, North American daily active users declined slightly to 99 million from 100 million last quarter. The company said it does not expect further declines in that region during the current period.
The company lowered its full-year adjusted operating expense range to $2.65 billion-$2.70 billion, down from $2.70 billion-$2.75 billion, and cut its stock-based compensation guidance to $1.13 billion-$1.16 billion, from a previous range of $1.15 billion-$1.20 billion.
