<\/button><\/span><\/span><\/span> shares dropped about 4% in extended trading after the company reported first-quarter earnings on Wednesday and provided cautious sales guidance while revealing it no longer has a deal with the generative AI startup Perplexity.<\/p>\nHere is how the company did compared with Wall Street’s expectations:<\/p>\n
\nEarnings per share<\/strong>: Loss of 5 cents. That figure is not comparable to analysts’ estimates.<\/li>\nRevenue<\/strong>: $1.53 billion vs. $1.53 billion expected, according to LSEG\u00a0<\/li>\nGlobal daily active users<\/strong>: 483 million vs. 475.6 million expected, according to StreetAccount<\/li>\nGlobal average revenue per user (ARPU)<\/strong>: $3.17 vs. $3.20 expected, according to StreetAccount<\/li>\n<\/ul>\nSnap’s first-quarter sales rose 12% year-over-year while its net loss was $89 million, representing a narrowing of 36% from the $139.6 million it logged the previous year.\u00a0\u00a0<\/p>\n
The company said in an investor letter that “large advertisers in North America remained a headwind to advertising growth” in the first quarter, and while the company is “not satisfied with that outcome,” it is “beginning to see encouraging signs that this part of the business is improving.”<\/p>\n
Global daily active users, or DAU, rose 5% year-over-year, which the company attributed to new product updates related to its Lenses digital filters and Snap Map feature, among others. The company said<\/a> in February that its global DAU declined by 3 million quarter-over-quarter due to reduced marketing spending and the impact of Australia’s social media minimum age act<\/a>.<\/p>\n“In Q1, we returned to growth in daily active users, accelerated revenue growth, expanded margins, and generated strong free cash flow,” Snap CEO Evan Spiegel said in a statement.<\/p>\n
Snap said second-quarter sales will be in the range of $1.52 billion to $1.55 billion. The midpoint of that range is roughly inline with analyst estimates of $1.54 billion.<\/p>\n
The company said in the investor letter that its sales guidance “assumes no contribution from Perplexity as we amicably ended the relationship in Q1,” referring to the $400 million deal<\/a> it announced in November with the generative AI startup. Snap shares jumped 15% after the company revealed the Perplexity deal as part of its third-quarter earnings<\/a>, saying at the time that “Revenue from the partnership is expected to begin contributing in 2026.”<\/p>\nTech newsletter Sources first reported<\/a> that Snap’s deal with Perplexity collapsed.<\/p>\nSnap also said in the letter that its second-quarter revenue guidance “assumes that the operating environment in the Middle East region<\/a> remains consistent relative to the magnitude of the headwinds we have experienced in March and April.” Still, Snap cautioned “that the trajectory of the geopolitical situation in the region is uncertain.”<\/p>\nThe company said in April that it would lay off about 16% of its workforce<\/a> and no longer hire for 300 open positions, while pushing further into an “AI-driven transformation.” <\/p>\nPinterest reported its latest quarterly earnings<\/a> on Monday that beat on the top and bottom lines, but the company’s finance chief Julia Donnelly told analysts that “large retailers remained a headwind to growth” as they bear the brunt of President Donald Trump<\/a>‘s tough tariffs.<\/p>\nReddit<\/a> revealed last Thursday its first-quarter earnings<\/a> in which revenue for the period soared 69% year-over-year to $663 million, which CEO Steve Huffman told analysts marked seven straight quarters in which sales growth was over 60%.<\/p>\nMeta<\/a> and Alphabet<\/a> also reported their most recent quarterly earnings<\/a> last Wednesday in which they both beat<\/a> on sales. While both online advertising giants also said they plan to increase spending this year on AI-related infrastructure, investors responded more favorably<\/a> to Alphabet, whose stock rose<\/a> while Meta’s dropped.<\/p>\nWATCH<\/strong>: Here’s which AI-focused tech giant has the most to prove after the latest round of earnings<\/a>.<\/p>\n<\/div>\n