Snap shares plunged over 15% after second-quarter results missed analyst expectations on global average revenue per user.

The company posted revenue of US$1.34 billion, just under the US$1.35 billion forecast by analysts, and a net loss of US$262.6 million, wider than the US$248.6 million loss a year ago.

Snap recorded 469 million daily active users, slightly exceeding expectations, but average revenue per user fell short at US$2.87.

Adjusted EBITDA came in at US$41 million, missing projections of US$53 million.

Snap forecasts third-quarter revenue between US$1.4 billion and US$1.5 billion, ahead of Wall Street estimates, and expects daily active users to reach 476 million.

The company also announced changes to its engineering leadership and reported that its Snapchat+ subscription service is nearing 16 million users.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ Snap’s advertising struggles highlight intensifying competition in digital ads

Snap’s 4% advertising revenue growth to $1.174 billion starkly contrasts with competitors posting much stronger results this quarter1.

Reddit reported 78% year-over-year revenue growth to $500 million, while Amazon’s online ad sales rose 23% to $15.69 billion and Meta’s overall revenue grew 22% to $47.52 billion.

Even smaller competitor Reddit is projected to reach $1.8 billion in ad revenue for 2025, representing 50% year-over-year growth, while maintaining significantly lower revenue per user at $1.19 compared to Snap’s $2.8723.

This performance gap suggests Snap faces distinct challenges in an otherwise growing digital advertising market, where other platforms are successfully capturing increased advertiser spending.

The competitive pressure becomes more evident when considering that Reddit’s audience has only 26% overlap with Snapchat users, indicating advertisers have viable alternatives for reaching different demographics2.

2️⃣ Technical platform issues can severely impact advertising revenue in real-time auctions

Snap’s experience demonstrates how quickly operational problems can translate into significant financial losses in programmatic advertising.