Published by Global Banking and Finance Review
Posted on August 5, 2025
(Corrects paragraph 8 to say ad revenue growth declined to 1%, not ad revenue declined)
By Jaspreet Singh
(Reuters) -Snap on Tuesday reported its slowest quarterly growth in more than a year, hurt by a temporary glitch in its ad platform and advertiser preference for bigger rivals such as Meta, sending its shares down over 16% in extended trading.
The Snapchat-parent said it had resolved the error that unintentionally allowed some ads to run at much lower prices.
Snap faces tough competition from the likes of TikTok and Meta-owned Facebook and Instagram, with advertisers preferring the larger platforms as they curtail marketing budgets amid economic uncertainty. Rivals Meta and Reddit reported upbeat second quarter results last week.
"The digital ad tailwinds that propelled Meta and Reddit to blowout quarters turned into a light breeze for Snap," said eMarketer principal analyst Jasmine Enberg.
Under different circumstances, investors might have overlooked its ad platform misstep, but "there is little room for mistakes," she added.
Snap's quarterly revenue was also impacted by the timing of Ramadan, which influenced ad spending patterns. The end of the "de minimis" exemption - a U.S. duty-free import provision - also prompted some Chinese advertisers to reduce their marketing budgets.
In April, ad revenue growth declined to about 1% before "largely recovering" through May, and triggering the company to roll out Sponsored Snaps - a new video ads format that appears in user inboxes - more broadly in June, said CFO Derek Andersen.
The company said its expanded roll-out of Sponsored Snaps across the U.S. and several other global regions is driving more user actions and deeper engagement with ad content.
The Santa Monica, California-based company reported second-quarter revenue of $1.34 billion, up around 8.7% from last year and largely in line with estimates, but lower than the double-digit growth it recorded in the last five quarters. Its net loss widened to $263 million from $249 million a year ago.
Small and medium-sized businesses were the largest contributors to ad revenue growth and its subscription service Snapchat+ remained a key driver for diversifying revenue beyond ads.
Snapchat+ subscribers rose 42% to nearly 16 million for the quarter ended June 30. Daily active users rose 9% to 469 million, compared with estimates of 467.9 million.
The company forecast third-quarter revenue between $1.48 billion and $1.51 billion, compared with analysts' average estimate of $1.48 billion, according to data compiled by LSEG.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Leroy Leo)
