Snap Inc. Q1 FY2026 earnings call

Evan noted progress in Q1 on growing community and engagement, re-accelerating revenue growth, improving gross margins, and moving toward net income profitability. Advertising execution improved with progress in core ad products, measurement, and new inventory. Other revenue saw strong growth driven by subscriptions. Derek discussed financial results, highlighting revenue at the top end of guidance, expanding gross margins, favorable adjusted EBITDA, and plans for cost reduction. They're also focused on specs with developer ecosystem momentum.

In Q1, revenue was $1.53 billion, up 12% year-over-year. Advertising revenue reached $1.24 billion, up 3% year-over-year, and other revenue was $285 million, up 87% year-over-year. Daily active users were 483 million, monthly active users were 956 million. Net loss was $89 million, operating cash flow was $327 million, free cash flow was $286 million, and adjusted EBITDA was $233 million. Adjusted gross margin improved 3 percentage points year-over-year to 57%.

Q2 revenue guidance is $1.52 billion to $1.55 billion. Assumes no contribution from perplexity and consistent Middle East operating environment. Infrastructure costs are expected to grow modestly, and adjusted EBITDA is between $175 and $200 million in Q2. Anticipates pre-tax restructuring charges of $95 to $130 million in Q2.

Evolving legal and regulatory landscape in the US and internationally, including age assurance, data use, privacy, advertising practices, and online safety. Outcomes are uncertain and may impact products, business practices, compliance costs, user growth, and engagement.

Q: Ross Sandler inquired about 2Q revenue guidance acceleration and thoughts on the activist deck.

A: Derek discussed Q1 factors, Q2 comps, and North America ads business; Evan stated they operate in the long-term interests of shareholders.

Q: Michael Nathanson asked about opening inventory to DSPs and details on Snapchat Plus.

A: Evan mentioned considering scaling through partners and talked about Snapchat Plus tiers and features.

Q: Doug and move with JP Morgan asked about AI sponsored snaps.

A: Evan said advertiser feedback was positive and chat monetization is native to Snapchat.

Q: Rich Greenfield asked about the North American ad business and balancing focus.

A: Evan talked about North America DAU, monetizable users, SMB and large customer segments.

Q: Nathan Bensal asked about the sustainability of Snapchat Plus.

A: Evan said they're focusing on user experience, creator subscriptions, and LensPlus.

Q: Mark Smolik asked about direct revenue and specs.

A: Evan talked about direct revenue growth and specs execution.

Q: Eric Sheridan asked about specs execution, Qualcomm collaboration, and agentic AI.

A: Evan talked about specs launch, Qualcomm, and agentic AI.

Q: Dan Selman asked about legislation and litigation.

A: Evan talked about age assurance and exploring additional age assurance practices.