Snap Q2 Earnings Call Highlights

Snap’s second-quarter revenue rose 19% to $1.6 billion , supported by a 9% increase in advertising revenue and an 85% surge in subscription-related revenue. Monthly active users reached 971 million, while daily active users totaled 493 million. Profitability and cash generation improved, with adjusted EBITDA rising to $250 million and free cash flow reaching $121 million; Snap has now generated positive free cash flow for eight consecutive quarters. The company will prioritize free cash flow per share in capital allocation and plans additional dilution-management efforts beginning in 2027. Snap guided for third-quarter revenue of $1.70 billion to $1.74 billion and adjusted EBITDA of $300 million to $350 million, while continuing to invest in AI infrastructure and its Spectacles platform. Management expects direct revenue to outpace overall growth, but warned that regulatory scrutiny and the normalization of World Cup-related advertising could affect results.

Snap NYSE: SNAP reported second-quarter revenue growth of 19% as the company cited improving advertising performance, rapid expansion in subscription-related revenue and increased cash generation. The company also said it is shifting its primary financial objective toward free cash flow per share while continuing to invest in its Spectacles computing platform. Revenue rose to $1.6 billion in the second quarter, while advertising revenue increased 9% to $1.28 billion. Other revenue climbed 85% to $316 million, driven by Snapchat+, Memories Storage and the Lens+ subscription offering. Monthly active users reached 971 million and daily active users totaled 493 million.

Chief Executive Officer and Co-Founder Evan Spiegel said Snapchat is approaching 1 billion monthly users and that the company’s work to rebuild its monetization platform and improve its go-to-market strategy is producing stronger results. He said Snap is focused on converting that scale into durable growth, margin expansion and cash generation.

Profitability and Cash Flow Improve Snap reported a gross margin of 58%, up seven percentage points from a year earlier. Net loss improved by $99 million to $164 million, while adjusted EBITDA increased by $208 million year over year to $250 million. Operating cash flow was $176 million and free cash flow was $121 million during the quarter. Over the past 12 months, Snap generated $919 million of operating cash flow and $706 million of free cash flow. Chief Financial Officer Doug Hott said the company has now produced positive free cash flow for eight straight quarters. Hott said Snap’s adjusted cost structure increased 4% year over year, compared with 19% revenue growth, as operating efficiencies helped offset investments in long-term growth initiatives. He also said the company’s early-quarter restructuring is expected to have a greater effect on personnel costs beginning in the third quarter. The company ended the quarter with approximately $2.7 billion in cash and marketable securities. Hott said Snap has repaid more than $2 billion of convertible notes due in 2027 and 2028, along with $47 million of notes due in August 2026. Going forward, Hott said free cash flow per share will guide capital allocation decisions. The company aims to grow revenue faster than costs, invest in higher-return opportunities, maintain a healthy cash balance and use share repurchases to offset dilution. Following completion of its current repurchase authorization, which is expected in the fourth quarter, Snap plans to introduce a new multiyear dilution-management program beginning in 2027.

Advertising Momentum and AI Tools Management...