Santa Monica, May 6, 2026, 14:01 PDT
- Snap reported a 12% jump in revenue to $1.53 billion. Still, the stock dropped in after-hours trading, following a guarded outlook for the second quarter.
- Daily active users ticked back up, hitting 483 million, though North America numbers stayed sluggish.
- The $400 million Perplexity AI agreement is off the table, with the company citing Middle East uncertainty as a short-term headwind.
Snap Inc. dropped roughly 5% in after-hours action Wednesday. The Snapchat parent posted stronger first-quarter revenue, but its guidance for the second quarter landed on the cautious side. Snap also confirmed it has terminated a $400 million AI agreement with Perplexity.
Investors still aren’t buying it—Snap needs to do more than just boost users if it wants to convince the market it can deliver consistent profits. Activist investors have been pushing, and Snap has slashed costs. Back in April, the company said it’s moving to become “faster, more focused, and more efficient,” with plans to trim at least $500 million off its annual cost base by the second half of 2026. Q4 Capital
Snap posted a 12% gain in first-quarter revenue, hitting $1.529 billion. Net loss improved, coming in at $89 million versus $140 million last year. Adjusted EBITDA jumped, more than doubling to $233 million. Free cash flow reached $286 million, reflecting cash from operations after property and equipment outlays.
“In Q1, we returned to growth in daily active users, accelerated revenue growth, expanded margins, and generated strong free cash flow,” said Chief Executive Evan Spiegel. Snap, according to Spiegel, is sticking to its focus on execution, but still investing in Specs—its smart-glasses project. Business Wire
Snapchat’s daily active users climbed to 483 million, an increase of 9 million over the prior quarter. Most of that growth came from outside North America and Europe. According to Reuters, North America saw a drop in daily active users, with revenue growth in the region slowing to just 2%.
Snap is guiding for second-quarter revenue between $1.52 billion and $1.55 billion, which sits roughly where analysts had it pegged. The company noted that the forecast doesn’t factor in any revenue from Perplexity, after the partnership wrapped up “amicably” in Q1. Q4 Capital
The Perplexity deal, rolled out roughly six months ago, was supposed to drop the AI start-up’s answer engine inside Snapchat’s chat—and funnel $400 million to Snap in a mix of cash and equity. With the agreement now scrapped, Snap loses a non-ad revenue stream just as it’s pushing to branch out from its core ad business.
Snap posted a 3% climb in ad revenue to $1.24 billion. Other revenue soared 87% to $285 million, thanks to subscriptions like Snapchat+, plus Memories Storage and Lens+. The company flagged big North American advertisers as a continued drag, though gains from small and mid-sized businesses and direct-response campaigns helped blunt the impact.
Snap pointed to a $20 million to $25 million estimated impact from Middle East geopolitical headwinds in March. Looking ahead to the second quarter, the company said its outlook assumes operating conditions in the region stay about the same as they were in March and April. Still, Snap cautioned that uncertainty in the area persists.
Snap continues to battle for advertising dollars with bigger players like Meta’s Instagram and TikTok. With rivals ramping up the pressure, Snap has leaned further into subscriptions, rolled out more AI-driven ad tools, and added fresh placements like Sponsored Snaps in Chat.
Analysts polled by Seeking Alpha were looking for Snap to post quarterly revenue around $1.53 billion. Snap shares finished the session at $6.15, then slipped to $5.83 after hours as of 4:45 p.m. Eastern.
Snap faces a tricky balance: cost-cutting could boost margins before its core ad business manages a true turnaround. Big-name North American advertisers? Their comeback is tentative, patchy at best. The Perplexity deal has dropped out of the picture, and new legal as well as regulatory hurdles—think age assurance, data policy, privacy, ad rules, and online safety—could drive up expenses or drag on user activity.
