Snap Inc (NYSE:SNAP) has withheld second quarter guidance, sending its shares more than 15% lower despite handing down a solid first quarter report.
For Q1, revenue grew 14% from the year-ago quarter to $1.36 billion, above estimates of $1.34 billion.
Snap also significantly reduced its net loss to $140 million from $305 million. Its loss per share improved to $0.08 from a loss per share of $0.19 in the year-ago quarter.
Daily active users came in at 460 million, up from 453 million in the previous quarter.
“We surpassed an important milestone in Q1, with our community growing to over 900 million monthly active users,” Snap CEO Evan Spiegel highlighted.
“Quarterly revenue increased 14% year-over-year, driven by the progress we have made with our direct-response advertising solutions, continued momentum in driving performance for small and medium-sized businesses, and the growth of our Snapchat+ subscription business.”
Caution or broader slowdown?
Analysts at Jefferies believe by withholding Q2 guidance, Snap is being cautious rather than signalling a broader ad market slowdown.
Commentary from other companies, including Google, Spotify and Netflix, suggests the ad market is still healthy.
“In the past, Snap has provided quarter-to-date growth trends and an ‘internal forecast' rather than formal guidance. However, given the unpredictably of the macro environment, Snap has now opted to fully remove any intra-quarter disclosures,” analysts noted.
“We believe this decision is more a function of Snap being cautious on the rest of the quarter, rather than current trends rapidly deteriorating as a result of the de minimis exemption closing.”
Snap also lowered its fiscal 2025 operating expenses (opex) guidance by $50 million, while still targeting high-single-digit opex growth.
“Admittedly, we would have expected a bigger reduction in the opex outlook if growth trends were expected to materially worsen in the second half of 2025,” Jefferies wrote.
They lowered their price target on Snap to $10 while reducing their 2025 revenue forecast by another 5% to $5.8 billion, after already decreasing it by 5% going into earnings.
The analysts have a ‘Buy’ rating on Snap, which traded down 15% at about $8 on Wednesday afternoon.