Snap Inc. reported stronger-than-expected revenue for the second quarter ended June 30, driven by growth in advertising and subscription services, while expressing optimism about the upcoming launch of its augmented reality (AR) glasses later this year. The Santa Monica-based company posted revenue of $1.6 billion, a 19% increase from the previous year and exceeding analysts’ average estimate of $1.54 billion. Advertising revenue, which accounts for the majority of Snap’s sales, rose 9% to $1.28 billion.
Looking ahead, Snap projected third-quarter revenue could reach up to $1.74 billion, surpassing the consensus forecast of $1.70 billion. Despite the positive forecast, the company’s stock has declined more than 37% this year amid concerns about its advertising business, which faces headwinds from geopolitical tensions, technical challenges, and a competitive digital advertising landscape.
Chief Executive Officer Evan Spiegel highlighted the launch of Snap’s first AR glasses, called Specs, as the company’s “largest long-term opportunity.” The device, set to debut commercially in September, is designed to function independently of Snapchat accounts, potentially expanding Snap’s user base beyond its existing social media platform. Spiegel emphasized that developing new computing platforms mirrors the company’s earlier success entering the social media market, although some investors expressed skepticism regarding Snap’s ability to compete with larger technology firms such as Meta Platforms and Alphabet, which are heavily investing in artificial intelligence (AI) development.
Unlike its larger peers focusing on advanced AI models and infrastructure, Snap has concentrated its AI efforts on the development of AI-powered AR glasses. The Specs business was spun off into a separate subsidiary earlier this year. Spiegel acknowledged that mass adoption of such technology is unlikely until the end of the decade and stated that Snap is approaching investments in this area with caution and discipline.
Snap also reported strong user growth, with daily active users rising to 493 million for the six months ending June 30, up from 483 million the previous quarter and exceeding analyst expectations. Growth was particularly notable in its U.S. audience, led by users aged 35 and older.
The company faces ongoing challenges relating to the regulatory and legal environment. Various countries have implemented or proposed social media restrictions for teenage users, including bans targeting those under 16 years old. Notably, Australia and France have passed such measures. In the U.S., Snap is involved in several lawsuits alleging that social media platforms have harmed minors through their products. While Snap has settled some cases, multiple trials remain scheduled for 2026. Chief Financial Officer Doug Hott warned that regulatory developments could significantly impact Snap’s business and financial performance.
In addition to advertising sales, Snap’s “other revenue” category increased 85% in the second quarter to $316 million. This segment includes subscription-based products such as Snapchat+, which offers premium features, and an enhanced Memories storage plan, reflecting Snap’s efforts to diversify its revenue sources.
Earlier this year, Snap reduced its workforce by 16% as part of a cost-cutting initiative aimed at achieving profitability. The company noted that savings from these reductions are expected to be more fully realized in the current quarter and beyond. Despite the challenges facing the company, Snap’s leadership maintains a cautiously optimistic outlook as it prepares to expand its footprint in the evolving tech and AI landscape.