dailyloe.com – Snap shares fell approximately 4% in extended trading following its first-quarter earnings report on Wednesday. The company provided cautious sales guidance and confirmed it no longer has a deal with the generative AI startup Perplexity.
Snap’s first-quarter sales increased by 12% year-over-year, with a net loss of $89 million. This loss represents a narrowing of 36% from the previous year’s $139.6 million.
In an investor letter, Snap stated that “large advertisers in North America remained a headwind to advertising growth” for the quarter. Although the company expressed dissatisfaction with this outcome, it noted signs of improvement.
Global daily active users (DAU) rose by 5% year-over-year, attributed to updates in its Lenses digital filters and Snap Map feature. Previously, Snap had reported a decline in DAU due to reduced marketing spend and Australia’s social media minimum age act.
Snap CEO Evan Spiegel remarked, “In Q1, we returned to growth in daily active users, accelerated revenue growth, expanded margins, and generated strong free cash flow.” The company’s second-quarter sales are projected to be between $1.52 billion and $1.55 billion.
The midpoint of this range aligns closely with analyst estimates of $1.54 billion. Snap indicated that its sales guidance “assumes no contribution from Perplexity as we amicably ended the relationship in Q1.” This relates to the $400 million deal announced in November.
Reports indicated that Snap’s agreement with Perplexity had collapsed. The company previously stated that revenue from the partnership was expected to contribute beginning in 2026.
Snap’s second-quarter revenue guidance also considers the geopolitical situation in the Middle East. The company mentioned that guidance “assumes that the operating environment in the Middle East region remains consistent relative to the magnitude of the headwinds we have experienced in March and April.” However, Snap warned of the uncertain trajectory of the geopolitical situation.
In April, Snap announced a workforce reduction of about 16%, alongside halting hiring for 300 open positions. This move was part of broader cost-cutting strategies.
