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Snap Inc. reported higher fourth-quarter revenue and a sharp improvement in profitability, as it expanded subscriptions and prepared a consumer launch of new augmented reality hardware. The results show steady execution on Snap’s push to diversify beyond advertising.
However, Snap also reported a small decline in daily active users and issued first-quarter revenue guidance that points to continued ad-market pressure. The company framed the outlook as part of a broader pivot toward “profitable growth.”
In Snap's Q4 2025 earnings, the company said revenue rose 10% year over year to $1.716 billion. Snap added that it reached a 59% gross margin in the quarter, up from the prior year.
Snap reported a net income of $45 million, compared with $9 million a year earlier. It also posted adjusted EBITDA of $358 million, which improved by $82 million year over year.
Cash generation strengthened as well. Snap reported operating cash flow of $270 million and free cash flow of $206 million for the quarter.
The company said it ended Q4 with about $2.9 billion in cash and marketable securities. Snap also authorized a $500 million share repurchase program, citing balance sheet strength and free cash flow progress.
Snap said “Other Revenue” rose 62% year over year to $232 million in Q4. The company tied that performance to momentum in subscriptions, including Snapchat+ and paid storage offers.
The company stated that subscribers grew 71% year over year to 24 million in the quarter. Snap also said it will track subscriber growth as a key input metric for measuring diversification progress.
Meanwhile, Snap described broader subscription work that includes Memories Storage Plans. In its investor letter, Snap said it plans to grow existing subscription offers and introduce new ones over time.
Advertising still accounted for the majority of revenue. Snap said advertising revenue reached $1.48 billion, up 5% year over year, and it pointed to strength in direct response (DR) advertising and small and medium-sized businesses (SMBs).
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Snap said global daily active users (DAU) fell to 474 million, down 3 million quarter over quarter. The company reported monthly active users (MAU) of 946 million in Q4.
Snap attributed the DAU decline partly to reduced community growth marketing investments. It also cited regulatory changes, including age verification implementation in Australia, that removed about 400,000 accounts.
For the first quarter, Snap guided to revenue of $1.50 billion to $1.53 billion. The company also guided to Adjusted EBITDA of $170 million to $190 million for Q1.
Snap said its Q1 revenue guidance excludes potential revenue tied to a Perplexity integration because the parties have not agreed on a broader rollout path. The company positioned the outlook alongside planned investments tied to product development and go-to-market support.
Hardware remains a longer-term pillar of the diversification plan. Snap created a wholly owned subsidiary, Specs Inc., and said it plans a consumer launch of Specs later in 2026.
Looking ahead, Snap said it will focus on accelerating topline growth, expanding gross margins, and making progress toward sustained net income profitability. The company reiterated that its Q1 guidance reflects those priorities and its investment plans for the year.
