Snap narrows Q1 loss as revenue rises 12% YoY
What's the story
Snap Inc., the parent company of Snapchat, has reported its first-quarter earnings for 2026. The company posted a net loss of $89 million, a 36% improvement from the $139.6 million loss it recorded in the same period last year. However, its first-quarter sales rose 12% year over year (YoY) to $1.53 billion.
Market reaction
Shares decline by 4% in extended trading
Snap's shares fell by about 4% in extended trading after the company announced its first-quarter earnings and cautious sales guidance. The decline was also triggered by the news that Snap no longer has a deal with generative AI start-up Perplexity. The $400 million deal had been announced last November but was amicably ended in Q1 2026, according to an investor letter from Snap.
Performance analysis
Key financial metrics for Snap
In terms of earnings per share (EPS), Snap reported a loss of $0.05, which is not comparable to analysts' estimates. The company's global daily active users (DAUs) reached 483 million, beating the expected number of 475.6 million. However, the global average revenue per user (ARPU) was slightly lower than expected at $3.17 against an anticipated $3.20 per user according to StreetAccount data.
Strategic shift
Snap plans to lay off 16% of workforce
Snap has also revealed its plans to lay off about 16% of its workforce and stop hiring for 300 open positions. The move is part of an "AI-driven transformation" strategy, which comes as the company faces headwinds from large advertisers in North America. Despite these challenges, Snap remains optimistic about improving this part of its business.
Revenue forecast
Revenue guidance for Q2 assumes no contribution from Perplexity
For the second quarter of 2026, Snap has projected sales between $1.52 billion and $1.55 billion. This estimate is in line with analyst expectations of around $1.54 billion. However, the company has also warned that its revenue guidance for Q2 assumes no contribution from Perplexity and considers the Middle East region's operating environment to remain consistent with the March-April headwinds it experienced earlier this year.