Snapchat’s Third Quarter Performance Overview

Snapchat (NYSE: SNAP) reported a revenue of $1.51 billion for the third quarter of 2025, marking a 9.8% increase compared to the previous year, which outperformed Wall Street’s expectations. Interestingly, the company’s GAAP loss came in at $0.06 per share, surpassing analyst forecasts by a significant 50.6%.

So, is it a good moment to invest in Snap? You might want to consider the details.

• Perplexity AI Partnership: Snap has confirmed that Perplexity AI will pay $400 million within a year to integrate its search capabilities into Snapchat.

• Revenue: The revenue of $1.51 billion represents a 9.8% year-over-year growth, exceeding the expected $1.49 billion.

• EPS (GAAP): The loss of $0.06, compared to an anticipated loss of $0.12, is a notable improvement.

• Adjusted EBITDA: Snap achieved $182 million against an estimated $124.2 million, indicating a better-than-expected performance.

• Operating Profit Margin: The margin stands at -8.5%, an improvement from -12.6% a year earlier.

• Free Cash Flow Margin: This margin is reported at 6.2%, up from 1.8% in the last quarter.

• Daily Active Users: The platform reached 477 million users, an increase of 34 million year-over-year.

• Market Capitalization: The current market cap is $12.62 billion.

CEO Evan Spiegel commented, “By focusing on performance, creativity, and simplicity, we help our advertisers achieve better results while providing our community with more ways to communicate.”

Snapchat, which was founded by students at Stanford, first launched as Picaboo and has developed into a visually-oriented social media platform.

When evaluating a company long-term, it’s essential to look at consistent performance. While Snap has achieved a 7.9% compound annual growth rate in revenue over three years, that’s relatively modest for the consumer internet sector. This raises some questions.

The recent quarter’s 9.8% revenue growth and $1.51 billion earnings surpassed Wall Street’s expectations by a narrow margin. Analysts expect sales to keep growing at 9.7% over the next year as Snap rolls out new products and services, yet this forecast still lags behind sector averages.

In the context of long-term trends, Snap’s daily active users have been climbing steadily, which is typically a positive sign. Recently, daily users rose by 34 million, demonstrating a year-over-year growth of 7.7%. However, this is below previous periods, indicating that new initiatives might not have accelerated user acquisition as hoped.

Average revenue per user (ARPU) is a critical metric that indicates the effectiveness of advertising strategies. Though Snap’s ARPU growth has averaged just 3.5% over two years, the user base expansion remains more indicative of long-term potential. Our observation is that if Snap adopts bolder monetization strategies, maintaining user growth might become a challenge.

This past quarter, Snap’s ARPU was $3.16, showing a 2% annual growth, which is slower compared to user growth.

We were impressed with Snap’s significant outperformance against analyst EBITDA expectations. The earnings surpassed predictions as well, painting a generally positive picture. Notably, the announcement regarding the $400 million from Perplexity AI led to a 22.8% surge in stock price, reaching $8.98.

While Snap has achieved solid quarterly results, one has to ask: Is now a good time to invest in this stock? When making this assessment, it’s crucial to look at the bigger picture—valuation, business quality, and not just the latest earnings report.