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    SNAP
    Earnings call· Jun 2026(Q2 FY26)

    Snap Q2 FY26 earnings call SNAP

    Aug 3, 2026 Source

    Executive summary

    Snap Inc. Q2 FY26 — Strong Revenue Growth and Improved Profitability Driven by Ad Platform and AI Efficiencies

    Snap Inc. delivered a strong second quarter, showcasing the benefits of its rebuilt monetization platform and AI-enabled operating model. The company achieved robust revenue growth and significant improvements in profitability and free cash flow, which is now its primary financial objective. Management is focused on leveraging this momentum to invest in long-term opportunities like Specs while maintaining disciplined cost growth and managing share dilution.

    Highlights

    5

    • Revenue increased 19% year-over-year to $1.6 billion, exceeding expectations.

    • Adjusted EBITDA grew by $208 million year-over-year to $250 million, reflecting significant operating leverage.

    • Free cash flow reached $121 million in Q2 and $706 million over the past 12 months, marking eight consecutive quarters of positive FCF.

    • Other revenue, primarily from Snapchat+ and Lens+, surged 85% year-over-year to $316 million.

    • AI-powered Smart Campaign Solutions drove an 8% decline in cost per install and an 18% decline in cost per purchase for app advertisers.

    Concerns

    3

    • Full year infrastructure cost guidance was raised to $1.65 billion-$1.70 billion from $1.60 billion-$1.65 billion due to increased AI/ML investments.

    • Q3 revenue guidance of $1.70 billion-$1.74 billion implies a deceleration from Q2's 19% growth, partly due to the normalization of World Cup spending.

    • The company continues to monitor evolving legal and regulatory landscape, which may result in significant changes to products, increased compliance, and legal costs.

    Guidance & targets

    8
    CategoryTargetConfidence
    Q3 Revenue
    $1.70 billion to $1.74 billion
    high materiality
    High
    Full Year Infrastructure Costs
    $1.65 billion to $1.70 billion
    medium materiality
    High
    Full Year Other Cost of Revenue (excluding infrastructure)
    16% to 17% of revenue
    low materiality
    High
    Full Year Adjusted Operating Expenses
    approximately $2.75 billion
    medium materiality
    High
    Full Year Stock-Based Compensation
    approximately $1.05 billion
    low materiality
    High
    Q3 Adjusted EBITDA
    $300 million and $350 million
    high materiality
    High
    Net Income
    positive
    high materiality
    Medium
    Fully Diluted Share Count
    stable
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Advertising Revenue
    Growth driven by progress with large advertisers in North America, broader adoption of AI-powered smart campaign solutions, and continued SMB momentum.
    		$1.28 billion9%——
    Other Revenue
    Primarily driven by Snapchat+, Memory Storage, and Lens+ subscriptions. Represents a meaningful second revenue stream.
    		$316 million85%——

    Operational metrics

    21
    Gross margin
    58%up 7 percentage points YoY
    Q2 FY26

    Expanded due to operating efficiencies offsetting investments.

    Net loss improvement
    $99 million
    Q2 FY26

    Net loss improved to $164 million.

    Adjusted EBITDA increase
    $208 millionYoY
    Q2 FY26

    Adjusted EBITDA reached $250 million.

    Total adjusted cost structure growth
    4%YoY
    Q2 FY26

    Operating efficiencies offset investments in long-term revenue drivers.

    Cash and marketable securities
    $2.7 billion
    Q2 FY26 end

    Strong cash balance provides capacity for investment.

    Convertible notes repaid
    $47 million
    August 2026

    Repaid notes due in August 2026, in addition to over $2 billion due in 2027 and 2028.

    Conversions across platform
    56%YoY increase
    Q2 FY26

    Includes app and pixel purchase goals, reflecting improved ad platform performance.

    Spotlight daily active users growth
    >20%YoY
    Q2 FY26

    Supported by investment in creators and AI-powered recommendations.

    Spotlight posters growth
    >115%YoY
    Q2 FY26

    Reflects increasing engagement with the Spotlight feature.

    Cost per install (app advertisers)
    8%declined YoY
    Q2 FY26

    Driven by Smart Campaign Solutions.

    Cost per purchase (app advertisers)
    18%declined YoY
    Q2 FY26

    Driven by Smart Campaign Solutions.

    App purchase volume
    128%increased
    Q2 FY26

    Reflects improved advertiser outcomes.

    Dynamic product ads revenue growth
    43%
    Q2 FY26

    Driven by greater adoption by retailers.

    Incremental return on ad spend (ROAS)
    19.3%higher than blended incremental return from social advertising
    Q2 FY26

    Indicates strong value for advertisers on Snapchat.

    Snapchat+ paying subscribers as % of MAU
    <3%
    Q2 FY26

    Indicates substantial room to grow direct revenue through premium features and subscriptions.

    Code commits per engineer
    75%YoY increased
    Q2 FY26

    Reflects internal efficiency gains from AI.

    Major reliability issues
    57%declined
    Q2 FY26

    Reflects internal efficiency gains from AI.

    Internal AI code reviewer pull requests reviewed
    90%
    Q2 FY26

    Estimated hours of code review time saved.

    AI-powered support agent questions answered
    3.9 million
    monthly

    Reduced support ticket volume by approximately 62% since the start of the year.

    AI image review automation
    90%vs 40% in Q2 2025
    Q2 FY26

    Resulted in faster approvals, stronger content safety, and lower operating costs.

    Free cash flow per share
    —
    Going forward

    Designated as the primary financial objective, connecting operating performance, disciplined capital allocation, and long-term shareholder value creation.

    Industry KPIs

    6
    MetricValueDetails
    Family dap dau493 millionusers
    CAPEX compute commitments$1.65 billion to $1.70 billionUSD
    Advertising revenue by segment$1.28 billionUSD
    Share buyback capital returned—
    Ai feature adoption monetization90%%
    Custom silicon ai infrastructureSpecs

    Product announcements

    1
    ProductTypeDetails
    Specsmilestone

    Risks & headwinds

    3
    Regulatory and legal landscapeLater this year and beyond

    Outcomes remain uncertain, may result in significant changes to products and business practices, increased compliance requirements and legal costs, increased payments for legal judgments and settlements, and negative impacts to user growth and engagement.

    Mitigation: Closely monitoring the regulatory environment, including age assurance, privacy, and online safety requirements.

    World Cup spending normalizationQ3 FY26

    Q3 revenue guidance reflects expected normalization of World Cup-related spending.

    Mitigation: Focusing on continued constructive trends across the platform, including large advertiser momentum, SMB strength, and broader adoption of smart campaign solutions.

    Specs mass market adoption challengesLong-term (end of decade)

    High consideration purchase at $2,195. Mass market consumer adoption expected towards the end of the decade.

    Mitigation: Focusing on product quality, customer experience, and ecosystem development; expecting weight and costs to come down over time.

    What to watch in Q3 FY26

    5

    Q3 Revenue Performance

    next quarter
    Current$1.6 billion (Q2 actual)
    TargetWithin $1.70 billion to $1.74 billion guidance range

    Why it matters

    Verifies the company's ability to sustain top-line growth amidst normalizing World Cup spending and tougher year-over-year comparisons.

    Our guidance range for Q3 revenue is $1.70 billion to $1.74 billion.

    Q&A highlights

    5

    What gives management confidence that the strong Q2 growth is sustainable?

    Evan Spiegel highlighted broad improvements across the advertising platform and go-to-market execution, including stronger performance for lower-funnel advertisers, easier campaign management through automation, and a 56% YoY increase in conversions across the platform. He noted increased spending from existing advertisers and broader adoption of new formats as evidence of stronger fundamentals.

    “One of the things I'm particularly excited about is that all these improvements resulted in a 56% year-over-year increase in conversions across the platform, including app and pixel purchase goals.”

    asked by Douglas Anmuth · answered by Evan Spiegel

    2 min read5 chapters

    Detailed Narrative

    01

    Monetization Platform and Go-to-Market Progress

    Snap's Q2 performance reflects significant progress in rebuilding its monetization platform and improving go-to-market strategies. The company observed stronger results with large advertisers in North America and continued strength among small- and medium-sized businesses. These improvements led to a 56% year-over-year increase in conversions across the platform, including app and pixel purchase goals, and increased spending from existing advertisers.

    02

    AI-Powered Operating Model and Efficiency Gains

    AI is transforming Snap's operations, leading to improved service, deeper engagement, and better advertiser outcomes. Internally, AI has driven a 75% year-over-year increase in code commits per engineer and a 57% decline in major reliability issues. The internal AI code reviewer now handles 90% of pull requests, saving an estimated 30,000 hours. An AI-powered support agent answers 3.9 million questions monthly, reducing support ticket volume by 62% since the start of the year. In advertising, AI increased first-pass image review automation from 40% in Q2 2025 to nearly 90% in Q2 2026.

    03

    Specs and the Future of Computing

    Snap is investing in Specs, a new type of computer built into see-through glasses, designed for a future where AI assists users without constant screen interaction. The company views this as an enormous long-term opportunity, despite the technical challenges and high price point of $2,195. A launch event on September 16 will provide more details, with mass market consumer adoption expected towards the end of the decade as weight and costs decrease.

    04

    Diversification of Revenue Streams

    Beyond advertising, Snap is building a meaningful second revenue stream, with 'other revenue' growing 85% year-over-year to $316 million. This growth is primarily driven by Snapchat+, Memory Storage, and Lens+. With less than 3% of monthly active users currently paying subscribers, management sees substantial room for growth through premium features, AI-powered creative tools, and additional subscription products.

    05

    Financial Objectives and Capital Allocation

    Snap's primary financial objective going forward⏳ is free cash flow per share, connecting operating performance, disciplined capital allocation, and long-term shareholder value. The company aims to grow revenue faster than costs, invest with discipline, and use its share repurchase program to offset dilution. A new multiyear dilution management program is planned for 2027, funded primarily through free cash flow, to support a stable fully diluted share count.

    AI-generated summary of the company’s earnings call. Not investment advice.