Snap (SNAP) Up 4.3% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Snap (SNAP). Shares have added about 4.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Snap due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

SNAP's Q4 Earnings Surpass Estimates, Revenues Increase Y/Y

Snap reported fourth-quarter 2025 earnings of 3 cents per share, in contrast to the Zacks Consensus Estimate of a loss of 2 cents. The company reported earnings of a penny per share in the year-ago period.

Revenues rose 10.2% year over year to $1.72 billion and beat the Zacks Consensus Estimate by 1%.

Top-Line Details of SNAP

Revenues from North America (60% of total revenues) rose 6% year over year to $1.03 billion. Revenues from Europe (20% of revenues) jumped 19% to $341 million. Revenues from the Rest of World (ROW) (20% of revenues) were $350 million, up 16% year over year.

The average revenue per user (ARPU) increased 5% year over year to $3.62. The ARPU of North America and Europe climbed 12% and 20% on a year-over-year basis, respectively, while ARPU for ROW increased 5%.

Other revenues, the majority of which consists of Snapchat+ subscription revenues, increased 62% year over year to $232 million in the fourth quarter, reaching an annualized run rate of more than $928 million. Snap reached 24 million Snapchat+ subscribers in the quarter, representing 71% year-over-year growth.

Snap’s Q4 User Engagement Metrics

SNAP's global community reached 474 million daily active users (DAU) in the fourth quarter, up 5% year over year. Snap lost three million DAU on a quarter-over-quarter basis.

North America's DAU was 94 million, which decreased 5% year over year. Europe's DAU was 98 million, down 1% year over year. The ROW's DAU was 282 million at the end of the reported quarter, which increased 11% year over year. Snap reached 946 million monthly active users in the fourth quarter, representing 6% year-over-year growth.

Snapchat+ reached 24 million subscribers in the fourth quarter, up 71% year over year.

The number of U.S. Snapchatters posting to Spotlight increased 47% year over year in the fourth quarter, while the number of Spotlight reposts and shares rose 69% year over year in the United States, demonstrating improved content relevance in Spotlight discovery. The company rolled out Quick Cut, its Lens-powered video creation tool that helps Snapchatters quickly turn their favorite Memories into beat-synced, ready-to-share Snaps in seconds.

Snap's Advertising Details in Q4

In the fourth quarter, revenues from In-App Optimizations grew 89% year over year, supported by advances in foundational app models, broader adoption of the App Power Pack and new immersive formats, such as Playables. Revenues from Dynamic Product Ads increased 19% year over year, driven by expansion among large advertisers and continued migration of spend from static formats into higher-performing dynamic solutions.

Sponsored Snaps click-through rates grew 7%, and click-through purchases increased 17% from the third quarter to the fourth quarter, during which numerous format and ranking improvements were introduced. The Smart Campaign Solution suite, which uses AI to identify incremental high-value audiences and dynamically allocate spend across objectives, contributed to a more than 8% lift in conversions, making performance advertising on Snapchat simpler, more efficient and more accessible.

In the fourth quarter, total active advertisers increased 28% year over year, driven in part by simplified onboarding, improved campaign workflows and increased performance. The company strengthened its SMB offering through new partnerships, including a global integration with Wix, which allows ecommerce businesses to create campaigns, manage catalogs and improve measurement.

Snap's Operating Details

Cost of revenues increased 5% year over year to $702 million.

In the fourth quarter, research and development expenses rose 12% to $473 million, sales and marketing expenses increased 0.4% to $249 million, and general and administrative expenses grew 0.4% to $242 million.

Adjusted EBITDA was $358 million, up 29.6% from the year-ago quarter. Adjusted EBITDA margin expanded 3 percentage points to 21%.

Balance Sheet and Cash Flow

As of Dec. 31, 2025, cash, cash equivalents and marketable securities were $2.9 billion compared with $3 billion as of Sept. 30, 2025.

The operating cash flow was $270 million compared with $146 million in the prior quarter.

The free cash flow was $206 million compared with $93 million reported in the prior quarter.

Guidance

Snap expects first-quarter 2026 revenues in the range of $1.56-$1.6 billion, indicating 9-12% year-over-year growth. The company projects adjusted EBITDA between $205 million and $245 million.

For 2026, the company expects revenue growth in the low double-digit percentage range and adjusted EBITDA margin expansion of approximately 500 basis points compared to full-year 2025.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates review.

VGM Scores

At this time, Snap has a great Growth Score of A, a score with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Snap has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Snap belongs to the Zacks Internet - Software industry. Another stock from the same industry, Palantir Technologies Inc. (PLTR), has gained 17.4% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.

Palantir Technologies reported revenues of $1.41 billion in the last reported quarter, representing a year-over-year change of +70%. EPS of $0.25 for the same period compares with $0.14 a year ago.

For the current quarter, Palantir Technologies is expected to post earnings of $0.29 per share, indicating a change of +123.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.2% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Palantir Technologies. Also, the stock has a VGM Score of D.

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