Social network Snapchat (NYSE: SNAP) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 18.9% year on year to $1.60 billion. Its GAAP loss of $0.10 per share was 18.3% above analysts’ consensus estimates.
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Snap (SNAP) Q2 CY2026 Highlights:
- Revenue: $1.60 billion vs analyst estimates of $1.54 billion (18.9% year-on-year growth, 3.8% beat)
- EPS (GAAP): -$0.10 vs analyst estimates of -$0.12 (18.3% beat)
- Adjusted EBITDA: $249.6 million vs analyst estimates of $185.3 million (15.6% margin, 34.7% beat)
- Operating Margin: -10.7%, up from -19.3% in the same quarter last year
- Free Cash Flow Margin: 7.5%, down from 18.7% in the previous quarter
- Market Capitalization: $7.89 billion
Company Overview
Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, Snap’s 12.3% annualized revenue growth over the last three years was decent. Its growth was slightly above the average consumer internet company and shows its offerings resonate with customers.
This quarter, Snap reported year-on-year revenue growth of 18.9%, and its $1.60 billion of revenue exceeded Wall Street’s estimates by 3.8%.
Looking ahead, sell-side analysts expect revenue to grow 10.6% over the next 12 months, a slight deceleration versus the last three years. Still, this projection is above the sector average and indicates the market sees some success for its newer products and services.
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Cash Is King
Although EBITDA is undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.
Snap has shown impressive cash profitability, driven by its cost-effective customer acquisition strategy that gives it the option to invest in new products and services rather than sales and marketing. The company’s free cash flow margin averaged 9.2% over the last two years, better than the broader consumer internet sector.
Taking a step back, we can see that Snap’s margin expanded by 9.3 percentage points over the last few years. This is encouraging because it gives the company more optionality.
Snap’s free cash flow clocked in at $120.5 million in Q2, equivalent to a 7.5% margin. This result was good as its margin was 5.8 percentage points higher than in the same quarter last year, building on its favorable historical trend.
Key Takeaways from Snap’s Q2 Results
We were impressed by how significantly Snap blew past analysts’ EBITDA expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 8.4% to $5.50 immediately following the results.
Indeed, Snap had a rock-solid quarterly earnings result, but is this stock a good investment here? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
