Feb 4 (Reuters) - Snap SNAP.N forecast first-quarter revenue below Wall Street estimates on Wednesday, signaling tough competition for digital advertising dollars from bigger rivals such as Meta-owned Facebook and Instagram.
The social media company faced major hiccups ranging from U.S. President Donald Trump's changing trade policies and a technical issue in its advertising platform last year, dragging its shares down around 25% in 2025.
Advertisers increasingly rely on platforms such as Meta META.O and TikTok, which are preferred due to their larger user base.
The Snapchat-parent said total active advertisers on the platform rose 28% in the fourth quarter, underscoring strength in direct response ads and growth in new ad formats such as Sponsored Snaps and Promoted Places.
Snap said on Monday it implemented platform-level age verification in Australia to comply with a new law requiring users to be at least 16, resulting in the removal of over 400,000 accounts.
It expects first-quarter revenue to be between $1.50 billion and $1.53 billion, slightly below analysts' average estimate of $1.55 billion according to data compiled by LSEG.
The revenue forecast does not include revenue from the Perplexity integration, a $400 million deal announced last year, as Snap said the companies "have yet to mutually agree on a path to a broader roll out."
The company's current-quarter outlook for adjusted earnings before interest, taxes, depreciation and amortization of $170 million to $190 million was above estimates of $177.9 million, as it pivots toward profitable growth by tighter cost control.
It reported net income of $45 million in the fourth quarter, compared with $9 million a year earlier. Its 2025 net loss narrowed to $460 million from $698 million in 2024.
The company has been doubling down on augmented reality smart glasses with the launch of independent unit, Specs, last month, and also diversifying its revenue stream by focusing on its subscription service Snapchat+.
Subscribers for Snapchat+ rose 71% to 24 million in the fourth quarter. Daily active users of Snapchat rose 5% from a year earlier to 474 million, but fell by 3 million from the prior quarter.
Revenue rose 10% from a year earlier to $1.72 billion in the quarter ended December 31, exceeding estimates of $1.70 billion.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Krishna Chandra Eluri)
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