Snap’s stock fell roughly 4% during after-hours trading following the release of its first-quarter financial results on Wednesday, which included a conservative sales forecast and the announcement that its agreement with generative AI firm Perplexity has concluded.

Here’s how Snap’s performance stacked up against Wall Street’s forecasts:

— Earnings per share: A loss of 5 cents, which isn’t directly comparable to analyst projections.

— Revenue: $1.53 billion, matching the $1.53 billion anticipated by LSEG.

— Global daily active users: 483 million, surpassing the 475.6 million forecast by StreetAccount.

— Global average revenue per user (ARPU): $3.17, slightly below the $3.20 expected by StreetAccount.

Snap’s first-quarter revenue grew 12% compared to the same period last year, while its net loss narrowed to $89 million, down 36% from the $139.6 million reported in the prior year.

In an investor letter, the company noted that “major advertisers in North America continued to pose challenges to advertising growth” during the quarter. Although Snap is “not pleased with this result,” it is “starting to observe positive indicators that this segment is recovering.”

Global daily active users (DAU) increased 5% year over year, a gain Snap credited to recent product enhancements including updates to its Lenses digital filters and Snap Map. Earlier in February, Snap had reported a quarterly decline of 3 million global DAUs, citing reduced marketing expenditures and the impact of Australia’s social media minimum age legislation.

“In Q1, we returned to growth in daily active users, accelerated revenue growth, expanded margins, and generated strong free cash flow,” Snap CEO Evan Spiegel stated.

Snap projected second-quarter sales between $1.52 billion and $1.55 billion. The midpoint of this range aligns closely with analyst estimates of $1.54 billion.

The investor letter clarified that the sales guidance “excludes any contribution from Perplexity as we amicably ended the relationship in Q1,” referencing the $400 million partnership announced in November. Snap shares had surged 15% after revealing the Perplexity deal during its third-quarter earnings report, with executives then stating that “Revenue from the partnership is expected to begin contributing in 2026.”

Snap also indicated that its second-quarter revenue guidance “assumes the operating environment in the Middle East remains consistent relative to the magnitude of the headwinds we have experienced in March and April.” However, the company cautioned that “the trajectory of the geopolitical situation in the region is uncertain.”

In April, Snap announced it would reduce its workforce by approximately 16% and halt hiring for 300 open roles, while advancing its “AI-driven transformation.”

Pinterest reported its latest quarterly earnings on Monday, exceeding expectations on both the top and bottom lines. However, CFO Julia Donnelly told analysts that “large retailers remained a headwind to growth” as they face the brunt of President Donald Trump’s stringent tariffs.

Reddit disclosed its first-quarter earnings last Thursday, showing revenue surged 69% year over year to $663 million. CEO Steve Huffman noted this marked seven consecutive quarters of sales growth exceeding 60%.

Meta and Alphabet also released their most recent quarterly earnings last Wednesday, with both beating on sales. While both tech giants announced plans to increase AI infrastructure spending this year, investors responded more positively to Alphabet, whose stock rose, whereas Meta’s fell.

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