Snap flags ad revenue hit from Middle East conflict, slower North America growth

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May 6, 2026 4:13 PM EDT

FILE PHOTO: A woman stands in front of the logo of Snap Inc. on the floor of the New York Stock Exchange while waiting for Snap Inc. to post their IPO, in New York City, NY, U.S. March 2, 2017. REUTERS/Lucas Jackson//File Photo

By Jaspreet Singh

May 6 (Reuters) - Snap ‌said on Wednesday ​its ​first-quarter advertising revenue was impacted by the conflict in the Middle East and slowing growth in North America, sending its shares 7% lower ‌in extended trading.

The Snapchat parent also announced an end to a $400 ⁠million deal with AI startup Perplexity. The deal, aimed at offering answers to users' questions within ‌the Snapchat app, was unveiled in ‌November.

Advertising revenue rose 3% to $1.24 billion in the quarter, driven by direct response ads, designed to prompt specific actions like app downloads or website visits. The ​company said it had an estimated $20 million to $25 million impact from the Middle East conflict during March and that it expects the geopolitical uncertainty to ⁠persist.

Squeezed between dominant platforms such as TikTok and Meta's Instagram in a crowded market, Snap has been turning ​to subscriptions to boost its revenue.

Revenue of $1.53 billion for the first quarter came in line with LSEG-compiled analysts' average estimate.

Snap expects second-quarter ​revenue of $1.52 billion to $1.55 billion, in line with ‌estimates.

In contrast, rivals Meta, Pinterest and Reddit reported upbeat first-quarter revenue. Analysts have said smaller platforms remain most exposed to ad ⁠budget cuts during geopolitical uncertainty, as spending concentrates on larger platforms such as Meta and Google.

Snap reported 483 million daily active users in the first quarter, adding 9 million from ⁠the prior quarter. But DAUs in North America declined, while revenue growth in the region slowed ​to 2%.

The company's average revenue per user (ARPU) declined sequentially to $3.17 in the quarter and missed analysts' estimates of $3.21, as it focuses on international markets including the Middle East, North Africa, India ‌and Asia Pacific.

Adjusted earnings before interest, taxes, depreciation, and amortization of $233.3 million exceeded estimates of $205.9 million.

"Nearly 70% of advertising spend now ‌uses at least one of our AI-powered automation solutions," Snap said in its letter to ⁠shareholders.

Last month, Snap said it ‌would lay off about 1,000 ​employees, after Irenic Capital Management pushed the company to optimize its portfolio and improve performance.

(Reporting by Jaspreet Singh in Bengaluru; Editing by ‌Sahal Muhammed)


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