Snap issues cautious guidance as Perplexity deal ends, Middle East 'geopolitical situation' causes uncertainty

Key Points:

• Snap's shares fell about 4% in extended trading after reporting a first-quarter net loss of $89 million, a 36% improvement year over year, with revenue meeting expectations at $1.53 billion and daily active users surpassing estimates at 483 million.
• The company ended its $400 million partnership with generative AI startup Perplexity in Q1 and provided cautious second-quarter sales guidance of $1.52 billion to $1.55 billion, roughly in line with analyst estimates.
• Snap cited challenges from large North American advertisers but noted early signs of improvement, attributing user growth to new product features like Lenses and Snap Map, despite previous declines linked to reduced marketing spend and regulatory impacts.
• The company plans to continue an AI-driven transformation while managing geopolitical uncertainties in the Middle East and recently announced workforce reductions of about 16% alongside a hiring freeze for 300 open roles.
• Comparatively, other social media firms like Pinterest and Reddit reported strong revenue growth despite headwinds, while tech giants Meta and Alphabet beat earnings expectations, with Alphabet receiving a more positive investor response due to its AI infrastructure investments.