Snap Inc. reported that its direct‑revenue business has exceeded a $1 billion annualized revenue run rate, a milestone driven by the rapid growth of its Snapchat+ subscription service. The achievement marks a substantial expansion of Snap’s high‑margin subscription stream, creating a recurring revenue source that is largely independent of the company’s advertising business.
In the fourth quarter of 2024, Snap’s direct‑revenue run rate was just over $500 million. By the first quarter of 2025 it had risen to more than $600 million, and the fourth quarter of 2025 pushed the figure past $1 billion. Subscriber numbers mirror this trend: 15 million users in Q1 2025, 24 million in Q4 2025, and more than 25 million as of February 18 2026. The steady climb underscores the platform’s ability to convert free users into paying customers.
Snap’s fourth‑quarter 2025 revenue reached $1.72 billion, beating the consensus estimate of $1.70 billion. Gross margin improved to 59% from 55% in the prior quarter, reflecting a higher mix of high‑margin subscription revenue and disciplined cost management. The company’s net loss for fiscal 2025 was $460 million, but the margin expansion signals progress toward profitability.
"Today, we’re excited to share that our direct revenue category – the portfolio of products where Snapchatters support the platform directly – has exceeded a $1 B annualized revenue run rate," said CEO Evan Spiegel. "Our Q4 results began to reflect the impact of our strategic pivot toward profitable growth, translating into revenue diversification and meaningful margin expansion. This progress reflects our commitment to building a more financially efficient and profitable business while continuing to invest in the future of augmented reality and the consumer launch of Specs."
The $1 billion run rate represents a critical diversification of Snap’s revenue mix, reducing reliance on advertising and positioning the company for higher‑margin growth. The subscription model also provides a more predictable cash flow, which can support continued investment in augmented‑reality initiatives and the development of the Specs smart‑glasses platform. However, the company remains a net‑loss maker, and daily active user growth has slowed in key markets, indicating that the subscription expansion is not yet fully offsetting broader user‑engagement challenges.
Investors have responded cautiously, weighing the strong subscription growth against the company’s ongoing net loss and declining daily active users. The market reaction reflects a focus on the company’s ability to convert its large user base into sustainable, high‑margin revenue while managing the costs associated with continued product innovation and global expansion.
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