Snap Beats Q4 Sales But Misses Guidance, AR Push Ahead

But here's the twist - Spiegel isn't panicking. The company's global ad sales from users under 18 are "not material," he said, adding that "looking at the revenue-generating potential of the business looking forward, we're not overly concerned about the changing regulatory environment." That confidence stems from a strategic pivot that's been quietly taking shape: subscriptions and augmented reality.

Snap's subscription offerings are exploding. Services like Snapchat+ and the recently launched Memories Storage Plans grew 71% year-over-year to 24 million subscribers in Q4. "Certainly memory storage plans were a big driver of the subscriber growth that we've seen recently," Spiegel said during the call. It's a revenue stream that doesn't depend on finicky advertisers or regulatory whims, and it's growing fast. The company also announced a $500 million stock repurchase program, signaling confidence in its financial position despite the mixed guidance.

But the real bombshell came last week when Snap announced it had created a wholly owned subsidiary named Specs Inc. dedicated to developing and marketing augmented reality glasses. The move graduates Specs from an R&D project to a standalone brand launching consumer AR glasses in 2026. "We're super excited about what's ahead this year with the launch of Specs, and obviously graduating from the R&D phase of Specs to broader consumer adoption," Spiegel told investors.

This isn't just a side project - it's a fundamental bet on the future. Spiegel emphasized that the AR glasses "appeals to a different audience segment than the core Snapchat audience," making it critical to "develop a standalone brand identity for Specs." He left the door open for outside investment, noting "there may be opportunities to raise additional capital" while balancing "our own ownership interest and any potential dilution."

The AR push puts Snap in direct competition with Meta, which has been aggressively marketing its Ray-Ban smart glasses. Spiegel took a subtle jab at Meta's efforts last year, suggesting their glasses represent technology Snap built a decade ago. Now he's putting his money where his mouth is, spinning off an entire subsidiary to prove Snap can win the AR race.

The numbers show a company in transition. Average revenue per user climbed to $3.62, beating StreetAccount's $3.56 estimate, suggesting Snap is squeezing more value from its existing user base even as growth slows. First-quarter adjusted EBITDA guidance of $170-$190 million came in above StreetAccount's $178 million estimate, indicating profitability isn't the issue - growth is.

Wall Street's reaction has been cautiously optimistic, with shares up over 2% in after-hours trading before dipping slightly when analysts probed regulatory risks. The mixed response reflects the uncertainty around Snap's dual strategy: milk the existing social media cash cow while betting big on an AR future that may or may not materialize.

What's clear is that Spiegel isn't content to fight yesterday's battles. While competitors like Meta and TikTok duke it out over short-form video supremacy, Snap is quietly positioning itself as the AR leader - assuming it can survive long enough to see that vision through.

Snap's fourth-quarter results capture a company at an inflection point. The beat-and-miss earnings reflect the tension between maintaining a profitable social media business and funding an ambitious AR future that could redefine the company. With regulatory pressure mounting, user growth stalling, and competition intensifying, Spiegel's bet on Specs Inc. and subscription revenue looks less like diversification and more like survival strategy. The question isn't whether Snap can beat quarterly estimates - it's whether the company can execute on its AR vision before the social media market leaves it behind. Watch for the Specs consumer launch later this year and whether Snap pursues outside funding that could validate or undermine confidence in the AR pivot.