Shares fell 11% as investors were disappointed by cautious full-year bookings guidance and modest margin improvement despite accelerating user growth. Market reaction reflects skepticism that rising DAUs will translate into near-term revenue gains given ongoing experimentation and gradual monetization.
- Daily Active Users (DAUs) grew 23% year-over-year in Q2, accelerating from Q1, driven by product experimentation and user retention initiatives like the Streak Revival campaign.
- Full-year bookings growth guidance was maintained at approximately 11%, despite current user momentum, signaling a deliberate restraint on near-term revenue expectations.
- Gross margin outlook was marginally raised to ~70% for 2026, up from 69%, primarily due to AI-driven cost savings and content improvements.
- Adjusted EBITDA margin guidance increased to around 25.5-26.5%, reflecting disciplined expense management despite investments.
- Free cash flow remains robust, with $79 million generated in Q2 and $1.3 billion cash on hand; $44 million of stock buybacks executed during the quarter.
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