Snap Shares Surge On The Back Of Growth In Users And Revenue

Snap Inc.'s Share Price Soars After Revenue Beats Expectations

Snapchat owner Snap Inc on Tuesday reported surging growth in users and revenue in its latest quarter, reviving hopes that it can survive competition with Facebook Inc's Instagram and sending its shares up more than 20 percent.

Revenue for the quarter ended December 31 jumped 72 percent, to $285.7 million, from a year earlier, roughly $30 million above what analysts had predicted. They also noted gains in average revenue per user, when compared with the old design. The company said the number of daily active users jumped 18 percent year-over-year - that's 28.8 million users. Analysts were expecting a loss of -$0.15 per share.

Snap, based in Venice, Calif., may be benefiting from troubles at its much larger rival, Facebook.

"Our business really came together towards the end of past year", said Snapchat CEO, Evan Spiegel.

The company is in the process of rolling out a major redesign, which CEO Evan Spiegel says will become available for all users in the first quarter. The company said that after fixing those software bugs, customers were now staying longer on the Android version of its app.

Paired with higher-than-expected revenue and improved margins, the user growth signalled loss-making Snap could be turning a corner as it grapples with other social media companies adding Snapchat-like features, analysts said.

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Daily active users: 187 million, up 5% from Q3.

Boosted by holiday demand from advertisers, average revenue per user - a key metric for investors - was up 46 per cent year on year to $1.53.

Snapchat is banking on smaller businesses to advertise on its platform as ad revenue has almost doubled in that market.

Perhaps most importantly for Snap's Q4 revenue results was the shift in its business to an automated auction-based advertising system, known as "programmatic". "More original content for Discover will only make the platform even more valuable as a complement to linear television, along with the ability to measure more on the platform".

"Anybody can log on to our platform and buy advertisements". Snap lost $443 million last quarter, nearly the same amount it lost in Q2 and up considerably from the $124 million it lost in Q3 the year prior.

While Snap Ads generate the most revenue in total, Snapchat's Sponsored Lenses and Sponsored Filters - collectively called its Creative Tools - rake in more money per ad. The company posted a $285.7 million revenue for the fourth quarter, beating Wall Street's $253.2 million expectation. The lack of reach now offered by Snapchat, especially outside of North America, remains a limiting factor for marketers looking to leverage the platform's full potential. In any case, these features have been live in Snapchat for a little while now, so if you're just finding out about them now, go ahead and give them a try. A drop in quality takes users' attention elsewhere and Snapchat is now facing that challenge. It could also be a great opportunity for marketers to reach and engage their audiences with well-targeted promoted content, while positively impacting Snapchat's bottom line.

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