Snap Inc added more users than expected to its Snapchat messaging app as it fights to fend off competition from Facebook Inc’s Instagram, sending it shares up by nearly 30 percent.
Snapchat’s daily active users rose to 187 million in the quarter ended Dec. 31 from 178 million in the third quarter, beating analysts’ average expectation of 184.2 million users, according to financial data and analytics firm FactSet.
Daily active users rose 18 percent from a year earlier, reversing a trend of slowing growth. The figure is closely watched by investors who hope user growth can be translated into advertising revenue.
To make its app more friendly with users and advertisers, Snap launched a redesigned app in November, splitting “friends” from content feeds.
The Venice, California-based company posted a net loss of $350 million, or 28 cents per share, down from a loss of $170 million, or 20 cents per share, a year earlier. It was Snap’s fourth quarterly earnings as a public company.
Excluding items, Snap reported a loss of 13 cents in the quarter. Analysts’ on average were expecting a loss of 16 cents per share. It was not immediately clear whether the numbers were comparable.
Advertising revenue rose 74 percent to $281 million, as companies advertised more in the crucial holiday quarter.
Revenue rose 72 percent year-over-year to $285.7 million. Revenue per user rose 46 percent from a year earlier to $1.53, while cost of revenue per user rose 5 percent to $1.02.
Analysts and investors have been watching to see if Snap can boost user growth amid competition from larger rival Instagram, which has added photo filters and other Snapchat-like features.
Chief Executive Evan Spiegel said the company benefited from a transition of its ad business to an auction model and from improvements to the version of Snapchat that runs on Android phones, among other changes.
“We executed well on our 2017 plan to improve quality, performance, and automation, which removed friction from our advertising business and improved our application for the Snapchat community.”
The company expects its year-over-year revenue growth rate to “moderate” in the current quarter, compared with the fourth-quarter, Chief Financial Officer Drew Vollero said.Snap has not provided any outlook till now, which some analysts believe led to aggressive Street expectations, hurting the company further.
