Q4 2017 earnings beat Wall Street estimates, a first for the company and a much-needed break for the financial side of a company that's struggled to make money despite being a technological success.
The social media firm added 8.9 million daily active users quarter over quarter, bringing the total to 187 million for a 5% increase. Analysts had expected $252.9 million in revenue for the quarter.
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. That sounds solid, but remember: Before the IPO, many close to the company expected Snap to be a $1 billion revenue business in 2017.
The Venice, California-based company posted a net loss of $350 million, or 28 cents per share, compared to a loss of $170 million, or 20 cents per share, a year earlier.
The ephemeral messaging app sccessfully wooed more advertisers in the fourth quarter as it became easier to place ads through its still-nascent automated platform, according to Aaron Goldman, chief marketing officer at 4C, which plugs into Snapchat to deliver ads. Tuesday Snap, Inc. closed at $14.06 a share, then rallied 22% in after hours trading.
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At the same time, the big announcement during Snap's last earnings report was CEO Evan Spiegel's admission that the service is too hard to use, meaning the company is at least thinking about trying to get new people to use the service.
Spiegel said the company has hired 2,400 employees over the past two years, an average of 100 each month. "Compared to the old design, core metrics around content consumption and time spent in the redesigned application are disproportionately higher for users over the age of 35, which bodes well for increasing engagement among older users as we continue to grow our business".
But the company showed on Tuesday that it is still adding new users. The fourth quarter was an "important quarter for Snap as investor confidence in the company's growth story has waned".
"Our business really came together towards the end of previous year", said Evan Spiegel, Snap's CEO, in a statement.