Snap's stock jumped 19 per cent to $16.74 in after-hours trading on Tuesday. Snap added almost 9 million daily active users in the last quarter, the most since the third quarter of 2016, pumping its daily user base to 187 million.
The announcement late previous year that Snap meant to completely rebuild the Snapchat app has been welcomed by frustrated users.
Snap, Inc. finally got a much needed turnaround and investors rejoiced. Analysts had been expecting losses of 14 cents per share on $252.7 million in revenue. 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. It debuted on the New York Stock Exchange in March 2017, and a string of poor results, and constant competition from Facebook (which has copied just about every good idea that Snapchat has ever had), has seen the company not trade above its IPO price since July.
Among other features, the redesign promised to have a clearer delineation between content from friends and content from publishers. One of its biggest expenses is the cost of supporting streaming photos and videos-the bulk of the functionality of Snapchat-which Snap said in its earnings presentation accounted for $131 million in costs in this quarter alone. It also added 8.9 million users, beating expectations of 6 million.
Snap spends a ton of money and the company is still not profitable. For 2018 Snap is expected to generate $1.47 billion in net worldwide ad revenue, which is up 90% from 2017, but that's a 0.6% share of the overall worldwide digital ad market, says eMarketer, and pales in comparison to Google and Facebook.
Snap said the average revenue per user rose 46 per cent from a year ago to US$1.53, offering some hope for reaching profitability.