Snap Is Growing Faster Than Facebook In North America: Q4 Results Revealed

Credit Michael Nagle  Bloomberg

Snap, the company that makes the Snapchat app, reported an unexpected earnings beat that sent the stock soaring at least 22%. 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.

"We see the advertiser expansion as an important source of revenue diversification and reflects Snap's capacity to grow revenue through a broadening of its addressable market", Wieser said.

Snap blew past Wall Street expectations with bumper revenue and daily active user growth.

The stock pushed past its IPO price of $17 for the first time since July previous year and as many as 10 Wall Street analysts raised their price targets on the stock.

"Our business really came together toward the end of a year ago", said Spiegel on Tuesday, according to CNN. Progress in the Snap ad auction platform was a key area of focus among analysts. The revenue figure blew away analysts' prediction of $253 million. Non-GAAP earnings for the third quarter came in at 5 cents a share. Last year, Snap started selling Sponsored Filters through its ad API and self-serve tool, and during the first half of this year, it will automate the sale of more of its Creative Tools formats, according to Vollero.

During last quarter's earnings call, CEO Evan Spiegel said the company was redesigning Snapchat in response to complaints that its interface was too complicated. The news helped send shares of Snap up over 20%. In addition to overtaking Snap Ad sales, programmatic has ignited the number of Snap Ads being sold, enabling Snap to fill more of the inventory being created by its growing audience.

Spiegel also said in the remarks that ad impressions increased four times year over year. A major driving factor in the wave of new users, according to Spiegel, is the app's redesign that prioritizes social features like messages and Stories from friends over ads and other professionally produced content housed in the Discover section. It was originally supposed to launch last December, Business Insider first reported.

The equation is nearly too simple: If Snapchat can make it easier for people to use its app, more people will use it. "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".

"Snap's revenue growth seems to have caught Wall Street by surprise, but it is consistent with overall digital advertising growth (and specifically social advertising)".

Snapchat's massive dominance was also seen on its global Daily Active Users or DAUs; the company managed to tally a total of 187 million DAU from the quarter as opposed to the 184.2 million expectations and estimates.

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