Snapchat has a reputation. Yes, for sexting, but also for its inability to impress investors. That narrative changed on Tuesday after Snap Inc. scored a massive beat on its quarterly earnings report, recapping revenue and user growth 2017.
To the surprise of investors, Snap reported that both its user growth and revenue growth are accelerating. The company brought in $285.7 million, beating expectations of $252.8 million. The app now reaches 187 million daily active users, up from 178 million in the last quarter and a bump of 18 percent year over year.
Snap CEO Evan Spiegel pointed to his willingness to change the company and the product.
“Our work during 2017 is proof that we aren’t afraid to make big changes for the long-term success of our business," Spiegel said in his prepared remarks. "We redesigned the Snapchat application, transitioned our Snap Ad business to an auction model, and made changes to our team to improve productivity and collaboration."
These financial and growth achievements come after months of a declining stock, news of top talent leaving the company, and concern of older users fleeing to Facebook's Instagram Stories. The highly anticipated redesign, teased to analysts at its third quarter earnings call, has been met with criticism from early users. And yet, Snap is soaring. The company's stock shot up by more than 27 percent in after-hours trading.
Of course, not every high number is good. Snap continues to have high spending, losing nearly $350 million in the fourth quarter of 2017.
One area of growth the company is focused on is Android. The retention rate of new Snapchat users on Android increased by nearly 20 percent compared to the year prior, according to prepared remarks.
"We enter 2018 energized by the opportunities in front us of and excited to deliver against our plan for user growth, augmented reality, and content," Spiegel's statement continued.
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