Published: Fri, February 09, 2018
Economy | By

Snap's Revenue Soars to $285.7 Million in Q4, a 75 Percent Increase

Snap's Revenue Soars to $285.7 Million in Q4, a 75 Percent Increase

The number of daily active users increased by 18% compared to the same period one year ago, which reversed a trend for growth slowing down.

The stock of Snap (SNAP) catapulted and gained almost 50% on Wednesday as the Snapchat-operator received several price target increases following a fourth-quarter earnings report that smashed revenue estimates and also beat on the bottom line. Brands continued to spend on the platform in 2017, reversing a slump that plagued the mobile app since it went public last spring.

So, how did Snap fare during Q4?

While Snap Ads generate the most revenue in total, Snapchat's Sponsored Lenses and Sponsored Filters - collectively called its Creative Tools - rake in more money per ad.

Shares, which closed the regular trading session at $14.06 which was up $0.21 on the day wound up closing up 21.41% at $17.07 or $3.01 as of 8 p.m.

In prepared remarks, Snap CEO Evan Spiegel said last quarter's growth was due to improvements made to the Android version of Snapchat. While Spiegel admitted that users will need to "take time" to get used to these changes, he believes that it will result in further growth. The retention rate of new Snapchat users on Android increased by almost 20 percent compared to the year prior, according to prepared remarks.

The company reported fourth-quarter results as Wall Street was looking for signs of life from an app that struggled at points past year. 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 figure is closely watched by investors who hope user growth can be translated into advertising revenue.

Another feather in Snap's cap: Average Revenue Per User, which came in well above the $1.36 ARPU analysts expected.

Looking at the companies' year-on-year performance, Snap saw a notably faster growth in North America, with a 17.7 percent increase in DAUs. Nelson Roberts Investment Advisors LLC boosted its position in Snap by 10,033.0% in the third quarter. "We are learning a lot while operating our automated advertising platform and we are constantly improving the way we sell and serve advertising". This was the highest net additions reported by Snap since Q3 2016.

That business is growing, and that's great news for Snap, which is about to make content from outside partners an even bigger part of its newly redesigned app.

"With our plans for user growth, augmented reality and content in 2018, I have never been more excited about the future of our business. We're going to keep up the hard work and stay focused on the big opportunities ahead".

Snapchat's daily active users rose to 187 million in the quarter ended December 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.

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