Shares in Snap jump as revenues and user numbers beat expectations

Evan Spiegel

The social networking company, known for its disappearing messages and popularity among teenagers, surprised Wall Street Tuesday when it announced better-than-expected sales of $285.7 million and a daily user count of about 187 million, 5 percent higher than the 178 million it counted in November previous year.

Snap's good news extended to usage metrics, with Snapchat adding 8.9 million daily active users in Q4 - the highest net addition since Q3 of 2016.

The company's planned redesign, announced in November as a way to staunch the declining growth rates, has yet to roll out to users in the United States.

Snap shares closed the day up more than 1 percent to $14.06.

The company has also suffered from unfavorable comparisons to Facebook Inc.'s Instagram, which is rapidly expanding and aggressively copying Snapchat's most-popular features.

More news: United Kingdom court rejects bid by Julian Assange to have arrest warrant lifted

Snap generated some $285.69 million in revenue during the quarter ending December 31, compared to $165.68 million during the same quarter a year before. 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.

SEE ALSO: Snapchat opens Snap Store in app.

"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. This is the first time Snap has beat market expectations since going public a year ago. But Spiegel was issued a stock award that vested immediately at the time of the IPO, representing 3 percent of all outstanding shares and delivered in "equal quarterly installments over three years beginning in the third full calendar quarter following this offering".

Shares in the social media company spiked Tuesday, rising 22 percent in after-hours trading.

The announcement late past year that Snap meant to completely rebuild the Snapchat app has been welcomed by frustrated users. The retention rate of new Snapchat users on Android increased by almost 20 percent compared to the year prior, according to prepared remarks. Analysts had only been expecting Snap Inc (SNAP) to add 6 million daily users for a total user base of 184 million daily users.

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