Snap user number beats Wall Street estimate, shares jump

(Reuters) – Snap Inc on Tuesday said the number of people using its Snapchat app was flat, beating Wall Street projections that it would continue to lose users to rival Facebook Inc’s Instagram, sending the company’s shares up more than 15 percent after hours.

The company said daily active users of its photo-messaging app in the fourth quarter remained unchanged at 186 million from the previous quarter, and down 1 million from the same period a year ago.

That beat analysts’ average expectation of 184.91 million, according to Refinitiv data.

“We do not foresee a sequential decline in daily active users in Q1 2019,” said Lara Sweet, Snap’s interim chief financial officer, in prepared remarks. She gave no specific outlook on user numbers.

The company avoided a third consecutive quarterly decline in users following an unpopular redesign of its app.

Snap shares jumped more than 15 percent to $8.15 after hours. The stock is still less than half its $17 initial public offering price in March 2017.

Snap’s revenue, which it earns from selling advertising on the app, increased 36 percent to $389.8 million, beating Wall Street’s average estimate of $377.52 million.

Revenue growth was helped by wider adoption of its programmatic ad buying platform, which makes it easier for marketers to buy ads on Snapchat.

Average revenue per user was $2.09 during the fourth quarter, up from $1.53 in the year-ago quarter.

The company’s net loss narrowed to $191.67 million, or 14 cents per share, compared with $349.98 million, or 28 cents per share, a year earlier.

Snap was now “substantially closer” to profitability, as it maintains a flat cost structure while increasing revenue, said Chief Executive Evan Spiegel in a statement.

The company has introduced more video content including original scripted shows with the aim of keeping hold of its users.

Snap has also begun rolling out its new Android app to a small percentage of Snapchat users, Spiegel said. Snap has said it rebuilt the Android app because it had more bugs and a worse user experience than its Apple iOS app.

For the first quarter, Snap said it expects revenue of $285 million to $310 million. That compares with the average analyst estimate for revenue of $307 million, according to data from IBES Refinitiv.