Shares of Snap Inc. (NYSE:SNAP) had surged 39% at the top of the noon hour on February 7. The company released its 2017 fourth-quarter and full-year results on February 6. After successive disappointments, Snap finally delivered an earnings beat that has impressed analysts.
After a disappointing third quarter, Snap leadership decided to reconfigure its Snapchat application in an effort to raise ad revenue and boost its Daily Active User (DAU) tally. Snap rolled out its update in January, and reviews appeared to be mixed among regular users.
In the fourth quarter, Daily Active Users (DAUs) rose 187 million to 8.9 million, representing a 5% increase. This was the highest net additions reported by Snap since Q3 2016. Fourth quarter revenue increased 72% year-over-year to $285.7 million and full-year revenue was up 104% to $824.9 million. Average revenue per user was $1.53 in the fourth quarter, a 46% increase year over year, demonstrating that its strategy to boost revenue with the new structure is paying off.
Snap reported a net loss of $350 million or $0.28 per share, up from analyst expectations of a $410 million loss.
The results are a pleasant surprise for Snap to start the year, but the company is still facing fierce competition from Facebook Inc.-owned Instagram and Whatsapp. Investors will be watching in 2018 to see if Snap can successfully attract older demographics to its revamped app. Snap will also need to retain its younger core user base, some of which responded with hostility to the new changes.
