Snap Shares Surge On The Back Of Growth In Users And Revenue

Muriel Hammond
February 9, 2018

The poor report included slowing user growth and a revenue miss, and showed no clear path to profitability. From the third quarter of the year to the fourth, Snap's flagship Snapchat app increased daily active users (DAUs) from 178 million to 187 million.

It accomplished both feats while losing less money than expected.

During the fourth quarter, its ad prices slid again: Snap's price per ad impression slid by 25%.

"Our business really came together toward the end of a year ago", Snap CEO Evan Spiegel said on a conference call with analysts Tuesday, according to CNN. That would also put Snap's yearly sales at $793 million, nearly double the $404 million it brought in in 2016.

Revealed in the 2017 fourth quarter earnings report, Snapchat added nine million people.

Snapchat's daily active users rose to 187 million in the quarter that 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. The strong growth and has reversed a downward trend amid increased competition from Facebook and Instagram. The figure is closely watched by investors who hope user growth can be translated into advertising revenue. With muted notifications, Snapchat users may also be moved to check the app more often, leading to more usage and engagement. A major driving factor in the wave of new users, according to Spiegel, is the app's redesign that prioritizes social features like messages and Stories from friends over ads and other professionally produced content housed in the Discover section. The firm's revenue was up 62.2% on a year-over-year basis. equities analysts anticipate that Snap will post -3.03 EPS for the current year.


Still, being a niche advertising platform, rather than a valid third player to Google and Facebook, is a rut Snap can't seem to extricate itself from. (One year earlier, it had added 10 million in the same quarter.) Wall Street expects Snapchat added six million new users in Q4.

Advertising revenue grew 38% in the last months of 2017 from Q3 for a total of $281 million in Q4. The lack of reach now offered by Snapchat, especially outside of North America, remains a limiting factor for marketers looking to leverage the platform's full potential.

Snap announced a design overhaul in November, and has announced that it would be pushing out new font options, rainbow swashes, and a neon glow font. Can Snapchat find ways to draw users into that content? That news sent marketers into a frenzy around the potential drop in reach.

Despite the improvements made on the platform towards the end of 2017, Snapchat's ad product offerings need to improve to measure up to its competitors.

To catalyze its future ad revenue growth, Snap plans to automate even more of its ads.

Our growth on iOS continues.

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