Snapchat shares skyrocket on first earnings beat with revived user growth

The logo of messaging app Snapchat

Snapchat operator Snap (SNAP) reported fourth-quarter results after the market close Tuesday that smashed revenue estimates and also beat on the bottom line.

In the previous quarter, Snap has taken a write-down from poor performance of the Spectacles video sunglasses, and it announced a re-design of the app that would make it easier for users to use. The poor report included slowing user growth and a revenue miss, and showed no clear path to profitability. The business had revenue of $207.90 million during the quarter, compared to analysts' expectations of $236.71 million. Finally, Cowen lowered Snap from a "market perform" rating to an "underperform" rating and dropped their target price for the stock from $12.00 to $11.00 in a research report on Thursday, January 4th. Sales for the year as a whole doubled to $825 million.

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.

The redesign has been rolled out to about 40 million users so far, according to Spiegel, with plans to expand it to all users by the end of the first quarter. Quarter-on-quarter growth was 5.05%, compared to 2.9% in Q3.

Snap is now locked in a fight for its life with Facebook, which copied its marquee Stories feature - and the accompanying selfie filters and masks - and inserted them into all of its major products: Facebook, Instagram, WhatsApp and Messenger. Squali anticipates that the company will post earnings per share of $0.16 for the year.

Sony Announces All The New Features Coming To PS4 System Update 5.50
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During last quarter's earnings call, CEO Evan Spiegel said the company was redesigning Snapchat in response to complaints that its interface was too complicated.

Among other features, the redesign promised to have a clearer delineation between content from friends and content from publishers.

Snap spends a ton of money and the company is still not profitable.

Average revenue per user, a closely watched number, rose 46 percent to $1.53 in the final period of 2017, while a similar measure of costs grew much more slowly, according to the company.

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