Snap added almost nine million new users last quarter, its best since mid-2016.

Snapchat finished 2017 with a bang.

Boosted by a bigger-than-expected jump in daily users, Snap surpassed all of Wall Street’s expectations for the fourth quarter, sending the stock up almost 25 percent in early after-hours trading.

Snap added 8.9 million daily active users in the quarter, and it now has 187 million users, a 5 percent jump over the September period. Analysts thought Snap would add closer to six million new users. The company also reported revenue of $285.7 million for the quarter, well above the $253 analysts were looking for.

Snap even spent less than Wall Street expected. The company, which has burned through nearly half a billion dollars per quarter the past two quarters, reported a net loss of $350 million. Analysts thought losses would be higher than $400 million.

It’s a major victory for Snap, which had a rough first year as a public company, one in which its stock fell by more than 40 percent. There were plenty of concerns that Facebook and Instagram had successfully crippled Snapchat’s user growth with copycat products.

Instead, Snapchat reported its largest quarter-over-quarter jump in total users since mid-2016.

Snap CEO Evan Spiegel also wrote in prepared remarks that the company sold 90 percent of its advertising in Q4 via automated sales software, known as programmatic buying. Snap been telling investors for months that it was transitioning its sales business to automated buying software, and the process has been slower than some expected. But Spiegel says things are going well. “The auction transition for Snap Ads is largely behind us,” he wrote.

Snap’s revenue per daily active user — the amount of money it makes from each user — increased to $1.53. It’s an important metric for Snap, which has been public about its desire to expand primarily into markets where new users can help the company’s business, not just emerging markets where there is little advertising opportunity.


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Author:

Kurt Wagner

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