Snap's shares soared more than 25 per cent in after-hours trading, reaching $17.61.
Snap, which makes the Snapchat photo-messaging app, said fourth-quarter sales jumped 72 percent to $285.7 million, beating the $252.8 million average projection of analysts, according to data compiled by Bloomberg.
Paired with higher-than-expected revenue and improved margins, the user growth signaled loss-making Snap could be turning a corner as it grapples with other social media companies adding Snapchat-like features, analysts said.
The company reported fourth-quarter results as Wall Street was looking for signs of life from an app that struggled at points previous year.
Snap, which makes the Snapchat app, has been struggling to stay ahead of Facebook and Instagram. (One year earlier, it had added 10 million in the same quarter.) Wall Street expects Snapchat added six million new users in Q4. The company's stock chart Tuesday afternoon looked similar to the trajectory of Elon Musk's SpaceX rocket, launched into outer space just minutes before Snap reported - straight up.
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After struggling to grow its audience throughout the year, Snap unveiled a significant redesign in November meant to make its messaging service more intuitive to users.
At the same time, the big announcement during Snap's last earnings report was CEO Evan Spiegel's admission that the service is too hard to use, meaning the company is at least thinking about trying to get new people to use the service. Snap has invested heavily in driving its ad business forward, buying a company that helps measure in-store foot traffic, and adding ad-serving tools for its clients. That would also put Snap's yearly sales at $793 million, nearly double the $404 million it brought in in 2016. In the last quarter, Snap lost $443 million, up from the $124 million it lost in Q3 2016.
Spiegel warned in November that the redesign could be disruptive to Snap's business in the short term, so it will be interesting to see if the company provides any color as to how the rollout is going so far.
Snapchat operator Snap (SNAP) reported fourth-quarter results after the market close Tuesday that smashed revenue estimates and also beat on the bottom line. Its net loss was about $350 million for the quarter ended December 31.
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