Published: Wed, February 07, 2018
Money | By Michele Stevens

Snap Earnings Beats Big on Earnings

Snap Earnings Beats Big on Earnings

The Q4 2017 Snap Inc (SNAP) earnings report revealed non-GAAP losses of 13 cents per share on $285.7 million in revenue.

Snap brought in almost $286 million in revenue during the fourth quarter of 2017, up 72 from the same period the previous year.

Following the Snap Inc (SNAP) earnings release, the company's stock skyrocketed in after-hours trade, climbing by more than 20% to as high as $17.80 as investors were undoubtedly cheerful about the beat on user adds.

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When Snap first went public in March, 2017, shares sold for $24.48 a share, but they've declined steadily since. The company's revenue for the quarter was up 62.2% on a year-over-year basis. The company reported ($0.14) EPS for the quarter, topping analysts' consensus estimates of ($0.31) by $0.17. The app now reaches 187 million daily active users, up from 178 million in the last quarter and a bump of 18 percent year over year. The poor report included slowing user growth and a revenue miss, and showed no clear path to profitability. Spiegel said in prepared remarks that were released alongside today's earnings that "Our business really came together towards the end of a year ago".

The biggest issue for Snap is its competition with Facebook's Instagram, says eMarketer analyst Debra Aho Williamson. Twitter's expense of $600 million in 2013 was slightly less than its revenue, while LinkedIn had just a $30 million expense and $522 million in sales in 2011, the year it debuted on the market. Snapchat had not growing as quickly as investors had hoped, causing questions about the app's ability to attract a broad audience beyond is base of young, digital savvy users.

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.

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That re-design, separating friends from brands, was launched in late November, but has yet to roll out to all users. Snap's new 8.9 million users will help, but the company will need to keep up the pace in order to thrive.

Advertising revenue rose 74 percent to $281 million, as companies advertised more in the key holiday quarter.

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