Snap Revenue Surges 72% on User Growth, Advertising Gains

Feb 07, 2018, 01:14
Snap Revenue Surges 72% on User Growth, Advertising Gains

Snap's sales climbed to $285 million in the fourth quarter, up 72% from the same period a year earlier.

Almost a year after its initial public offering and lackluster growth, the company behind Snapchat is making a comeback.

"Our business really came together towards the end of a year ago", Chief Executive Officer Evan Spiegel said in a statement. 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.

Shares traded at $17.73 after the bell, up 26 percent after trading even higher earlier. If the gains hold, Snap's stock could open above its IPO price of $17 a share for the first time since July.

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

Snapchat has finally made investor concerns disappear. Earlier, they rose 1.5 percent to close at $14.06 in NY. The fourth quarter was an "important quarter for Snap as investor confidence in the company's growth story has waned".

Snap's net loss of 13 cents a share also was more positive by 3 cents a share than analysts' expectations of a loss of 16 cents a share, according to a Thomson Reuters consensus estimate.

Snap's revenue previous year grew about 104 percent to $824.9 million.

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The improved margin "shows that they can control costs of user acquisition and of providing service, and that should eventually lead to the leverage necessary to become profitable", analyst Michael Pachter of Wedbush Securities said.

Spiegel said Tuesday that Snap had generated more than $100 million for its content partners in 2017.

"We executed well on our 2017 plan to improve quality, performance, and automation, which removed friction from our advertising business and improved our application for the Snapchat community", Spiegel said in remarks prepared for a conference call with analysts.

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