Investors are very relieved about Snap’s latest earnings report: The Snapchat maker not only beat analysts’ revenue expectations for Q4 of 2017, but also posted the biggest net user addition in over a year.
The company’s stock went up close to 27% in after-hours trading immediately following the report, and settled at gains of around 22% following the company’s earnings call.
“Our business really came together towards the end of last year and I am very proud of our team for working hard to deliver these results,” said Snapchat CEO Evan Spiegel Tuesday. “We ended 2017 confident that we can grow our Snapchat community and monetize our products more efficiently than ever before.”
Snap generated $285.69 million in revenue during the quarter ending December 31, compared to $165.68 million during the same quarter a year before. Net losses came in at $349.98 million, compared to net losses of $169.95 million during Q4 of 2016. This translated to a net loss of $0.28 per share.
Analysts had expected losses of $409 million, and revenue of around $253 million. This is the first time Snap has beat market expectations since going public last year.
Snap’s good news extended to usage metrics, with Snapchat adding 8.9 million daily active users in Q4 — the highest net addition since Q3 of 2016.
Snap’s upbeat earnings release was in stark contract to previous quarters, which saw the company struggling with slowing user growth and lower-than-expected revenue numbers. The company responded to these trends with a big app redesign, which launched to some users in November, and is now coming to Snapchat’s entire user base this quarter.
Those design changes have put a bigger emphasis on user-to-user sharing, as opposed to content created by publishers and brands. “There is a really big difference in talking to your friends on a telephone, and broadcasting on a TV channel,” Spiegel said Tuesday about the logic of separating the two.
However, engagement with content from publishers has actually grown, Spiegel said. “In one of our first test markets, we saw that the number of Daily Active Users watching Publisher Stories on Discover grew by over 40 percent when compared to the old design of the application.” Spiegel said Tuesday that Snap had generated more than $100 million for its content partners in 2017.
That kind of money seems to encourage publishers to continue to bring their content to the platform. Buzzfeed and NBCUniversal executives are currently in talks with Snap about bringing videos from Playfull, a new parenting video vertical, to Snapchat, according to a Digiday report.
Finally, Spiegel revealed Tuesday that Snap has also been talking to wireless carriers to partner up on data plan exceptions for Snapchat. “We have recently launched partnerships with wireless carriers in over a dozen markets to begin reducing cellular bandwidth costs for Snapchatters,” he said. “We have seen that when data is less expensive, more people are willing to use our data-intensive products.”