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Snap Shares Skyrocket on Better-Than-Expected Earnings, User Growth Still Flat

Snapchat still isn’t growing, but investors didn’t care much about that on Tuesday: Snap’s share price rose 19% in after-hours trading after Snapchat’s corporate parent reported much better-than-expected earnings for the holiday quarter.

Snap generated revenue of $389.8 million in Q4 of 2018, compared with $285.7 million during the same quarter last year. The company’s net losses for the quarter were $191.7 million, compared to $350 million during the same time a year before. This equals losses per share of $0.14 for Q4 of 2018. Analysts had expected revenue of $377 million, and losses of $0.19 per share.

Snapchat’s user growth continues to be the sore spot for the company. The service ended 2018 with 186 million daily active users, which is down a million from the end of 2017, but flat when compared to the previous quarter. The company posted user losses of 2 million in Q3.

Snap tried to put a positive spin on its growth challenges by pointing out in its earnings release that its iOS user base “increased both quarter-over-quarter and year-over-year,” but didn’t provide any further details.

Snap executives have in the past frequently pointed to problems with their Android app to explain why users were leaving the service. The company has been working on a revamped Android app for some time, and CEO Evan Spiegel said on Tuesday that it is starting to test the new app with “a small percentage” of its user base.

Spiegel dodged multiple questions about the timeline of the Android rollout during Snap’s earnings call on Tuesday afternoon, but said the company had shifted most of its resources to rebuild its Android app.

Spiegel also said the company spent much of 2018 building out its advertising product. “We are now able to reach 70% of the total 13 to 34-year‐old U.S. population with premium mobile video ads on a monthly basis,” he said.

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