The original shows and rebuilt Android app that was launched by Snap Inc helped it add Snapchat users for the first time in around three quarters. It was also able to surpass the revenue expectations of analysts. However, that was not enough to push its shares higher following a sharp run-up this year.
Snap disclosed that the number of daily active users of Snapchat increased to 190 million in the first quarter from the 186 million that was recorded in the prior period, however, it remained below the 191 million that it had a year earlier.
The figure was widely watched by advertisers and investors. According to IBES data from Refinitiv, it surpassed the average estimate of analysts of 187.2 million daily users,
The overall revenue of the company increased by almost 40 percent in the quarter from a year earlier as Snap was able to bring in more ad revenue out of every user.
Executives left the firm in droves late last year following a widely panned redesign of Snapchat. Any uptick is a welcome sign Snap has stemmed user losses.
Evan Spiegel, the Chief Executive of the company, has worked to turn the business of Snap around while the firm largely avoids privacy and other scandals that are plaguing bigger rivals such as Facebook Inc.
Snap did not disclose specific guidance on future user growth, however, it cautioned that the growth rates tend to be higher in the first quarter as compared to the second quarter.
The shares of the firm rose 12 percent immediately after the results. It gave up most of their gains to trade up marginally at $12.08. So far, they have more than doubled in value this year.
In a note, an analyst at Hargreaves Lansdown, Nicholas Hyett, disclosed: “Things are improving at Snap, and that could be putting it mildly – although with the shares up 100% so far this year, that’s pretty priced in.”
Snap faces tough competition from Facebook’s Instagram. In an attempt to increase how much time its users spend on the app, it launched more than 50 original shows in the reported quarter.
It also rebuilt its Android app, which had more bugs and worse user experience as compared to its iOS app. Snap had prioritized the development on the Apple ecosystem through its stock market debut in 2017.