Snapchat shares skyrocket on first earnings beat with revived user growth

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The redesign is still not broadly rolled out, and Snap has said little about why.

The parent company for the ephemeral-messaging app Snapchat announced its fourth-quarter earnings today (Feb. 6). Revenue was $285.7 million, up 72 percent year-over-year, with earnings per share of -$0.13 adjusted compared to estimates of $253 million and a -$0.16 adjusted. Shares skyrocketed about 26% in after-hours trading, to almost $18 at the time of publishing.

That re-design, separating friends from brands, was launched in late November, but has yet to roll out to all users. It also aimed to entice more creators, like those on YouTube (and previously on Vine), to embrace the app as a platform.

The results mark a rare win for Snap, whose first year as a public company has been hobbled by stagnant user growth and management departures, including the loss of its heads of product and engineering.

Instagram is also wildly popular with young mobile users.

Snap is still struggling massively to bring its revenue up to par with expenses. The company's revenue for the quarter was up 62.2% on a year-over-year basis. Expenses were up 93% over the same period a year ago.

Snap will report earnings after the markets close. "We redesigned the Snapchat application, transitioned our Snap Ad business to an auction model, and made changes to our team to improve productivity and collaboration". This represented the highest daily net user additions since the third quarter of 2016.

Snap added 8.9 million daily active users in the quarter, and it now has 187 million users, a 5 percent jump over the September period.

The silver lining in a hard 12-month period for Snap is that it continues to grow both users and revenue despite Facebook's ruthless attempts to demolish it. Facebook's copies have certainly hurt the company, but they have not killed it yet. It still has tons of room to grow revenue in other regions, which can be seen as positive by investors. Will it still be able to continue to attract new advertisers, and new users, when 2 billion people use Facebook each month, and almost double the number of Snapchat's users use Instagram's knock-off Stories feature?