Snap Inc. posted record revenue in its latest quarter and narrowed its loss considerably, as the social-media firm rode a boom in online advertising to inch closer to profitability.
Georgia Wells of The Wall Street Journal had the news:
Snap shares jumped immediately following the company’s report late Tuesday.
Snap said its revenue rose 36% to $389.8 million in the fourth quarter, typically the heaviest spending period for advertisers, up from $285.7 million a year earlier. Those results topped analyst projections of $377 million, according to FactSet. The revenue marked the most money Snap has ever brought in during a quarter, although the company’s revenue growth is decelerating.
Snap reported its fourth-quarter loss shrank to $191.7 million, or 14 cents a share, from $350 million, or 28 cents a share, a year earlier. Snap has yet to report a profit as a publicly traded company, although Snap Chief Executive Evan Spiegel has said it is his “stretch” goal for the company to be profitable in 2019.
Salvador Rodriguez of CNBC.com reported that Snap also stopped losing users:
Snap was able to maintain its user base at 186 million daily active users, flat from the previous quarter. Analysts were expecting the company’s user base to continue shrinking as it had over the past two quarters.
The promising results come at a crucial time for the Los Angeles tech company, which had a rough fourth quarter.
The company saw rival Instagram emerge as the most popular social platform among teenagers, according to Piper Jaffray report in October. This change in ranking has coincided with a continued decrease in Snapchat’s user base.
Snap this quarter also dealt with a number of key executive departures, including that of Chief Financial Officer Tim Stone, who the company announced last month will be leaving the company. Stone joined Snap less than a year ago.
Troy Wolverton of Business Insider reported that the stock jumped 17% in after-hours trading:
Snap saw another big outflow of cash in the fourth quarter. Its free cash flow, which is the cash generated or used up in operations after the amount spent on capital expenditures, was in the red by $149 million. That was an improvement from the third quarter, when it burned through $159 million in free cash, but it meant that the company saw a free cash outflow of $810 million last year, down only slightly from the $819 million in burned through last year.
The company ended the year with $1.3 billion in cash and marketable securities, down from more than $2 billion a year earlier.
Snap has had trouble almost since its debut on the public markets. Before its report, its stock was down nearly 50% over the previous year and had fallen even further from its initial public offering price two years ago. It has lost numerous executives, most recently Tim Stone, the company’s former chief financial officer, who is set to depart after Tuesday’s report.
The company’s stock closed regular trading Tuesday up $0.09, or 1.3%, to $7.02 a share.
