Snapchat Halts User Decline While Revenue Surges to Record High
Snapchat holds steady at 186 million daily users and beats revenue expectations with $390 million in the fourth quarter. The company shows significant progress toward profitability as its financial losses continue to shrink.
Snapchat stops its ongoing user decline by holding steady at 186 million daily active users in the fourth quarter of 2018. This flat growth exceeds Wall Street expectations of 184.2 million users, though the overall count remains down 0.3 percent compared to the previous year. The company successfully prevents further shrinkage in its most lucrative markets, keeping North America flat at 79 million users and growing Europe from 59 million to 60 million users.
The social media giant generates record revenue of $390 million during the holiday quarter, which represents a 36 percent increase year-over-year and beats analyst estimates of $378 million. This strong revenue growth, combined with a 37 percent increase in average revenue per user, helps Snap significantly narrow its adjusted EBITDA losses by 68 percent compared to the previous year. The company reports a net loss of $158 million, but CEO Evan Spiegel notes that losses now represent only 13 percent of revenue compared to over 50 percent one year ago.
These improving financial metrics indicate that Snapchat is on a promising path toward profitability within the next year or two without needing additional investor funding or an acquisition. The platform reaches 70 percent of all 13 to 34 year olds in the United States with premium mobile video, and 70 percent of daily users engage with augmented reality lenses. Following this positive earnings report, Snap stock jumps 17 percent in after-hours trading to reach $8.27, even though the share price remains far below its peak from a year ago.