Snapchat has seen user growth for the first time in a year, the company announced on Tuesday, after it improved its much-maligned Android app. The results beat Wall Street predictions and sent shares soaring after hours.
The company has been slowly rolling out updates to the app after users complained about blurry images and low-quality videos. In a call with investors on Tuesday, the Snapchat CEO, Evan Spiegel, said a well-developed Android app was “the price of admission” to international markets and acknowledged that users turned off by previous Android iterations might not immediately jump on the new version.
“It is going to take time to rebuild that trust and the best way for us to do that is to focus on the product and improve it over time,” he said. “It’s going to be a process.”
Snap Inc’s shares closed the day up 4% at $11.99. Revenue increased 39% to $320m in the first quarter of 2019, compared with $230m the prior year. Shares were up more than 10% in after hours trading following the report.
Snap added 4 million daily active users in the quarter, bringing its user numbers to 190 million. As of March, it had reached 90% of 13-24-year-olds and 75% of 13-34-year-olds in the United States, it said in the earnings report.
“In the first quarter we delivered strong results across our business with growth in daily active users and revenue,” said the company’s CEO. “Our new Android application is available to everyone, with promising early results.”
The results came after Snap added a number of new features meant to bolster advertising revenue on the platform, including an ad-supported gaming platform with six new games meant to entice younger users, including Epic Games’ Fortnite, and EA’s Apex legends. These developments have been a positive step towards attracting more advertisers, said Jim Cridlin, the global head of innovation at WPP’s Mindshare.
“Snap has made several moves to broaden its reach and it has also made several bold moves designed to increase the time existing users spend on the app,” he said. “For advertisers looking to reach Snap’s younger consumer base the changes the company has announced are incredibly appealing.”
It has also poured more resources into Discover, a video offering on the Snapchat platform. The report said content partners increased their total mobile monthly audience in the US by an average of more than 30% just by publishing to Discover, as measured by ComScore. Nearly half of Discover viewers watch the service every day of the week, the report said. Snap added 50 new shows and stories, content that users can watch for 24 hours at a time, in international markets in quarter one and now offers more than 450 channels worldwide.
“This month we announced several new products that we believe will drive further engagement and monetization,” Spiegel said. “As we look towards the future, we see many opportunities to increase our investments, and will continue to manage our business for long-term growth.”
Snap said it anticipated record revenue in the next quarter, expected to be between $335m and $360m, or grow between 28% and 37% compared to Q2 2018.