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Snapchat lost users last quarter.
The Snap-owned app had 188 million daily active users during the three-month period that ended in June. That’s down 2 percent from the 191 million DAUs it had at the end of the first quarter.
But the company’s shares climbed immediately after Tuesday’s news, rising more than 9 percent during after-hours trading, because the company increased revenue by 44 percent to $262 million during the quarter. Adjusted net loss was 14 cents per share. Analysts were expecting the company to lose 17 cents per share and bring in revenue of $250.4 million.
Confidence might also be high because Saudi billionaire Prince Alwaleed bin Talal on Tuesday announced that he had purchased a 2.3 percent stake in Snap worth around $250 million.
Snapchat has struggled with growth since rolling out a redesign earlier this year that received significant pushback from users. Following initial complaints by users, Snapchat made some changes in May. Snapchat also has been hurt by the growing popularity of Instagram Stories, which has more than 300 million DAUs. But it is still especially popular among younger users. Per eMarketer, Snapchat has more users ages 12 to 24 than Instagram. And its user base represents 43 percent of social network users in the U.S.
For the first time, Snapchat disclosed that it had over 100 million monthly active users, which CEO Evan Spiegel noted represents growth compared to last quarter. Wall Street analysts, as polled by FactSet, were looking for 192 million daily active users, up just slightly from 191 million reported at the end of last quarter.
Snap shares closed the day up less than 1 percent to $13.12. After their initial surge during after-hours trading, shares were down about 2 percent.