Snap Ends Turbulent 2018 With Flat User Growth, Strong Revenue Gains

Evan Spiegel - Getty - H 2018
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Daily active users were flat at 186 million during the period.

Snapchat's parent company ended a turbulent year, its first full year as a public company, with flat user growth but a significant uptick in revenue. 

During the final three months of 2018, Snap brought in revenue of nearly $390 million, up 36 percent from the same period the previous year. The company lost 14 cents per share. Analysts were expecting quarterly revenue of $377 million and a loss of 19 cents per share. 

The company's strong financial quarter was enough to send the stock up more than 20 percent during after-hours trading on the NYSE. 

Even though the company has found a way to grow revenue and shrink losses, it is still struggling to add to its user base in a meaningful way. Daily active users were flat at 186 million during the period. That is an improvement from a 1 percent decline in DAUs during the previous quarter.

In prepared remarks released ahead of Snap's call with investors, CEO Evan Spiegel laid out a plan to stabilize the company and focus on long-term growth. "In 2018, we focused on building a foundation for Snap to scale over the long term by driving sustainable product innovation, scaling our advertising platform, and hiring the leadership team that will help us achieve our future goals," he said. 

He revealed that average time spent on the platform was 30 minutes per day and that user engagement had stabilized as the company prepares to rollout updates to its Android app.

Snap has been investing in media programming to boost time spent on its platform. Snapchat's first slate of scripted programming launched in the fall. Spiegel revealed that 40 percent of the people who watched the first episode of The Dead Girls Detective Agency went on to watch the entire season. The cartoon Bitmoji Stories, meanwhile, reached over 40 million viewers in December.

"We feel we have made significant progress towards our mission of contributing to human progress because we are now able to offer a higher quality content experience while simultaneously empowering people to express themselves with their close friends and family," the exec added.

Spiegel noted that following the redesign, 30 percent more people are watching publisher stories and shows every day compared to the previous year. But he also admitted that it can be hard to find content on Discover, which he likened to walking into a supermarket without labels on the aisles. The exec said he's focused on Discover and "improving the depth of engagement" on that platform, where media brands like ESPN and NBC News have shows. But Spiegel also wouldn't give much detail about what Snap has in store for its shows in the coming months, noting that he didn't "want to ruin the surprise." 

The exec also addressed the roller coaster year at Snap that began when it implemented a widely derided app update and continued as several key executives left the company, including strategy chief Imran Khan, content vp Nick Bell and CFO Tim Stone. "We have worked hard to develop our team and culture in 2018," said Spiegel, adding later on the call that he's focusing on finding a permanent CFO and a CMO. "The transitions we made in both the Snapchat platform and our business last year were necessary and created many of the opportunities we have ahead of us, but change is always difficult and this past year was no exception."  

Snap shares closed the day up more than 1 percent to $7.02.