Shares of the Snapchat owner rose 21% in after-hours trading after the social media group beat Wall Street expectations for quarterly revenue and user growth.
Improvements to Snap’s advertising system are delivering results faster than expected, the company said.
Snapchat’s daily active users grew to 422 million in the first three months of the year, beating analyst expectations of 419.6 million. Meanwhile, revenue during the first quarter rose 21% to $1.2 billion, beating the analyst consensus estimate of $1.12 billion.
Snap, based in Santa Monica, California, has long struggled to compete for advertising dollars against larger rivals such as Meta Platforms, which owns Facebook and Instagram. But it has been working over the past year to improve how it targets ads to users and simplify how people interact with ads.
In a letter to shareholders, Snap said its business was improving faster than expected due to updates and increased demand for features that help brands drive sales or website clicks.
after newsletter promotion
“The value we provide to our community and our advertising partners has translated into improved financial performance,” said Evan Spiegel, CEO of Snap. “Our large, growing, hard-to-reach community, brand-safe environment, and full-funnel advertising solutions have made us an increasingly important partner for businesses of all sizes.”
On Tuesday, the US Senate passed a bill giving Chinese tech company ByteDance up to a year to divest its popular video app TikTok, another of Snap’s rivals, or else the app will be banned in USA.
Snap said it expects second-quarter revenue of between $1.23 billion and $1.26 billion, slightly above analysts’ forecasts. The company expects its user base to grow to 431 million.
Reuters contributed reporting