Snapchat has reported quarterly sales and user growth for the first time since going public in March 2017.

The news that the beleaguered social media company had soundly beaten Wall Street’s estimates sent its stock rocketing by over 20% on Tuesday. This was the closest the parent company, Snap, has come to topping its IPO price of $17 since July 2017.

The centrepiece of the positive results was a 72% jump in sales from this time last year to $286 million. This was heralded as a vindication of the decision to transition to an automated ad sales auction in the style of Google and Facebook.

There was also a growth in the number of users, with 8.9 million daily active users coming to the site in the last three months of 2017. Snap reported that consumers were staying longer on the Android version of its app.

Analytics firm FactSet puts the total amount of daily active users at 187 million as of the end of December 2017.

Industry insight

Aaron Goldman, CMO, 4C Insights:

“Snap benefited from some of the seasonality that’s expected during the holidays as advertisers heavy up but also saw some new brands come in and test the platform as a place to engage hard-to-reach audiences. In November, Snapchat unveiled a redesign that separated out peer-to-peer interaction and curated/professional content.

“In fact, ad spend through 4C increased 29% in Q4 to close out the first full year of self-serve Snap Ads. This shows current users are happy to spend time leaning back and watching brand-safe videos even with ads interspersed throughout. More original content for Discover will only make the platform even more valuable as a complement to linear television, along with the ability to measure more on the platform.

“It’s time for brands to embrace each of the “social” platforms as unique advertising vehicles.”

Yuval Ben-Itzhak, CEO of Socialbakers:

“Despite growth expectation from analysts and a forecasted record of about $254.8 million in the fourth quarter revenue, Snapchat is still a long way behind its rivals for advertising dollars, Facebook and Instagram in terms of audience size. The lack of reach currently offered by Snapchat, especially outside of North America, remains a limiting factor for marketers looking to leverage the platform’s full potential.

“Despite the improvements made on the platform towards the end of 2017, Snapchat’s ad product offerings need to improve to measure up to its competitors. They need to offer improved viewability metrics for marketers if they want to increase their ad revenue and be successful moving forward.

“Currently, having a programmatic access (APIs) to the Snap platform requires special permission from the platform. This means that both marketers and advertisers have no programmatic access to learn about the audience and know what content to create and how to target. Snapchat will face another huge growth barrier in 2018 if they continue to only open its API to a selected number of brands.”

– by Colm Hebblethwaite