Snap's Revenue Up 44% YOY, Global Daily Users Rise

Despite what appear to be strong business fundamentals, Snap’s fourth-quarter earnings failed to meet some analyst expectations this week. For the quarter, Snap reported revenue of $561 million, which was less than analysts were expecting -- but still up 44%, year-over-year.

The “camera company” also posted better-than-expected global daily active user numbers of 218 million, which were up 17%, year-over-year.

But Michael Levine at Pivotal Research, explaining Snap's performance, wrote in a note to clients: “U.S. ad growth was negatively impacted by the shorter holiday period (consistent with all of its online media peers that have reported) and challenging [comparisons] from the rollout of goal-based advertising.”

Yet, Snap CEO Evan Spiegel is characterizing those issues as short-time and easily surmountable. “The strength and momentum in our underlying business fundamentals gives us confidence in our long-term growth and profitability,” Spiegel told investors on a Wednesday earnings call.

Other analysts were satisfied with Snap’s recent performance.

“Snap slightly beat our expectations for revenue in the 2019 fiscal year, and the growth of its ad business shows that marketers want to engage with its youthful audience,” eMarketer principal analyst Debra Aho Williamson said in a note.

During the quarter ended December 31, the total daily time Snapchat users spent watching Discover increased by 35%, year-over-year. Among users over 25, total daily time spent watching Discover increased by 60%, during the same period.

In the quarter, more than 50 “Shows” -- or content created specifically for Snapchat -- reached a monthly audience of over 10 million viewers.

Adding to its array of original content, Snap also launched Bitmoji TV -- a cartoon series starring users’ self-styled Bitmojis and those of their friends.

Last quarter, revenue from Snapchat “commercials” more than tripled, year-over-year, while revenue from Story Ads doubled.

Snap also announced McDonald’s and Coca-Cola as the first brand partners to partake in its Scan camera technology in the quarter. It  combines visual search and augmented reality by recognizing logos through the Snap camera and providing related AR experiences.

Looking ahead, Spiegel said Snap remains focused on supporting what he calls “real friendships” on the platform, along with global expansion, and investing further in augmented reality and original content.

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