Snapchat’s growth accelerated after the social-media company rolled out an improved version of its Android mobile application and introduced fun ways for people to manipulate their images and videos.
Snap Inc, whose Snapchat app lets people send each other disappearing photos and videos, said an average of 203 million users logged in daily in the second quarter, well ahead of the 191.7 million estimated by analysts. It was a sign of recovery after a rocky period, and shares jumped more than 13 percent in late trading following the report.
After a disastrous redesign that alienated users last year and the turnover of most of its executive leadership team, Snap is finally delivering on longtime promises that a new version of its app for the Android mobile system would shore up user growth.
The company also gave an upbeat forecast, saying it expects daily users of 205 million to 207 million in the third quarter.
Investors have recently turned more optimistic about the company’s prospects, and the stock has more than doubled this year.
“Following last year’s substantial product evolution, we believe that we are now better positioned for long-term success,” Chief Executive Officer Evan Spiegel said.
In the second quarter, the company’s net loss narrowed to $255.2 million, or 19 cents a share, from $353.3 million, or 27 cents, a year earlier.
Snap also forecast third-quarter sales of $410 million to $435 million, exceeding the average analyst estimate of $402.9 million.
Spiegel hasn’t just been working to move past Snap’s own growing pains — he’s dealing with an increasingly competitive landscape, with Facebook Inc’s apps copying some of his most popular inventions. Android phones are more popular in emerging markets, where Snap usage isn’t as saturated, and where Instagram’s version of Snap’s popular stories feature is taking hold.
“We don’t see anything on the horizon that would change IG’s dominant grip and continued capture of incremental stories’ users,” said Mark Zgutowicz, an analyst at Rosenblatt Securities, in a note.
That’s why Snapchat needs to focus on growing in other ways, by drawing users in with new games, media content, and ways for people to manipulate their appearances, Zgutowicz said. In April, the company added more advanced ways for users to take videos. In May, Snapchat added a gender-swap filter, which would allow people to see what they’d look like as a member of the opposite gender.
“Does that gender-swap feature have staying power? No,” Zgutowicz said. “But it brings people to the platform and they continue to use it.”
The company said 7 million to 9 million of the new users in the quarter came because of the new augmented-reality tools.