Snapchat owner Snap has reported surging growth in users in its latest quarter, reviving hopes it can survive competition with Facebook's Instagram. Revenues were up sharply, but so were quarterly losses.
Snap's shares soared by over 20 percent after the company behind messaging application Snapchat reported a surge in users. The results were good news for a firm that had seen investor enthusiasm fade after its initial public offering last year.
The California-based company said customers were now staying longer on the Android version of its app after software bugs were fixed.
Snapchat's daily active users rose to 187 million in the quarter that ended on December 31, up from 178 million in the previous three months. The user figures are closely watched by investors who hope that growth can be translated into more advertising revenue.
Turnover increased by 72 percent to $285.7 million (€230.6 million), beating analysts' expectations.
Instagram, with more than twice the number of daily users of Snapchat and backed by financing from Facebook, had threatened to stamp out its rival by copying features such as photo filters and disappearing slide shows.
"They are going to continue to be competitors, and Snap is doing a creditable job of competing for revenue," Wedbush Securities analyst Michael Pachter said in a statement.
While Snapchat ads once were primarily bought by large brands with household names, revenue from smaller businesses more than doubled from the third quarter.
Nonetheless, Snap posted a net loss of $350 million, compared with a loss of $170 million a year earlier.
hg/jd (Reuters, dpa)