Snapchat roped in new users during the last three months of 2019 but didn't rake in as many ad dollars as expected, a sign that the ephemeral-messaging app is still struggling to keep up with rivals such as Facebook-owned Instagram, Google and TikTok. Snap, the parent company of Snapchat, said Tuesday that 218 million people logged in to the app daily during the fourth quarter, up 17% from the same period last year.
But the company posted revenue of $561 million, falling short of expectations of $563 million. Snap also reported a net loss of $241 million. In the fourth quarter, which ended Dec. 31, Snap lost 17 cents per share, which was worse than the loss of 11 cents per share projected by analysts surveyed by Thomson Reuters. The company's net loss increased compared with the previous year, largely because of one-time legal costs.
Snap's competitors have been releasing copycat features, making it tougher for the company to grow quickly. In October, Instagram launched a camera-first standalone app called Threads for messaging close friends, a group that Snapchat focuses on with its messaging service.
To attract more users, Snap has revamped its Android app, introduced the latest version of its augmented reality glasses and rolled out new features. That includes a 3D camera mode and a tool called Cameos that lets you put photos of your face in videos.
Snap CEO Evan Spiegel attributed user growth to improvements in the Android app and the creation of new augmented reality lenses by its users.
"The growth of our Snapchat community underscores people's desire to communicate with one another through technology that feels natural and similar to face-to-face friendships," Spiegel said during a call with analysts.
Revenue growth slowed because of a shorter holiday season, according to Snap. Jeremi Gorman, Snap's chief business officer, said the app had its highest number of active advertisers ever in the fourth quarter but declined to share exact numbers. Asked if it was in the hundreds of thousands, Gorman confirmed it was less than Snap's competitor Facebook, which has more than 7 million active advertisers.
At one point in after-hours trading, Snap's stock dropped more than 11% to $16.77 per share.
Originally published Feb. 4, 1:37 p.m. PT.
Update, 3:16 p.m.: Includes comments from earnings call.