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Axios Visuals

Snap Inc. beat on earnings and revenue Tuesday, surprising Wall Street investors that had modest expectations for the camera company. It also saw an increase in user growth after posting slowed growth over the past four quarters.

Why it matters: Snapchat faced a difficult first year as a public company, missing growth expectations as it faced competition from Instagram and Facebook. Tuesday's success, as seen by Snap's stock gains, is reviving investor confidence in the company.

  • Revenue: $285.7 vs. expected $252.8 million by Bloomberg.
  • Earnings per share: $0.13 vs. expected $0.16 by Bloomberg.
  • Daily active Users (DAU): 187 million vs 184 expected by TheStreet
  • Average revenue per user (ARPU): Up $1.57 vs. $1.36 forecast

The company announced last quarter that it would be rolling out a redesigned version of the app in December, but many users reportedly have not seen any changes to their Snapchat apps yet.

  • Executives told investors that they hoped a redesign would drive user growth, which it did, per last quarter's earnings announcement.
  • The company announced 187 million average DAU — up 8.9 million from last quarter — and the highest number of quarterly net adds since the third quarter of 2016.
  • "Our work during 2017 is proof that we aren’t afraid to make big changes for the long-term success of our business," Snapchat CEO Evan Spiegel said in a pre-earnings call statement.

The company sold 90% of ads programmatically last quarter, up from 60% the previous quarter, Spiegel noted in the statement.

  • Programmatic growth is reflective of the company's improvements in ad technology to capture more small and medium-sized business advertising — something Facebook and Instagram do well.
  • It also seems to have finally figured out how to make a business out of its users outside of North America and Europe: Q4 revenue hit $26 million, double the previous quarter and up from $6 million a year ago. ARPU hit $0.56, up from $0.30 in Q3 and $0.15 a year ago.

Not as great:

  • Expecting Spectacles, which brought in $8 million in revenue in Q1 2017, to be substantially down year-over-year and sequentially.
  • "In Q1, we are planning for our year-over-year revenue growth rate to moderate from the Q4 pace," according to CFO Drew Vollero's prepared remarks. "The majority of our revenue is generated through brand advertising, which seasonally peaks in the fourth quarter."
  • The company is planning for a slight increase in capital expenditure in 2018 as its moving many of its headquarter teams to leased facilities during the first half of the year, and expect more moves later in the year and into 2019.

Go deeper

Cuomo barraged by fellow Dems after second harassment accusation

New York Gov. Andrew Cuomo faced a barrage of criticism from fellow Democrats after The New York Times reported that the second former aide in four days had accused him of sexual harassment.

Why it matters: Cuomo had faced a revolt from legislators for his handling of nursing-home deaths from COVID. Now, the scandal is acutely personal, with obviously grave political risk.

Fauci: Children "very likely" to get COVID vaccine at start of 2022

NIAID Director Anthony Fauci. Photo: Win McNamee/Getty Images)

Children under age 12 will "very likely" be able to get vaccinated for coronavirus at the "earliest the end of the year, and very likely the first quarter of 2022," NIAID Director Anthony Fauci told "Meet the Press" Sunday.

Why it matters: Children generally aren't at risk of serious coronavirus infections, but vaccinating them will be key to protecting the adults around them and, eventually, reaching herd immunity, writes Axios' Caitlin Owens.

Virginia lawmakers vote to legalize marijuana in 2024

Virginia Gov. Ralph Northam. Photo: Alex Edelman/Getty Images

Lawmakers in Virginia on Saturday approved compromise legislation that would legalize marijuana in 2024, putting the state a step closer to becoming the first in the South to end prohibition on the drug, the Richmond Times-Dispatch reports.

Why it matters: The legislation will make Virginia the 16th state to legalize marijuana, per Politico. It would add to a slate of laws that have seen Virginia move in a more progressive direction during the tenure of Gov. Ralph Northam.