Snapchat sees revenue soar 44%

Snapchat’s revenue climbed 44% year over year even as it lost users in the last quarter because of a rocky app redesign and increased competition from rivals.

Snap, the parent company of Snapchat, on Tuesday reported $262 million in revenue during the three months ending in June. Snap stock soared over 10% in after-hours trading following the report.

However, its daily active user base declined by 2% in the same period. The company reported 188 million daily active users, falling short of analysts’ expectations of about 193 million.

The disappointing user numbers came as Snapchat faces mounting competition from Instagram. That platform, owned by Facebook, recently announced that more than 400 million people use its popular Story feature every day to post photos and videos that disappear after 24 hours.

Snapchat has experienced a string of declines after lackluster earnings reports since going public in March 2017. Snap stock was trading at just over $13 a share ahead of Tuesday afternoon’s report, down from a 52-week high of $21.22.

The company has struggled with a rocky redesign widely criticized by users. The makeover was meant to attract new users while addressing concerns about lackluster audience growth and criticism that the app was too difficult to use.

Snapchat responded with a few design tweaks to appease users, such as making it easier to find Stories. The company also grapples with heightened competition from Instagram, which regularly copies its most popular features.

“Snap has a major app redesign in process which remains one of the linchpins for future success and monetization, although it has encountered clear speed bumps on this front,” said Daniel Ives, chief strategy officer at GBH Insights.

Other social media networks such as Facebook and Twitter recently reported disappointing earnings. Facebook suffered the single biggest wipeout in stock market history following its earnings report.

This story will be updated.