What happened

Shares of Snap (NYSE:SNAP) have skyrocketed today, up by 27% as of 11:30 a.m. EST, after the company reported fourth-quarter earnings results. The Snapchat operator's net loss narrowed while the user base stabilized.

So what

Revenue in the fourth quarter increased 36% to $389.8 million, topping the Street's forecast of $377.5 million in sales. The company's GAAP net loss narrowed to $191.7 million. On a non-GAAP basis, Snap posted a net loss of $59.5 million, or $0.04 per share. Adjusted EBITDA came in at negative $50.4 million. Snap said last month that revenue and adjusted EBITDA should be "slightly favorable to the top end" of guidance.

Friendship profiles on Snapchat

Friendship profiles were introduced during the fourth quarter. Image source: Snap.

Daily active users (DAUs) were 186 million, roughly flat on a sequential basis, allaying fears regarding the user base and topping the consensus estimate, which called for 185 million DAUs. That stabilization is thanks in part to performance improvements in the Android version of Snapchat, which had long been a weakness.

Now what

Snap had reported its first user decline last summer, blaming the controversial redesign that the company had rolled out in early 2018. The self-proclaimed "camera company" has now made progress in retaining core users. Investors and analysts are optimistic that Snap could finally be putting together a turnaround.

For the first quarter, Snap's outlook calls for revenue of $285 million to $310 million, with adjusted EBITDA of negative $140 million to negative $165 million. The company also said it does not expect DAUs to decline sequentially in the first quarter.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.