Snap (SNAP 1.79%) reported a smaller-than-expected earnings loss in the first quarter of 2019 after market close on Tuesday, as the company's sales jumped and daily active users improved sequentially.

Revenue for Snap, which makes the Snapchat messaging app, increased by 39% in the quarter to $320 million. The company's sales were significantly higher than analysts' consensus revenue estimate of $307 million. Average revenue per user was up 39% as well, to $1.68.

Snap's EPS loss of $0.10 beat analysts' estimated loss of $0.12. The company lost a total of $310.4 million in the quarter, which was an improvement from the Snap's net loss of $385.8 million in the first quarter of 2018.

Woman taking a selfie.

Image source: Getty Images.

Snap improved its operating cash flow to a loss of $66 million, up from a loss of $232 million in the year-ago quarter. Adjusted EBITDA improved as well, from a loss of $217.8 million last year to a loss of $123.4 million in the first quarter of 2019.

CEO Evan Spiegel said in a press release that, "In the first quarter we delivered strong results across our business with growth in daily active users and revenue."

Spiegel's reference to daily-active-user growth is on a sequential basis, not year over year. While the company's 190 million daily active users were up 2% from 186 million in the fourth quarter, that figure is still down from the company's 191 million daily active users in the year-ago quarter.

Snap is trying to increase daily active users by updating its Android app, which it did at the end of the first quarter. The company said that changes to the app resulted in a 6% increase in the number of users sending Snaps within the first week after upgrading to the new app.

Looking ahead

Snap's management said that its revenue guidance for the second quarter would be between $335 million and $360 million, which would equate to about 33% growth at the midpoint. The company also expects an adjusted EBITDA loss between $150 million and $125 million, which would be an improvement from the company's loss of $169 million in the year-ago second quarter.

Snap investors will likely look to the company's growth in daily active users (and its revenue and earnings beat) as a strong sign that it is improving. But the business still has a long way to go before proving that it's a great long-term investment.