What happened

Shares of Snap (NYSE:SNAP) have plunged today, down by 11% as of 11:45 a.m. EST, after the company reported fourth-quarter earnings results. The Snapchat parent enjoyed continued momentum in user growth but missed estimates for the top line.

So what

Revenue in the fourth quarter jumped 44% to $561 million, which was shy of the $563 million in sales that analysts were modeling for. That all translated into adjusted earnings of $0.03 per share, slightly ahead of the $0.01 per share in adjusted profits that the Street was expecting. Daily active users (DAUs) rose to 218 million, which topped the 215 million DAUs that the market was looking for. Adjusted EBITDA was $42.3 million, exceeding the high end of Snap's guidance.

Two smartphones displaying Snapchat interface

Image source: Snap.

"In 2019 we saw momentum across the board," CEO Evan Spiegel said in a statement. "We grew our community by 31 million daily active users, accelerated our revenue growth, and progressed toward profitability by improving full-year Adjusted EBITDA by 65% year-over-year."

Now what

On the conference call with analysts, Spiegel attributed the strong user growth to improvements in the Android version of Snapchat. The tech company's ad business continues to evolve, with revenue from Story ads doubling and revenue from commercials tripling compared to a year ago.

In terms of guidance, Snap's outlook calls for Q1 revenue of $450 million to $470 million, with that midpoint fairly close to the consensus estimate of $461 million. Adjusted EBITDA is expected to be negative $70 million to negative $90 million. Spiegel also said that the company is targeting full-year adjusted EBITDA profitability in 2020.