- The company reported a strong earnings beat across the board Thursday afternoon.
- Investors were encouraged by the strength of users and engagement. Its ads growth was also a key highlight.
The company's stock had jumped as much as 25%.
The company posted 293 million global daily active users, compared to the 290.3 million expected per StreetAccount. That's also up more than 23% compared with the 238 million daily users the company reported a year prior.
Investors were encouraged by the strength of users and engagement. Snap's ad growth was also a key highlight, with concerns around potential Apple iOS privacy changes largely alleviated during the quarter.
Snap said the company was not impacted by the iOS 14.5 privacy changes as it had anticipated that it would be. This was due to the mobile operating system update rolling out later than expected, iOS users being slow to update their devices and Snap observing "higher opt-in rates than we are seeing reported generally across the industry, which we believe is due in part to the trust our community has in our products and our business," Snap executive Jeremi Gorman said Thursday.
"We have written much about the strength of the online ad markets over the past 9 months...but even we under-estimated 2Q/3Q results," Morgan Stanley analysts wrote in a Friday note.
"SNAP's ad revenue strength was broad-based across use cases (Stories, Discover, lenses and AR, etc) as performance-focused innovation like improved matching, dynamic product ads, and new AR lenses are leading to increased advertiser and spend per advertiser growth," the firm added.
Wells Fargo analysts also pointed toward the company's broad-based growth and engagement.
"While the ultimate impact remains uncertain, we are confident SNAP will continue to execute across its five key platforms (Stories, Camera, Spotlight, Map, and Communications) with ensuing strong engagement trends amid innovation, improvement and adoption across multiple fronts (new ad formats, AR tools, optimization, original content, gaming) with ample monetization runway," the firm said in a Friday note.
Twitter also reported earnings Thursday, posting its fastest revenue growth since 2014. Twitter stock had more muted gains Friday, closing up 3%. Snap and Twitter earnings beats could bode well for Alphabet, Facebook, Pinterest and Amazon's ad segments, which all report earnings next week.
-- CNBC's Salvador Rodriguez and Michael Bloom contributed to this report.