Shares in Snap Inc. rose in after-hours trading after the social media company reported earnings and user growth that beat analysts’ expectations.

For the quarter ended March 31, Snap reported revenue of $770 million, up 66% year-over-year. The company had an operating loss adjusted for earnings before interest, taxes, depreciation and amortization of $1.7 million or zero cents per share. According to CNBC, analysts had been predicting revenue of $743.8 million and a loss of six cents per share.

The standout in the report was global daily active users, which rose to 280 million versus market expectations of 274.62 million. Average revenue per users in the quarter came in at $2.74 versus a predicted $2.72.

Without the adjustment, Snap reported a net loss of $286 million but despite that number, the company is slowly starting to move toward profitability, delivering positive free cash flow in the quarter for the first time in its history.

Notable highlights in the quarter included more than 125 million Snapchat users using Spotlight, a TikTok-like component in Snapchat that promotes viral videos. The number of Snapchat users, called “Snapchatters” by the company, who used the app’s augmented reality Lenses grew 40% in the quarter.

The overall driving factor behind increased user engagement on Snapchat is said to have been driven by new content on the platform. Snap said it added more than 300 new channels to its Discover feature in the first quarter.

Looking forward, Snap said it was estimating revenue in the second quarter of between $820 million and $840 million, up from $454 million in the second quarter of 2020. As for the bottom line, it forecast a range of a $20 million adjusted loss and breakeven, compared with a loss of $98 million a year ago.

“Snap’s strong results show us that the platform is not only continuing its reign as the app of choice for Gen-Z, but is also a go-to for brands wanting to engage consumers in a fun, entertaining way,” Yuval Ben-Itzhak, president of social media and digital marketing firm Socialbakers a.s., told SiliconANGLE. “While rival platforms like Facebook and YouTube offer similar camera technologies, they haven’t been able to capitalize on them in the same way as Snap. This is partly down to perception – users see Snapchat as the place for fun, visual, real-time content – but it’s also down to Snap’s relentless focus on innovation.”

Ben-Itzhak explained that Snap has come a long way since it introduced advertising to the platform. “First, brands were experimenting and weren’t sure about the value in reaching such young audiences, but this continuous innovation has paid off,” he said. “Now, brands are getting the engagement they need in ways unique to Snapchat. But a focus on innovating for advertising will only get them so far.”

Ben-Itzhak notes that Snap is now at a critical point where it must pivot toward social commerce if it wants to keep booking solid earnings reports. “Its recent acquisition of Berlin startup Fit Analytics is testament to this,” Ben-Itzhak said. “Snap is known for its powerful features around the camera, so the synergy with Fit Analytics is clear. While it will take some time for Snap to figure out how best to incorporate its sizing technologies into the platform, and for this to diversify its revenue streams, it’s a sign that the future is bright for Snap – a future driven by social commerce.”

Shares in Snap were up 5% to $59.90 in extended trading.

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