(Reuters) - Snap beat Wall Street's expectations for quarterly revenue and user growth on Thursday, as improvements to its advertising system delivered results faster than anticipated, sending its shares up 21% in after-market trading.

The owner of photo messaging app Snapchat has been working over the past year to improve how it targets ads to users and simplify the way people interact with the ads. The company has historically struggled to compete against much larger rivals like Facebook owner Meta Platforms for digital ad revenue.

Revenue during the first quarter ended March 31 was $1.2 billion, up 21% from the prior-year quarter and beating the analyst consensus estimate of $1.12 billion.

In a letter to shareholders, Snap said its business was improving faster than it expected due to the upgrades of its ad system and higher demand for features that help brands drive sales or website clicks.

Daily active users of Snapchat grew to 422 million, beating analyst expectations of 419.6 million.

On Tuesday, the U.S. Senate passed a bill that gives Chinese tech company ByteDance up to one year to divest its wildly popular video app TikTok, or else the app will be banned in the U.S.

Reuters reported on Thursday that ByteDance prefers to shut down TikTok if it exhausts its legal options for fighting the legislation.

Ad buyers have told Reuters that Snap will be a beneficiary of some marketing budgets if TikTok is no longer available.

Snap said it expects second-quarter revenue of between $1.23 billion and $1.26 billion. Analysts forecast $1.22 billion.

The Santa Monica, California-based company said it expects to grow to 431 million users in the second quarter.