Photo messaging app Snap on Tuesday reported a surprise rise in quarterly revenue and forecast an upbeat current quarter as its efforts to bolster ad-targeting tools with artificial intelligence showed signs of paying off.

Revenue for the third quarter ended September, according to a Reuters report, rose 5 percent to $1.19 billion, beating analysts’ expectations of $1.11 billion LSEG data said.

For the fourth quarter, the Santa Monica, California-based company expects revenue to be between $1.32 billion and $1.38 billion. Analysts were expecting revenue of $1.33 billion.

Snap, however, said it saw a risk to its sales in the fourth quarter as a war in the Middle East could tamp down spending from a large number of brand-oriented advertising campaigns.

The social media company’s subscription service, Snapchat+, which gives subscribers access to exclusive and pre-release features and costs $3.99 a month, hit more than 5 million members in the third quarter.

“I think what you’re seeing is the work starting to show up in the output, and the fundamental progress we’re making with the ad platform, and that’s showing up in the ARPU (average revenue per user), which is great news for the business,” CEO Evan Spiegel told analysts.

Daily active users on Snapchat were 406 million, beating Wall Street expectations of 405.7 million.

Snap‘s net loss widened to $368 million in the quarter from $360 million a year earlier.