Snap files IPO, reveals finances
.Snapchat has been one of the most interesting apps to watch in the Digital Age. The photo and video sharing app by Snap has become virtually synonymous with disappearing multimedia. It has prompted users to be more creative and has continuously evolved and progressed in various iterations without losing much of its original spirit.
At first, many considered Snapchat as nothing more than a fad. Young people left and right shared photos that disappeared after a while. This led many to take advantage of Snapchat for more provocative adventures, despite the associated dangers. After some massive data leaks, it seemed like the future of Snapchat hang by a thread.
Despite its troubles, the app preserved and now boasts more than 160 million daily users. Snap, the company behind Snapchat, is now ready to go public. For us, that means we get to take an in-depth look at the company’s finances, along with other interesting tidbits.
To start with, Snap had a total cost of revenue of $452 million in 2016, up from $182 million in 2015. In 2016, it spent $184 million in R&D and $123 million in marketing alone. In order to continue its growth, Snap has required substantial amounts. Last year alone, it raised $1.8 billion.
Though these numbers might seem shocking, Snapchat has been very adamant about the fact that it might never be really profitable. So far, it has not really found many practical ways of monetizing its services, aside from advertising. Of course, the app is quite appealing to advertisers and marketers, both because of the level of user engagement and because of the ways it can deliver ads.
According to Snap, its users open the app more than 18 times per day. About 60 percent of its users use the chat service consistently. About 25 percent post on their Snapchat stories on a daily basis. Overall, more than 2.5 billion Snaps are created and shared every single day.
That kind of engagement is quite incredible. This particularly interests advertisers due to the fact that Snapchat remains hugely popular with the hard-to-reach audience of teens and millennials.
Another interesting fact about the company’s finances is just how much it pays Google for its Cloud Services. In 2016, Snap paid $400 million for Google Cloud. The company further said that it would commit at least $2 billion over the next five years for Google Cloud infrastructure.
Now that Snap has rebranded itself as a camera company, its Spectacles video camera glasses might be a huge area of focus for 2017. This year will be particularly interesting for the company. Even better, it will certainly be intriguing to watch how analysts will react to it after its March valuation.
