Skip to Main Content
Snap Inc. logo

Snap Inc.

 Save

About Snap Inc.

Snap owns and operates the Snapchat smartphone app, which lets social media users take photos and videos, attach messages, and send them to other users. The twist: The messages disappear in a few seconds, unless the receiver captures them. Other features allow users to edit their images through stylized representations and special effects (puppy faces and gender swap lenses remain popular features). Snap serves two constituencies: its users, who average of about 190 million a day, and the advertisers who pay Snap to reach those users. All of Snap's revenue comes from advertisers. The company has offices in the US, Europe, Asia, and Australia. Founded in 2011, Snap raised about $3.4 billion in an 2017 IPO.

Financial Performance

Snap's revenues climbed year-over-year since 2015 as its advertising operations matured. The company has yet to report a profit, citing increases in operating expenses as it works to expand its business. Expenses include research and development, headcount growth, and infrastructure costs related to growing storage, computing, and bandwidth as more people use Snapchat. Snap makes major payments to third-party infrastructure partners Google Cloud and Amazon Web Services for hosting its products.

In 2018 the company's revenue increased 43% year-over-year to reach $1.18 billion, up from $824.95 million in 2017. Snap measures its progress using ARPU --  its quarterly revenue divided by the average Daily Active Users -- because it helps measure the rate at which it is monetizing its daily user base. The company attributes revenue growth to an increase in ARPU as a result of growth in the number of advertisements delivered. ARPU was $2.09 in the fourth quarter of 2018 versus $1.53 in Q4 2017.

Snap's net loss was $1.26 billion in 2018, but this figure fell significantly from a loss of $3.44 billion in 2017. Decreases in research and development expenses in 2018 relative to 2017 contributed to the drop. Still, the biggest line item in Snap's income statement is for R&D. In 2018, it spent more than $772 million on R&D. 

A primary source of liquidity is cash generated through financing activities, while primary uses of cash include operating costs such as personnel-related costs and the infrastructure costs of the Snapchat app, facility-related capital spending, and acquisitions and investments. Cash at the end of 2018 was $387.1 million. Cash used in operating activities was $689.9 million, while investing activities used $1.01 billion. Financing activities provided $1.14 billion.

 

Strategy

Since its start as the provider of disappearing photos and texts, Snap has added to its portfolio of user products and services to keep users entertained and engaged. It has been particularly effective in reaching a younger demographic. The 18-34 age group is a golden demo for advertisers trying to reach people with disposable income who haven't established their brand loyalty. The company's most engaged users are younger than 25. 

Advertisers are flocking to the mobile phone, where Snap's business is based. The company has worked to develop new tools for advertisers, including technology that allows advertisers to show full-screen vertical ads, which the company's analysis suggests is more engaging than horizontal ads on vertical screens. 

The key challenge for Snap is its ability to develop new products that keep current users and attract new ones as it faces intense competition from Twitter, Facebook's Instagram and WhatsApp apps, and China's TikTok. Some say Snapchat's focus on young users gives it a clear advantage over Facebook, which skews older.

More recently, Snap updated its Android app supporting a resurgence in Android users. Another new advancement is in augmented reality. In 2019, HBO teamed up with Snap to create an AR lens that allowed users to see one of the dragons from "Game of Thrones" land on the Flatiron Building in New York.

Snap Inc.

2772 DONALD DOUGLAS LOOP N
Santa Monica, CA 90405-2951
Phone: 1 (310) 399-3339

Stats

Employer Type: Publicly Owned
Stock Symbol: SNAP
Stock Exchange: , NYSE
Chairman: Michael M. Lynton
CEO and Director: Evan Spiegel
CFO: Andrew Vollero
Employees (This Location): 148
Employees (All Locations): 2,884

Major Office Locations

Santa Monica, CA

Other Locations

Pacific Palisades, CA
Santa Monica, CA