20 ms·

Snap Inc. S-1

465 points by harryh 10y ago

minimaxir 10y ago
Interesting DAU-growth plateau around the 150M user mark mid-2016. Maybe there is truth to the theories that Instagram is successfully slowing the drain of users to Snapchat?
- 6stringmerc 10y ago
  Could be equilibrium reached - market saturation. All those who will use it are now on it, and the only way to go is down as the Primary Users, err, grow up and their time and interests are spent elsewhere. I mean, it might sound terribly reductive but I kind of figure there's only so many teenagers at any one given moment, and growing rapidly into a dominant market share is wonderful until it isn't.
- k-mcgrady 10y ago
  Anecdotally I have seen a lot of people AND brands/public figures stop using Snapchat in favour of Instagram stories. Stories on each platform don't cross-post well (Snapchat for example puts a massive white border around posts from the camera roll) so it makes sense to commit to one. Personally the thing that makes me use Snapchat less is the 'discover' stuff. 9/10 the stuff their promoting to me is top 10 type articles for teenage girls. I enjoy the Economist story but apart from that the rest is garbage. They could have a really nice media consumption platform their but they seem to be wasting it.
  - dopamean 10y ago
    Which people and brands have you seen stop using Snapchat in favor of Instagram? Since you said you've seen a lot I'm expecting a list of at least 10. Thanks.
obilgic 10y ago
Snap Inc. is a camera company.
- OedipusRex 10y ago
  Still don't use the native camera on Android.
  - charlesdm 10y ago
    You don't understand. They're a camera company.
    - adtac 10y ago
      Like, making actual cameras? I don't use Snapchat, but would that just be a regular camera with filters?
    - OedipusRex 10y ago
      They have "made" cameras before, one was a pair of sunglasses iirc. But still. Make that your slogan?
- FanaHOVA 10y ago
  See Spectacles (and whatever else they have in store)
melvinmt 10y ago
Very interesting to see what they think of their competition: > We face significant competition in almost every aspect of our business both domestically and internationally. This includes larger, more established companies such as Apple, Facebook (including Instagram and WhatsApp), Google (including YouTube), Twitter, Kakao, LINE, Naver (including Snow), and Tencent, which provide their users with a variety of products, services, content, and online advertising offerings, and smaller companies that offer products and services that may compete with specific Snapchat features. > For example, Instagram, a subsidiary of Facebook, recently introduced a “stories” feature that largely mimics our Stories feature and may be directly competitive. We may also lose users to small companies that offer products and services that compete with specific Snapchat features because of the low cost for our users to switch to a different product or service. > Many of our current and potential competitors have significantly greater resources and broader global recognition and occupy better competitive positions in certain markets than we do. These factors may allow our competitors to respond to new or emerging technologies and changes in market requirements better than we can. > Our competitors may also develop products, features, or services that are similar to ours or that achieve greater market acceptance. These products, features, and services may undertake more far-reaching and successful product development efforts or marketing campaigns, or may adopt more aggressive pricing policies.
- clock_tower 10y ago
  At least they're honest! Maybe it's the sector I'm in, but I rarely see this kind of candor in my sub-field of technology...
  - rjeli 10y ago
    They are required by law to disclose this in SEC filings
  - Game_Ender 10y ago
    I feel like S1 filings are always brutally honest like this. I believe it's a legal thing, they are afraid of future suits.
d4l3k 10y ago
> Although other U.S.-based companies have publicly traded classes of non-voting stock, to our knowledge, no other company has completed an initial public offering of non-voting stock on a U.S. stock exchange. We cannot predict whether this structure and the concentrated control it affords Mr. Spiegel and Mr. Murphy will result in a lower trading price or greater fluctuations in the trading price of our Class A common stock as compared to the trading price if the Class A common stock had voting rights. Nor can we predict whether this structure will result in adverse publicity or other adverse consequences.
- abalone 10y ago
  How does this differ from what Facebook and Google did? Did they offer stock that technically had voting power but in practice was massively outweighed by the founders' voting power? Whereas Snapchat is dispensing with such technicalities and just outright stating the founders control it?
  - d4l3k 10y ago
    When Facebook IPOed it had two classes of voting stock. Normal and super voting. They only offered the normal voting stock. Facebook and Google both later offered non-voting stock, but not when they IPOed. Not sure if it really makes a difference overall, but unlike Facebook and Google there is no public Snap Inc. voting stock.
    - minimax 10y ago
      There is no non-voting FB stock yet. It's still tied up in a shareholder lawsuit.
  - memnips 10y ago
    Relevant Money Stuff on the subject: https://www.bloomberg.com/view/articles/2017-01-17/snap-votes-and-banker-bonuses https://www.bloomberg.com/view/articles/2017-01-17/snap-vote...
- jbpetersen 10y ago
asdfg11235813 10y ago
> For the year ended December 31, 2016, we recorded revenue of $404.5 million... For the year ended December 31, 2016, we incurred a net loss of $514.6 million > We have three classes of common stock: Class A, Class B, and Class C. Holders of our Class A common stock—the only class of stock being sold in this offering—are entitled to no vote on matters submitted to our stockholders
- dumbfounder 10y ago
  Is the monthly revenue growth rate in there? I can't find it. To me that tells the story of whether it's a buy or not (for the mid term).
stuckagain 10y ago
"We have committed to spend $2 billion with Google Cloud over the next five years and have built our software and computer systems to use computing, storage capabilities, bandwidth, and other services provided by Google, some of which do not have an alternative in the market." There's some numbers for you that Google wouldn't have provided (as far as I have seen).
- richardwhiuk 10y ago
  I find the "do not have an alternative in the market" comment interesting - is there really anything which AWS does not have the GCE does?
  - chinathrow 10y ago
    Maybe the amount of rebates received?
  - stuckagain 10y ago
    Snap runs on Google App Engine, not on GCE (or perhaps they use both).
  - pbh101 10y ago
    There isn't an alternative inasmuch as there isn't a drop-in replacement. Thus, there are switching costs, which thus represent financial (and counterparty!) risks. Compare this situation to Dell v. Lenovo v. HP commodity x86 servers: if one goes out of business, you can go to the others (and proactively use this as leverage when negotiating). EDIT: Or more realistically, you don't need to do much/any work to run your service on a Dell v. an IBM.
  - whorleater 10y ago
    If you're already tied into GAE, Google's other offerings in cloud become really easy to tie in, from adding buckets in GCS to adding extra stuff in GCE. With the soonish coming of Google Pub/Sub, it takes a lot of effort to switch to AWS.
  - bduerst 10y ago
leothekim 10y ago
> We rely on Google Cloud for the vast majority of our computing, storage, bandwidth, and other services. Any disruption of or interference with our use of the Google Cloud operation would negatively affect our operations and seriously harm our business. Over-under on how much of their cost of revenue goes to Google App Engine?
dvdhnt 10y ago
> We had 158 million Daily Active Users on average in the quarter ended December 31, 2016, and we view Daily Active Users as a critical measure of our user engagement. > We anticipate that our Daily Active Users growth rate will decline over time if the size of our active user base increases or we achieve higher market penetration rates. If our Daily Active Users growth rate slows, our financial performance will increasingly depend on our ability to elevate user engagement or increase our monetization of users. > In addition, because our products typically require high bandwidth data capabilities, the majority of our users live in countries with high-end mobile device penetration and high bandwidth capacity cellular networks with large coverage areas. We therefore do not expect to experience rapid user growth or engagement in countries with low smartphone penetration even if such countries have well-established and high bandwidth capacity cellular networks. We may also not experience rapid user growth or engagement in countries where, even though smartphone penetration is high, due to the lack of sufficient cellular based data networks, consumers rely heavily on Wi-Fi and may not access our products regularly. > Snapchat is free and easy to join, the barrier to entry for new entrants is low, and the switching costs to another platform are also low. Moreover, the majority of our users are 18-34 years old. > This demographic may be less brand loyal and more likely to follow trends than other demographics. > For example, users 25 and older visited Snapchat approximately 12 times and spent approximately 20 minutes on Snapchat every day on average in the quarter ended December 31, 2016, while users younger than 25 visited Snapchat over 20 times and spent over 30 minutes on Snapchat every day on average during the same period. > Our Daily Active Users may not continue to grow. For example, although Daily Active Users grew by 7% from 143 million Daily Active Users for the quarter ended June 30, 2016 to 153 million Daily Active Users for the quarter ended September 30, 2016, the growth in Daily Active Users was relatively flat in the latter part of the quarter ended September 30, 2016.
- aleem 10y ago
  Worse still, Instagram is on a collision course with SnapChat [1]. > Mark Zuckerberg talked about the long-term strategy for Instagram’s growth, and the fact that in a few months, the company created a new product identical to Snapchat’s Stories that already has more than the 110 million users as Snapchat’s entire app is reported to have: >> Over the next five years, we’re going to keep building ecosystems around our apps that a lot of people are already using. Growth and engagement on Instagram have been strong. We announced in December that Instagram now has over 600 million monthly actives and recently passed 400 million daily actives. Instagram Stories reached 150 million daily actives just five months after the launch, and we’ve added new features like Boomerang and Live into Stories and I’m excited to see that continue to grow. While the numbers are impressive, it seems they may already have plateaued. Nothing wrong with that--if the addressable market is limited, it limits them too. However, the problem with a plateau is that everyone starts eating into your stagnant market share. Adding premium services results in higher churn. Adding advertising results in higher churn. Remains to be seen if they can double down with the IPO capital injection but so far we haven't seen much beyond the gimmicky SnapChat Spectacles. [1] https://qz.com/901289/facebooks-fb-earnings-call-revealed-zuckerbergs-plan-for-taking-down-snapchat-before-its-ipo/
dddrh 10y ago
Small question, but is it normal to leave the numbers blank when it comes to share-percentage or number of shares rewarded to the founders in the Risks section[0]? [0]: https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm#rom270216_2 https://www.sec.gov/Archives/edgar/data/1564408/000119312517...
ejcx 10y ago
Am I reading this right? I'm no banker... Their losses for 2016 were ~$500m? That's very steep, but it looks like revenue grew almost 700%. Wow. Insane numbers. I don't think anyone on the planet knows what's going to happen with them but I am sure interested in finding out.
- charlesdm 10y ago
  $50 it'll tank like Twitter. (And to the people downvoting me, please explain why you think it won't tank like Twitter - thanks!)
  - Swizec 10y ago
    Funnily, the way I see most people use Snap is "Twitter but video"
    - charlesdm 10y ago
      Their revenue ($400MM) is impressive for a messaging app, but honestly, the valuation it carries at this point is nuts. It's just an app and I personally don't believe it has a sufficient economic moat to justify that. Where's the ecosystem? How can we bolt on value from having that audience? Unlike Facebook, we won't have a billion people using Snapchat any time soon. Then again, I didn't believe Instagram was worth $1bn when acquired either, and looking back, was wrong on that. But there's a massive disconnect between the current valuation of Snapchat, and the valuation of Instagram (when it was acquired).
      - angryasian 10y ago
        >Their revenue ($400MM) is impressive for a messaging app Compared to Line and Wechat its really not
        charlesdm 10y ago
        You're right. I converted the Line Corp yen revenue number to USD, but looks like I missed a zero. Line has a market cap of $7bn, and does $1bn in revenue.
sagivo 10y ago
> Snap Inc. is a camera company interesting statement from a company that just released their first camera (Spectacles) few months ago. i'm not sure if their users see them as a camera company.
- ageyfman 10y ago
  Why can't a camera be software? Top 5 cameras on Flickr are iPhones. Software is eating the world, including photography.
  - dilemma 10y ago
    The iPhone is not software.
    - ageyfman 10y ago
      the default camera on iphone is used synonymously
- jonbarker 10y ago
  This line was included to convince investors they have product vision considering that until Spectacles they were completely locked into Apple and Google's mobile platforms. Presumably some type of light sensing device will always exist. Will they become a product company that makes per unit margins? Maybe not.
- ktta 10y ago
  Maybe it has to do with how investors view hardware vs. software companies. Social networks are much more volatile than hardware products and hardware companies are more stable. Of course, labelling themselves as camera company isn't going to fool HN, but it might be viewed in a different light by investors.
  - fullshark 10y ago
    I'd rather be seen as the next big social network than the next GPRO
vineetch 10y ago
They spent $890,339 on security for Evan Spiegel in 2016? Why does he need that much security? Who is trying to hurt him?
- trendia 10y ago
  According to Wikipedia, he has $2b in wealth [0]. I have no idea whether $900,000 / year is high or low for someone of that net worth. [0] https://en.wikipedia.org/wiki/Evan_Spiegel#Personal_life https://en.wikipedia.org/wiki/Evan_Spiegel#Personal_life
  - rwmj 10y ago
    Johnny Depp spends "Over $150,000/month on full-time security for his children" according to current revelations. So $900K/year for someone who's not very famous isn't unreasonable I suppose.
    - jonknee 10y ago
      Johnny Depp is also in a huge financial hole for irresponsible spending... Not a comparison.
      - discodave 10y ago
        It's easy to work out the cost of full time security. Lets say you need 2 people on rotation, they do 12 hours per day each (doable because they get to relax while client is at home etc.) then multiply by a reasonable salary for skilled labor like 70k then you get to 140k per year per person easily.
  - skuhn 10y ago
    $890k seems high in that for the previous year it was only $328k. I guess they had to triple everything for BCP.
  - yggda 10y ago
    Apple Spends $220K on Tim Cook http://files.shareholder.com/downloads/AAPL/3444424458x0x921630/0F4F1DA5-8CC6-43DC-A27E-1D1FF97F9359/Apple_2017_Proxy_Statement.pdf http://files.shareholder.com/downloads/AAPL/3444424458x0x921...
nlittlepoole 10y ago
"We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability." haha
- 6stringmerc 10y ago
  "There's a sucker born every minute" didn't enter the American lexicon by accident, mind you.
- Etheryte 10y ago
  It's not like they could claim anything else. No company can guarantee that it will remain profitable.
- _nrvs 10y ago
  SEE ALSO: https://en.wikipedia.org/wiki/Greater_fool_theory https://en.wikipedia.org/wiki/Greater_fool_theory :troll:
- rwc 10y ago
  This is boilerplate S1 language.
  - adtac 10y ago
    May I ask why? What would companies get out of doing that?
    - twinkletwinkle 10y ago
      I imagine it's a legal disclaimer. Same reason every investing prospectus in existence says "Past performance is not a guarantee of future returns"
      - adtac 10y ago
        Are there legal implications if you use language like "we _hope_ to get to a profitable stage within one year"?
deleted 10y ago
[deleted]
urs2102 10y ago
> We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability. Also having only 158 million daily active users up from 150 million in June is definitely interesting and a lot smaller growth jump than I had expected. Revenue up from $58MM in 2015 to $405MM despite a loss of $515MM last year. Wishing them best of luck, but I wonder how much their competition is hurting their growth (Instagram stories for example)? Also: > We are not aware of any other company that has completed an initial public offering of non-voting stock on a U.S. stock exchange. We therefore cannot predict the impact our capital structure and the concentrated control by our founders may have on our stock price or our business. Hmmm... will be interesting...
- charlesdm 10y ago
  158M DAU is not bad, but I would guess they are to some extent limited by the amount of iOS and Android devices in circulation? How are they going to get that number to 300M, or 500M? My best guess is they won't, ever.
  - urs2102 10y ago
    Yeah I'm not so surprised by that, as much as I'm surprised by the 8MM user growth from June to now. That's what's seems weird to me. Is that not indicative of a plateau?
    - charlesdm 10y ago
      I didn't actually read that part. If they only added 8MM DAU from June -> now, then it deserves to tank on its first trading day. Sounds like a decent short actually, once it cools down.
      - k-mcgrady 10y ago
        Why would it tank based on numbers available BEFORE it IPO's? I know there are idiots out there but surely the big investors are going to take figures available in the filing into account.
synaesthesisx 10y ago
Is anyone else seeing these numbers? How are they pushing for such a high valuation with those kind of losses? I suspect that Snap is merely capitalizing on traditional advertising metrics (engagement, CTR) which don't translate over on their app, and the advertisers just haven't caught on yet. People play with filters because they're funny/amusing, but those impressions don't convert into purchases in the same way other types of ads would. Earlier last year Snapchat temporarily featured X-Men filters exclusively ahead of the movie release - I interacted with those for the novelty (and mainly because they disabled all the other filters so there were no other options) but I did not see the movie. Again, I'm not sure if they follow something similar to a CPC model or what, but I bet it's expensive. If the advertisers decide it's ineffective their newfound revenue growth certainly won't be sustainable.
- EnFinlay 10y ago
  I would disagree about the value they are offering to advertisers. Offering a platform where targeted users actually engage with the ad is huge. I'm no advertiser, but that sounds kind of like the holy grail - the user is not only engaging with the ad, they are then sharing that ad + engagement with their friends.
  - charlesdm 10y ago
    Is it worth $25bn? Seems like a (massive) stretch, but maybe. Can it still realistically increase in value from this point? Probably not.
    - EnFinlay 10y ago
      No idea what it's worth, I just disagree that their ads are less valuable than other types.
    - mdb333 10y ago
      agree this reeks of ca 2000 burstage... so you have a bunch of eyeballs you sell ads to. Big f'in deal, that's not a $25B business unless you can continue to scale 10x (profitably). The rest is simply tech-fad novelty junk. I'd still buy into the IPO and ride it up a bit though.
pixelmonkey 10y ago
"We are required to purchase at least $400M of cloud services from Google each year beginning on January 30, 2017..." Wow, quite a snag for Google Cloud Platform to land that contract!
earlyriser 10y ago
When are they going to be on Nasdaq? I'm not sure where to find this info.
- selectodude 10y ago
  Never. They're on the NYSE.
  - earlyriser 10y ago
    Oh, I see. And when are they expected to enter the market?
    - selectodude 10y ago
      They plan for sometime in March.
screed 10y ago
What a shit design of this page.
- GrinningFool 10y ago
  I know - it's fully searchable, everything easily accessible. What were they thinking?
bluetwo 10y ago
OK, their dirty laundry is about what I would expect it to be. They are required to list these things at this point to avoid being accused of hiding information later. Given all this, are you buying? If you owned stock day 1 would you sell it?
- clock_tower 10y ago
  Personally, I'd sell immediately. I don't trust tech stocks; they're consumer discretionaries (or media stocks?) but more volatile, and any one of them could suffer the fate of Sun or Iomega at any time. If you gamble and win, you can make a fortune, but if you gamble you're more likely to lose; there are more reliable profits to be made elsewhere. (But I don't short any tech stocks, even though they don't normally pay dividends; all you have to do is short the next Microsoft once, and then you're selling your house a decade down the line. I prefer to let other people do the gambling, in both directions, while I look for safer things. Similarly, I have no exposure to biotech, the other gambling part of the market.)
benarent 10y ago
It's great to see both founders ( Evan and Bobby ) ended out with equal shares, both at 21.8% of Common A Stock. The history is pretty interesting, and as always there is a possible 3rd founder. https://techcrunch.com/2013/07/31/spiegel-murphy-say-alleged-snapchat-co-founder-never-had-equity/ https://techcrunch.com/2013/07/31/spiegel-murphy-say-alleged...
- gkop 10y ago
  Why is it great? It seems a super low probability that both founders deserve exactly the same compensation.
- nikcub 10y ago
  Spiegel gets an extra 3% for the IPO.
whitepoplar 10y ago
Serious question: how does Snapchat spend so much money on infrastructure? How could the app run up a $2b Google Cloud tab? Would anyone care to break it down?
- nom 10y ago
  Second. At that scale (160M active users [0]) I guess they could easily develop and run their own infrastructure. $2bn just screams 'inefficient implementation' to me... I could be wrong though. [0] https://techcrunch.com/2017/02/02/snap-ipo/ https://techcrunch.com/2017/02/02/snap-ipo/
- bendavis381 10y ago
  My guess would be the huge compute power needed to transcode that much video.
  - ljk 10y ago
    and storage, i'm guessing
    - trhway 10y ago
      video transcoding wouldn't it be better on FPGA or some DSP? and storage - compression? I mean are all those images that different from each other? Different people make photos and videos of basically the same stuff.
khana 10y ago
Oh Snap!
brentm 10y ago
Much greater losses than Twitter's S1. Snap's revenue is 27% higher but 548% greater net losses. Twitter s1: https://www.sec.gov/Archives/edgar/data/1418091/000119312513390321/d564001ds1.htm https://www.sec.gov/Archives/edgar/data/1418091/000119312513...
- artursapek 10y ago
  ...and TWTR isn't doing so well
  - bduerst 10y ago
    Which could in part be because of Snapchat, if we're being honest.
    - deleted 10y ago
      [deleted]
- slezakattack 10y ago
  I'm wondering where the loss is coming from. I'm skeptical that it's all coming out of the cost of infrastructure and workforce. I know they've had some company acquisitions in the past, so I wonder how that is coming into play.
  - dopamean 10y ago
    400 million a year to Google and then who knows how much more on AR/VR stuff.
  - fastball 10y ago
    Well, they do have 1859 employees. If you say on average they're paid $50k each (totally made up estimate, would love for someone to give me a better one), that would be almost $100mil a year in base salary alone.
    - ladon86 10y ago
arzt 10y ago
What's up with the massive negative gross margins? Will wall street glance over those? Is there any precedent for a company going public with such upside down financials (putting growth aside)?
justinzollars 10y ago
Snap is a company that doesn't know Oneself.
kartD 10y ago
So what's the transition time from an S-1 to being able to buy shares. Does it mean the stock will list tomorrow?
- elastic_church 10y ago
  A month or two. I'd wager 6 weeks. The S-1 is for the roadshow to create the underwriters and syndicate. They want to study our reactions and other people's reactions to see how they can price the shares. It is all about perception at this point. Share value number should go up.
mmastrac 10y ago
I wonder if Snapchat is still using AppEngine. I'm pretty sure they were 50%+ of the AE traffic at some point.
- egillie 10y ago
  I know googlers used to needle the AE SREs by calling them "Snapchat SREs"
softwarefounder 10y ago
I'll never complain about writing a SOW ever again.
deleted 10y ago
[deleted]
charlesdm 10y ago
Your pension funds at work, people.
ch0wn 10y ago
"The launch of Spectacles, which has not generated significant revenue for us, is a good example. There is no guarantee that investing in new lines of business, new products, and other initiatives will succeed. If we do not successfully develop new approaches to monetization, we may not be able to maintain or grow our revenue as anticipated or recover any associated development costs, and our business could be seriously harmed." I don't think anyone expected Spectacles to be a cash cow, but I still would have expected a more positive outlook on them.
- ben0x539 10y ago
  They're probably more of a shot at creating lock-in than a profit center.
  - dbbk 10y ago
    They certainly are, you flat out cannot use Spectacles without opening the Snapchat app.
prawn 10y ago
Grew by 3.4 employees per day last year. Can only imagine the challenges there in onboarding, maintaining culture and direction, etc.
perseusprime11 10y ago
Fate will be similar to the Twitter stock
econner 10y ago
Executive Compensation Name and Principal Position Year Salary Bonus(1) Stock Awards(2) All Other Total Evan Spiegel 2016 $ 503,205 $ 1,000,000 $ — $ 901,635 $ 2,404,840 2015 363,715 1,000,000 — 344,756 1,708,471 Imran Khan 2016 241,539 5,239,460 — 14,658 5,495,657 2015 230,000 — 145,292,145 348 145,522,493 Timothy Sehn(6) 2016 400,152 1,000,000 40,000,020 8,348 41,408,520
- bruceb 10y ago
  Looks like it is time for University of Waterloo to hit Timothy Sehn up for a donation.
  - econner 10y ago
    Yea, is that $40,000,000 in stock for 1 year of work?
- deleted 10y ago
  [deleted]
fastball 10y ago
My takeaway was that Snap has 1,859 employees... huh? Why does a company with a single product, which is a mobile app (so what is that these days, three platforms?) need almost two thousand employees - am I missing something? No wonder they lost $514mil in 2016, that's an absurd amount of overhead for a company with a single, not very cumbersome product.
- ohstopitu 10y ago
  What I'd like to see - is the employee breakdown. How many are working on the acutal product/engineering? I work for a startup (that was bootstrapped I believe) and our sales team is almost half the company (we are just under 100 people right now). Point being, at Snap's scale - I have a feeling they'll have a lot of Business Development Reps trying to bring in contracts for adverts.
  - hxnjxn 10y ago
    Yeah, thats what Im interested in too. have to assume there is a significant sales force, especially with their expected sales growth
    - renesd 10y ago
      Since both of you assume that, we'll assume it's true for the moment. In that case, in order to scale their sales, they have to do it by an industry benchmark unless proven otherwise. The industry benchmark is about linear scaling of a sales force. Actually, a more accurate calculation is much more complex. It's also almost impossible to figure out accurately unless they release certain data - which I guess they won't do. Good luck with that!
  - petters 10y ago
    The cost they list for research and development compared to e.g. marketing gives you an idea.
  - icedchocolate 10y ago
    Sales & Marketing expense was $124M, they spent ~$9M on advertising, so ~$115M on sales and marketing, and $183M on R&D (engineering). So about 61:39, eng:sales, if you were to assume wages were equal, on average.
gigatexal 10y ago
Net loss about 500 million at the end of 2016 which is about 100 million more than the year prior. Yikes. Still they'll likely make the case that they can turn a profit in the not-to-distant future.
atishd 10y ago
If I am the May 2016 investor, I'm thrilled that I got to see how the company grew for a year and a half, while still paying the same price as the Feb 2015 investor. Snap might have provided other incentives to investors early in the Series F round, or they were just happy to get invited to the party.
svend 10y ago
> For the year ended December 31, 2016, we incurred a net loss of $514.6 million, as compared to a net loss of $372.9 million for the year ended December 31, 2015. Some serious progress there. Great. Let's IPO O_o
- ljk 10y ago
  gotta strike while the iron is hot
nojvek 10y ago
I use snapchat every single day. I know my friends who've moved off facebook and Instagram use it extensively too. Its the facebook for young people. No one I know who is under 20 uses facebook anymore. Mostly because their parents are on facebook. Snapchatters post a lot more stuff that they won't usually post on public social media. After 24 hours it goes poof. I expect a dip after IPO and then a nice rise like facebook once they figure out how to advertise to the teens. Worth a wait and then buy once all the adults think its worthless.
- dbbk 10y ago
  If you go to university, Facebook is inescapable. Every society, sports team, social event is organised through there.
dynofuz 10y ago
It doesnt make sense that it would be worth more than twitter or even instagram. Even if ads are more effective, there's 5x the interest to advertise on those platforms than snap (https://www.google.com/trends/explore?q=snapchat%20ads,twitter%20ads,instagram%20ads,facebook%20ads https://www.google.com/trends/explore?q=snapchat%20ads,twitt...). I say its worth more like ~3B market cap
- dangoldin 10y ago
  Part of this can be explained by Snapchat not having a self serve product (AFAIK) so a lot of the search results might be individuals/smaller businesses looking for help/advice to get started. I know the major brands are spending fairly significantly on Snapchat and doubt they contribute much to the Google trends data.
skewart 10y ago
I'm surprised by the number of comments about how much money they've been losing. Their finances right now are completely irrelevant to their eventual success or failure. All that matters is getting a huge number of highly engaged users. The attention of many hundreds of millions or billions of people is a very valuable resources that they will have no problem selling. Keep in mind that there is a limited amount of human attention in the world, and it's a zero-sum game to control it. As Facebook has discovered, owning a huge amount of attention gives you a ton of leverage over advertisers who want to buy it. Being in the long tail of smaller attention-holders gives you much less. So Snap will either grow to compete with TV and Facebook as one of the top attention-holders, or else they'll fizzle out into irrelevance, burning through gobs of cash along the way. I mean, sure, they could aim to be a nice $500 million company that builds a product that makes people happy and makes their employees comfortably upper middle class. But that's clearly not their ambition so there's no point in discussing their finances as if it were.
return0 10y ago
It s going to be tremenous success. I ve never even seen the app, let alone used it, but its the times we live in.
brangalina4eva 10y ago
The biggest joke of this IPO is that the 2 co-founders will control the company and continue to do so even if they step down.

465 points by harryh 10y ago

Interesting DAU-growth plateau around the 150M user mark mid-2016. Maybe there is truth to the theories that Instagram is successfully slowing the drain of users to Snapchat?

6stringmerc 10y ago
Could be equilibrium reached - market saturation. All those who will use it are now on it, and the only way to go is down as the Primary Users, err, grow up and their time and interests are spent elsewhere. I mean, it might sound terribly reductive but I kind of figure there's only so many teenagers at any one given moment, and growing rapidly into a dominant market share is wonderful until it isn't.
k-mcgrady 10y ago
Anecdotally I have seen a lot of people AND brands/public figures stop using Snapchat in favour of Instagram stories. Stories on each platform don't cross-post well (Snapchat for example puts a massive white border around posts from the camera roll) so it makes sense to commit to one. Personally the thing that makes me use Snapchat less is the 'discover' stuff. 9/10 the stuff their promoting to me is top 10 type articles for teenage girls. I enjoy the Economist story but apart from that the rest is garbage. They could have a really nice media consumption platform their but they seem to be wasting it.
- dopamean 10y ago
  Which people and brands have you seen stop using Snapchat in favor of Instagram? Since you said you've seen a lot I'm expecting a list of at least 10. Thanks.

obilgic 10y ago

Snap Inc. is a camera company.

OedipusRex 10y ago
Still don't use the native camera on Android.
- charlesdm 10y ago
  You don't understand. They're a camera company.
  - adtac 10y ago
    Like, making actual cameras? I don't use Snapchat, but would that just be a regular camera with filters?
  - OedipusRex 10y ago
    They have "made" cameras before, one was a pair of sunglasses iirc. But still. Make that your slogan?
FanaHOVA 10y ago
See Spectacles (and whatever else they have in store)

melvinmt 10y ago

Very interesting to see what they think of their competition: > We face significant competition in almost every aspect of our business both domestically and internationally. This includes larger, more established companies such as Apple, Facebook (including Instagram and WhatsApp), Google (including YouTube), Twitter, Kakao, LINE, Naver (including Snow), and Tencent, which provide their users with a variety of products, services, content, and online advertising offerings, and smaller companies that offer products and services that may compete with specific Snapchat features. > For example, Instagram, a subsidiary of Facebook, recently introduced a “stories” feature that largely mimics our Stories feature and may be directly competitive. We may also lose users to small companies that offer products and services that compete with specific Snapchat features because of the low cost for our users to switch to a different product or service. > Many of our current and potential competitors have significantly greater resources and broader global recognition and occupy better competitive positions in certain markets than we do. These factors may allow our competitors to respond to new or emerging technologies and changes in market requirements better than we can. > Our competitors may also develop products, features, or services that are similar to ours or that achieve greater market acceptance. These products, features, and services may undertake more far-reaching and successful product development efforts or marketing campaigns, or may adopt more aggressive pricing policies.

clock_tower 10y ago
At least they're honest! Maybe it's the sector I'm in, but I rarely see this kind of candor in my sub-field of technology...
- rjeli 10y ago
  They are required by law to disclose this in SEC filings
- Game_Ender 10y ago
  I feel like S1 filings are always brutally honest like this. I believe it's a legal thing, they are afraid of future suits.

d4l3k 10y ago

> Although other U.S.-based companies have publicly traded classes of non-voting stock, to our knowledge, no other company has completed an initial public offering of non-voting stock on a U.S. stock exchange. We cannot predict whether this structure and the concentrated control it affords Mr. Spiegel and Mr. Murphy will result in a lower trading price or greater fluctuations in the trading price of our Class A common stock as compared to the trading price if the Class A common stock had voting rights. Nor can we predict whether this structure will result in adverse publicity or other adverse consequences.

abalone 10y ago
How does this differ from what Facebook and Google did? Did they offer stock that technically had voting power but in practice was massively outweighed by the founders' voting power? Whereas Snapchat is dispensing with such technicalities and just outright stating the founders control it?
- d4l3k 10y ago
  When Facebook IPOed it had two classes of voting stock. Normal and super voting. They only offered the normal voting stock. Facebook and Google both later offered non-voting stock, but not when they IPOed. Not sure if it really makes a difference overall, but unlike Facebook and Google there is no public Snap Inc. voting stock.
  - minimax 10y ago
    There is no non-voting FB stock yet. It's still tied up in a shareholder lawsuit.
- memnips 10y ago
  Relevant Money Stuff on the subject: https://www.bloomberg.com/view/articles/2017-01-17/snap-votes-and-banker-bonuses https://www.bloomberg.com/view/articles/2017-01-17/snap-vote...
jbpetersen 10y ago

asdfg11235813 10y ago

> For the year ended December 31, 2016, we recorded revenue of $404.5 million... For the year ended December 31, 2016, we incurred a net loss of $514.6 million > We have three classes of common stock: Class A, Class B, and Class C. Holders of our Class A common stock—the only class of stock being sold in this offering—are entitled to no vote on matters submitted to our stockholders

dumbfounder 10y ago
Is the monthly revenue growth rate in there? I can't find it. To me that tells the story of whether it's a buy or not (for the mid term).

stuckagain 10y ago

"We have committed to spend $2 billion with Google Cloud over the next five years and have built our software and computer systems to use computing, storage capabilities, bandwidth, and other services provided by Google, some of which do not have an alternative in the market." There's some numbers for you that Google wouldn't have provided (as far as I have seen).

richardwhiuk 10y ago
I find the "do not have an alternative in the market" comment interesting - is there really anything which AWS does not have the GCE does?
- chinathrow 10y ago
  Maybe the amount of rebates received?
- stuckagain 10y ago
  Snap runs on Google App Engine, not on GCE (or perhaps they use both).
- pbh101 10y ago
  There isn't an alternative inasmuch as there isn't a drop-in replacement. Thus, there are switching costs, which thus represent financial (and counterparty!) risks. Compare this situation to Dell v. Lenovo v. HP commodity x86 servers: if one goes out of business, you can go to the others (and proactively use this as leverage when negotiating). EDIT: Or more realistically, you don't need to do much/any work to run your service on a Dell v. an IBM.
- whorleater 10y ago
  If you're already tied into GAE, Google's other offerings in cloud become really easy to tie in, from adding buckets in GCS to adding extra stuff in GCE. With the soonish coming of Google Pub/Sub, it takes a lot of effort to switch to AWS.
- bduerst 10y ago

leothekim 10y ago

> We rely on Google Cloud for the vast majority of our computing, storage, bandwidth, and other services. Any disruption of or interference with our use of the Google Cloud operation would negatively affect our operations and seriously harm our business. Over-under on how much of their cost of revenue goes to Google App Engine?

dvdhnt 10y ago

> We had 158 million Daily Active Users on average in the quarter ended December 31, 2016, and we view Daily Active Users as a critical measure of our user engagement. > We anticipate that our Daily Active Users growth rate will decline over time if the size of our active user base increases or we achieve higher market penetration rates. If our Daily Active Users growth rate slows, our financial performance will increasingly depend on our ability to elevate user engagement or increase our monetization of users. > In addition, because our products typically require high bandwidth data capabilities, the majority of our users live in countries with high-end mobile device penetration and high bandwidth capacity cellular networks with large coverage areas. We therefore do not expect to experience rapid user growth or engagement in countries with low smartphone penetration even if such countries have well-established and high bandwidth capacity cellular networks. We may also not experience rapid user growth or engagement in countries where, even though smartphone penetration is high, due to the lack of sufficient cellular based data networks, consumers rely heavily on Wi-Fi and may not access our products regularly. > Snapchat is free and easy to join, the barrier to entry for new entrants is low, and the switching costs to another platform are also low. Moreover, the majority of our users are 18-34 years old. > This demographic may be less brand loyal and more likely to follow trends than other demographics. > For example, users 25 and older visited Snapchat approximately 12 times and spent approximately 20 minutes on Snapchat every day on average in the quarter ended December 31, 2016, while users younger than 25 visited Snapchat over 20 times and spent over 30 minutes on Snapchat every day on average during the same period. > Our Daily Active Users may not continue to grow. For example, although Daily Active Users grew by 7% from 143 million Daily Active Users for the quarter ended June 30, 2016 to 153 million Daily Active Users for the quarter ended September 30, 2016, the growth in Daily Active Users was relatively flat in the latter part of the quarter ended September 30, 2016.

aleem 10y ago
Worse still, Instagram is on a collision course with SnapChat [1]. > Mark Zuckerberg talked about the long-term strategy for Instagram’s growth, and the fact that in a few months, the company created a new product identical to Snapchat’s Stories that already has more than the 110 million users as Snapchat’s entire app is reported to have: >> Over the next five years, we’re going to keep building ecosystems around our apps that a lot of people are already using. Growth and engagement on Instagram have been strong. We announced in December that Instagram now has over 600 million monthly actives and recently passed 400 million daily actives. Instagram Stories reached 150 million daily actives just five months after the launch, and we’ve added new features like Boomerang and Live into Stories and I’m excited to see that continue to grow. While the numbers are impressive, it seems they may already have plateaued. Nothing wrong with that--if the addressable market is limited, it limits them too. However, the problem with a plateau is that everyone starts eating into your stagnant market share. Adding premium services results in higher churn. Adding advertising results in higher churn. Remains to be seen if they can double down with the IPO capital injection but so far we haven't seen much beyond the gimmicky SnapChat Spectacles. [1] https://qz.com/901289/facebooks-fb-earnings-call-revealed-zuckerbergs-plan-for-taking-down-snapchat-before-its-ipo/

dddrh 10y ago

Small question, but is it normal to leave the numbers blank when it comes to share-percentage or number of shares rewarded to the founders in the Risks section[0]? [0]: https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm#rom270216_2 https://www.sec.gov/Archives/edgar/data/1564408/000119312517...

ejcx 10y ago

Am I reading this right? I'm no banker... Their losses for 2016 were ~$500m? That's very steep, but it looks like revenue grew almost 700%. Wow. Insane numbers. I don't think anyone on the planet knows what's going to happen with them but I am sure interested in finding out.

charlesdm 10y ago
$50 it'll tank like Twitter. (And to the people downvoting me, please explain why you think it won't tank like Twitter - thanks!)
- Swizec 10y ago
  Funnily, the way I see most people use Snap is "Twitter but video"
  - charlesdm 10y ago
    Their revenue ($400MM) is impressive for a messaging app, but honestly, the valuation it carries at this point is nuts. It's just an app and I personally don't believe it has a sufficient economic moat to justify that. Where's the ecosystem? How can we bolt on value from having that audience? Unlike Facebook, we won't have a billion people using Snapchat any time soon. Then again, I didn't believe Instagram was worth $1bn when acquired either, and looking back, was wrong on that. But there's a massive disconnect between the current valuation of Snapchat, and the valuation of Instagram (when it was acquired).
    - angryasian 10y ago
      >Their revenue ($400MM) is impressive for a messaging app Compared to Line and Wechat its really not
      - charlesdm 10y ago
        You're right. I converted the Line Corp yen revenue number to USD, but looks like I missed a zero. Line has a market cap of $7bn, and does $1bn in revenue.

sagivo 10y ago

> Snap Inc. is a camera company interesting statement from a company that just released their first camera (Spectacles) few months ago. i'm not sure if their users see them as a camera company.

ageyfman 10y ago
Why can't a camera be software? Top 5 cameras on Flickr are iPhones. Software is eating the world, including photography.
- dilemma 10y ago
  The iPhone is not software.
  - ageyfman 10y ago
    the default camera on iphone is used synonymously
jonbarker 10y ago
This line was included to convince investors they have product vision considering that until Spectacles they were completely locked into Apple and Google's mobile platforms. Presumably some type of light sensing device will always exist. Will they become a product company that makes per unit margins? Maybe not.
ktta 10y ago
Maybe it has to do with how investors view hardware vs. software companies. Social networks are much more volatile than hardware products and hardware companies are more stable. Of course, labelling themselves as camera company isn't going to fool HN, but it might be viewed in a different light by investors.
- fullshark 10y ago
  I'd rather be seen as the next big social network than the next GPRO

vineetch 10y ago

They spent $890,339 on security for Evan Spiegel in 2016? Why does he need that much security? Who is trying to hurt him?

trendia 10y ago
According to Wikipedia, he has $2b in wealth [0]. I have no idea whether $900,000 / year is high or low for someone of that net worth. [0] https://en.wikipedia.org/wiki/Evan_Spiegel#Personal_life https://en.wikipedia.org/wiki/Evan_Spiegel#Personal_life
- rwmj 10y ago
  Johnny Depp spends "Over $150,000/month on full-time security for his children" according to current revelations. So $900K/year for someone who's not very famous isn't unreasonable I suppose.
  - jonknee 10y ago
    Johnny Depp is also in a huge financial hole for irresponsible spending... Not a comparison.
    - discodave 10y ago
      It's easy to work out the cost of full time security. Lets say you need 2 people on rotation, they do 12 hours per day each (doable because they get to relax while client is at home etc.) then multiply by a reasonable salary for skilled labor like 70k then you get to 140k per year per person easily.
- skuhn 10y ago
  $890k seems high in that for the previous year it was only $328k. I guess they had to triple everything for BCP.
- yggda 10y ago
  Apple Spends $220K on Tim Cook http://files.shareholder.com/downloads/AAPL/3444424458x0x921630/0F4F1DA5-8CC6-43DC-A27E-1D1FF97F9359/Apple_2017_Proxy_Statement.pdf http://files.shareholder.com/downloads/AAPL/3444424458x0x921...

nlittlepoole 10y ago

"We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability." haha

6stringmerc 10y ago
"There's a sucker born every minute" didn't enter the American lexicon by accident, mind you.
Etheryte 10y ago
It's not like they could claim anything else. No company can guarantee that it will remain profitable.
_nrvs 10y ago
SEE ALSO: https://en.wikipedia.org/wiki/Greater_fool_theory https://en.wikipedia.org/wiki/Greater_fool_theory :troll:
rwc 10y ago
This is boilerplate S1 language.
- adtac 10y ago
  May I ask why? What would companies get out of doing that?
  - twinkletwinkle 10y ago
    I imagine it's a legal disclaimer. Same reason every investing prospectus in existence says "Past performance is not a guarantee of future returns"
    - adtac 10y ago
      Are there legal implications if you use language like "we _hope_ to get to a profitable stage within one year"?

deleted 10y ago

[deleted]

urs2102 10y ago

> We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability. Also having only 158 million daily active users up from 150 million in June is definitely interesting and a lot smaller growth jump than I had expected. Revenue up from $58MM in 2015 to $405MM despite a loss of $515MM last year. Wishing them best of luck, but I wonder how much their competition is hurting their growth (Instagram stories for example)? Also: > We are not aware of any other company that has completed an initial public offering of non-voting stock on a U.S. stock exchange. We therefore cannot predict the impact our capital structure and the concentrated control by our founders may have on our stock price or our business. Hmmm... will be interesting...

charlesdm 10y ago
158M DAU is not bad, but I would guess they are to some extent limited by the amount of iOS and Android devices in circulation? How are they going to get that number to 300M, or 500M? My best guess is they won't, ever.
- urs2102 10y ago
  Yeah I'm not so surprised by that, as much as I'm surprised by the 8MM user growth from June to now. That's what's seems weird to me. Is that not indicative of a plateau?
  - charlesdm 10y ago
    I didn't actually read that part. If they only added 8MM DAU from June -> now, then it deserves to tank on its first trading day. Sounds like a decent short actually, once it cools down.
    - k-mcgrady 10y ago
      Why would it tank based on numbers available BEFORE it IPO's? I know there are idiots out there but surely the big investors are going to take figures available in the filing into account.

synaesthesisx 10y ago

Is anyone else seeing these numbers? How are they pushing for such a high valuation with those kind of losses? I suspect that Snap is merely capitalizing on traditional advertising metrics (engagement, CTR) which don't translate over on their app, and the advertisers just haven't caught on yet. People play with filters because they're funny/amusing, but those impressions don't convert into purchases in the same way other types of ads would. Earlier last year Snapchat temporarily featured X-Men filters exclusively ahead of the movie release - I interacted with those for the novelty (and mainly because they disabled all the other filters so there were no other options) but I did not see the movie. Again, I'm not sure if they follow something similar to a CPC model or what, but I bet it's expensive. If the advertisers decide it's ineffective their newfound revenue growth certainly won't be sustainable.

EnFinlay 10y ago
I would disagree about the value they are offering to advertisers. Offering a platform where targeted users actually engage with the ad is huge. I'm no advertiser, but that sounds kind of like the holy grail - the user is not only engaging with the ad, they are then sharing that ad + engagement with their friends.
- charlesdm 10y ago
  Is it worth $25bn? Seems like a (massive) stretch, but maybe. Can it still realistically increase in value from this point? Probably not.
  - EnFinlay 10y ago
    No idea what it's worth, I just disagree that their ads are less valuable than other types.
  - mdb333 10y ago
    agree this reeks of ca 2000 burstage... so you have a bunch of eyeballs you sell ads to. Big f'in deal, that's not a $25B business unless you can continue to scale 10x (profitably). The rest is simply tech-fad novelty junk. I'd still buy into the IPO and ride it up a bit though.

pixelmonkey 10y ago

"We are required to purchase at least $400M of cloud services from Google each year beginning on January 30, 2017..." Wow, quite a snag for Google Cloud Platform to land that contract!

earlyriser 10y ago

When are they going to be on Nasdaq? I'm not sure where to find this info.

selectodude 10y ago
Never. They're on the NYSE.
- earlyriser 10y ago
  Oh, I see. And when are they expected to enter the market?
  - selectodude 10y ago
    They plan for sometime in March.

screed 10y ago

What a shit design of this page.

GrinningFool 10y ago
I know - it's fully searchable, everything easily accessible. What were they thinking?

bluetwo 10y ago

OK, their dirty laundry is about what I would expect it to be. They are required to list these things at this point to avoid being accused of hiding information later. Given all this, are you buying? If you owned stock day 1 would you sell it?

clock_tower 10y ago
Personally, I'd sell immediately. I don't trust tech stocks; they're consumer discretionaries (or media stocks?) but more volatile, and any one of them could suffer the fate of Sun or Iomega at any time. If you gamble and win, you can make a fortune, but if you gamble you're more likely to lose; there are more reliable profits to be made elsewhere. (But I don't short any tech stocks, even though they don't normally pay dividends; all you have to do is short the next Microsoft once, and then you're selling your house a decade down the line. I prefer to let other people do the gambling, in both directions, while I look for safer things. Similarly, I have no exposure to biotech, the other gambling part of the market.)

benarent 10y ago

It's great to see both founders ( Evan and Bobby ) ended out with equal shares, both at 21.8% of Common A Stock. The history is pretty interesting, and as always there is a possible 3rd founder. https://techcrunch.com/2013/07/31/spiegel-murphy-say-alleged-snapchat-co-founder-never-had-equity/ https://techcrunch.com/2013/07/31/spiegel-murphy-say-alleged...

gkop 10y ago
Why is it great? It seems a super low probability that both founders deserve exactly the same compensation.
nikcub 10y ago
Spiegel gets an extra 3% for the IPO.

whitepoplar 10y ago

Serious question: how does Snapchat spend so much money on infrastructure? How could the app run up a $2b Google Cloud tab? Would anyone care to break it down?

nom 10y ago
Second. At that scale (160M active users [0]) I guess they could easily develop and run their own infrastructure. $2bn just screams 'inefficient implementation' to me... I could be wrong though. [0] https://techcrunch.com/2017/02/02/snap-ipo/ https://techcrunch.com/2017/02/02/snap-ipo/
bendavis381 10y ago
My guess would be the huge compute power needed to transcode that much video.
- ljk 10y ago
  and storage, i'm guessing
  - trhway 10y ago
    video transcoding wouldn't it be better on FPGA or some DSP? and storage - compression? I mean are all those images that different from each other? Different people make photos and videos of basically the same stuff.

khana 10y ago

Oh Snap!

brentm 10y ago

Much greater losses than Twitter's S1. Snap's revenue is 27% higher but 548% greater net losses. Twitter s1: https://www.sec.gov/Archives/edgar/data/1418091/000119312513390321/d564001ds1.htm https://www.sec.gov/Archives/edgar/data/1418091/000119312513...

artursapek 10y ago
...and TWTR isn't doing so well
- bduerst 10y ago
  Which could in part be because of Snapchat, if we're being honest.
  - deleted 10y ago
    [deleted]
slezakattack 10y ago
I'm wondering where the loss is coming from. I'm skeptical that it's all coming out of the cost of infrastructure and workforce. I know they've had some company acquisitions in the past, so I wonder how that is coming into play.
- dopamean 10y ago
  400 million a year to Google and then who knows how much more on AR/VR stuff.
- fastball 10y ago
  Well, they do have 1859 employees. If you say on average they're paid $50k each (totally made up estimate, would love for someone to give me a better one), that would be almost $100mil a year in base salary alone.
  - ladon86 10y ago

arzt 10y ago

What's up with the massive negative gross margins? Will wall street glance over those? Is there any precedent for a company going public with such upside down financials (putting growth aside)?

justinzollars 10y ago

Snap is a company that doesn't know Oneself.

kartD 10y ago

So what's the transition time from an S-1 to being able to buy shares. Does it mean the stock will list tomorrow?

elastic_church 10y ago
A month or two. I'd wager 6 weeks. The S-1 is for the roadshow to create the underwriters and syndicate. They want to study our reactions and other people's reactions to see how they can price the shares. It is all about perception at this point. Share value number should go up.

mmastrac 10y ago

I wonder if Snapchat is still using AppEngine. I'm pretty sure they were 50%+ of the AE traffic at some point.

egillie 10y ago
I know googlers used to needle the AE SREs by calling them "Snapchat SREs"

softwarefounder 10y ago

I'll never complain about writing a SOW ever again.

deleted 10y ago

[deleted]

charlesdm 10y ago

Your pension funds at work, people.

ch0wn 10y ago

"The launch of Spectacles, which has not generated significant revenue for us, is a good example. There is no guarantee that investing in new lines of business, new products, and other initiatives will succeed. If we do not successfully develop new approaches to monetization, we may not be able to maintain or grow our revenue as anticipated or recover any associated development costs, and our business could be seriously harmed." I don't think anyone expected Spectacles to be a cash cow, but I still would have expected a more positive outlook on them.

ben0x539 10y ago
They're probably more of a shot at creating lock-in than a profit center.
- dbbk 10y ago
  They certainly are, you flat out cannot use Spectacles without opening the Snapchat app.

prawn 10y ago

Grew by 3.4 employees per day last year. Can only imagine the challenges there in onboarding, maintaining culture and direction, etc.

perseusprime11 10y ago

Fate will be similar to the Twitter stock

econner 10y ago

Executive Compensation Name and Principal Position Year Salary Bonus(1) Stock Awards(2) All Other Total Evan Spiegel 2016 $ 503,205 $ 1,000,000 $ — $ 901,635 $ 2,404,840 2015 363,715 1,000,000 — 344,756 1,708,471 Imran Khan 2016 241,539 5,239,460 — 14,658 5,495,657 2015 230,000 — 145,292,145 348 145,522,493 Timothy Sehn(6) 2016 400,152 1,000,000 40,000,020 8,348 41,408,520

bruceb 10y ago
Looks like it is time for University of Waterloo to hit Timothy Sehn up for a donation.
- econner 10y ago
  Yea, is that $40,000,000 in stock for 1 year of work?
deleted 10y ago
[deleted]

fastball 10y ago

My takeaway was that Snap has 1,859 employees... huh? Why does a company with a single product, which is a mobile app (so what is that these days, three platforms?) need almost two thousand employees - am I missing something? No wonder they lost $514mil in 2016, that's an absurd amount of overhead for a company with a single, not very cumbersome product.

ohstopitu 10y ago
What I'd like to see - is the employee breakdown. How many are working on the acutal product/engineering? I work for a startup (that was bootstrapped I believe) and our sales team is almost half the company (we are just under 100 people right now). Point being, at Snap's scale - I have a feeling they'll have a lot of Business Development Reps trying to bring in contracts for adverts.
- hxnjxn 10y ago
  Yeah, thats what Im interested in too. have to assume there is a significant sales force, especially with their expected sales growth
  - renesd 10y ago
    Since both of you assume that, we'll assume it's true for the moment. In that case, in order to scale their sales, they have to do it by an industry benchmark unless proven otherwise. The industry benchmark is about linear scaling of a sales force. Actually, a more accurate calculation is much more complex. It's also almost impossible to figure out accurately unless they release certain data - which I guess they won't do. Good luck with that!
- petters 10y ago
  The cost they list for research and development compared to e.g. marketing gives you an idea.
- icedchocolate 10y ago
  Sales & Marketing expense was $124M, they spent ~$9M on advertising, so ~$115M on sales and marketing, and $183M on R&D (engineering). So about 61:39, eng:sales, if you were to assume wages were equal, on average.

gigatexal 10y ago

Net loss about 500 million at the end of 2016 which is about 100 million more than the year prior. Yikes. Still they'll likely make the case that they can turn a profit in the not-to-distant future.

atishd 10y ago

If I am the May 2016 investor, I'm thrilled that I got to see how the company grew for a year and a half, while still paying the same price as the Feb 2015 investor. Snap might have provided other incentives to investors early in the Series F round, or they were just happy to get invited to the party.

svend 10y ago

> For the year ended December 31, 2016, we incurred a net loss of $514.6 million, as compared to a net loss of $372.9 million for the year ended December 31, 2015. Some serious progress there. Great. Let's IPO O_o

ljk 10y ago
gotta strike while the iron is hot

nojvek 10y ago

I use snapchat every single day. I know my friends who've moved off facebook and Instagram use it extensively too. Its the facebook for young people. No one I know who is under 20 uses facebook anymore. Mostly because their parents are on facebook. Snapchatters post a lot more stuff that they won't usually post on public social media. After 24 hours it goes poof. I expect a dip after IPO and then a nice rise like facebook once they figure out how to advertise to the teens. Worth a wait and then buy once all the adults think its worthless.

dbbk 10y ago
If you go to university, Facebook is inescapable. Every society, sports team, social event is organised through there.

dynofuz 10y ago

It doesnt make sense that it would be worth more than twitter or even instagram. Even if ads are more effective, there's 5x the interest to advertise on those platforms than snap (https://www.google.com/trends/explore?q=snapchat%20ads,twitter%20ads,instagram%20ads,facebook%20ads https://www.google.com/trends/explore?q=snapchat%20ads,twitt...). I say its worth more like ~3B market cap

dangoldin 10y ago
Part of this can be explained by Snapchat not having a self serve product (AFAIK) so a lot of the search results might be individuals/smaller businesses looking for help/advice to get started. I know the major brands are spending fairly significantly on Snapchat and doubt they contribute much to the Google trends data.

skewart 10y ago

I'm surprised by the number of comments about how much money they've been losing. Their finances right now are completely irrelevant to their eventual success or failure. All that matters is getting a huge number of highly engaged users. The attention of many hundreds of millions or billions of people is a very valuable resources that they will have no problem selling. Keep in mind that there is a limited amount of human attention in the world, and it's a zero-sum game to control it. As Facebook has discovered, owning a huge amount of attention gives you a ton of leverage over advertisers who want to buy it. Being in the long tail of smaller attention-holders gives you much less. So Snap will either grow to compete with TV and Facebook as one of the top attention-holders, or else they'll fizzle out into irrelevance, burning through gobs of cash along the way. I mean, sure, they could aim to be a nice $500 million company that builds a product that makes people happy and makes their employees comfortably upper middle class. But that's clearly not their ambition so there's no point in discussing their finances as if it were.

return0 10y ago

It s going to be tremenous success. I ve never even seen the app, let alone used it, but its the times we live in.

brangalina4eva 10y ago

The biggest joke of this IPO is that the 2 co-founders will control the company and continue to do so even if they step down.