As Snapchat Readies IPO, Details of Business Emerge - eMarketer
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As Snapchat Readies IPO, Details of Business Emerge

Snapchat reported revenues of $404.5 million in 2016

February 3, 2017 | Mobile | Social Media

Snap Inc., the parent company of popular messaging service Snapchat, has followed through on its long-awaited plans to go public.

Snapchat reported revenues of $404.5 million in 2016, as well as a loss of $514.6 million. The 2016 revenues were higher than originally projected by eMarketer. For instance, eMarketer forecast net ad revenues would reach $366.7 million last year. However, according to Snap’s public filing, the company spent about $48.2 million in shared revenue payments to their partners, which would bring net ad revenues closer to our estimates.

Snapchat Ad Revenues Worldwide, 2015-2018 (millions and % change)

This year, we expect that Snapchat’s ad revenues will reach nearly $1 billion.

As far as usage, Snap reported 158 million daily active users (DAUs) worldwide. Interestingly, roughly 58% of their users reside outside of North America.

In the US, Snapchat is expected to reach 66.6 million monthly active users in 2017, eMarketer estimates. By 2020, that number will grow to 85.5 million.

Among the risk factors, Snap noted that it faces significant competition, which is something the company anticipates will continue to intensify. Facebook and Instagram pose the biggest threats at this point, given that each platform is actively adding Snapchat-like features to their platforms, and both have sizeable user bases in markets where Snapchat is likely aiming to expand its user base to increase its ad revenues.

“The key to Snap’s success at this point hinges on the company continuing to innovate and bring new features to Snapchat in order to differentiate it from the competition and continue to attract new users,” said Cathy Boyle, principal analyst at eMarketer.

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