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| What Snap’s I.P.O. Filing Reveals About the Company | What Snap’s I.P.O. Filing Reveals About the Company |
| (35 minutes later) | |
| Snap, the parent of Snapchat, disclosed several important aspects of its business in its initial public offering document. The complete filing is here. Below are notable excerpts. | Snap, the parent of Snapchat, disclosed several important aspects of its business in its initial public offering document. The complete filing is here. Below are notable excerpts. |
| Prospective investors will be drawn to how quickly Snap has grown its advertising business over the span of roughly two years, with the company showing a nearly sevenfold increase between 2015 and last year. The question is how long the start-up can maintain anywhere close to that kind of growth. | |
| The company said in its prospectus that it views daily active users as a critical measure of engagement — a measure that is tracked closely by similar companies. (Facebook on Wednesday reported that it had an average of 1.23 billion daily active users in December.) | |
| As does every company in this kind of filing, Snap laid out a number of potential risks to its business. Among them is Britain’s decision to leave the European Union, what has come to be known as Brexit, which could pose large problems for the company because it recently designated London as its international hub. | |
| Snap noted that other countries may choose to censor Snapchat. Moreover, the company pointed out that many of Google’s services, which powers a significant portion of Snap’s computer services, are restricted in China. So, according to Snap, it isn’t clear “if we will be able to enter the market in a manner acceptable to the Chinese government.” | |
| The company was originally built for users to send self-destructing photographs and messages to their friends. But the company’s ambitions have grown to include user stories, news and branded content. | |
| Evan Spiegel, 26, one of Snap’s two founders, started the company while he was a student at Stanford. Mr. Spiegel, who is the company’s chief executive and serves on the board, owns a stake in the company that was worth $3.7 billion at the end of last year. His 2016 compensation package came to $2.6 million and includes $503,205 in base salary, a $1 million bonus and $901,635 in other compensation that covers his $890,339 personal security budget. | |
| The company’s chief strategy officer, Imran Khan, received nearly $151 million during that same time, largely because of a $145 million stock award when he joined the company from the investment bank Credit Suisse in 2015. | |
| A month before the company first filed initial public offering documents with the Securities and Exchange Commission, its two co-founders each sold stock worth $8.1 million. | |
| The company more than tripled its employee ranks from 2015 to 2016. Yet even with 1,859 staffers, the company has a relatively small number of workers relative to its valuation. | |
| Snap noted that it hired a law firm that employs Mr. Spiegel’s father. The elder Mr. Spiegel is a litigator who represented Transocean, which operated the Deepwater Horizon rig at the center of the BP oil disaster. | |
| The company has attracted a number of prominent backers, who are expected to reap handsome rewards — if only on paper — in the initial public offering. Among them are investment firms like Benchmark Capital, which owns about 13 percent of the company. | The company has attracted a number of prominent backers, who are expected to reap handsome rewards — if only on paper — in the initial public offering. Among them are investment firms like Benchmark Capital, which owns about 13 percent of the company. |
| Snap’s offering is being led by Morgan Stanley and Goldman Sachs. Morgan Stanley won the desired “lead left” position on the prospectus, which indicates that it is the bank that will play the biggest role in the offering. The bank also led Facebook’s initial public offering. |