Snapchat Is on Track to Generate $100 Million in Revenue

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Snapchat Is on Track to Generate $100 Million in Revenue
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3 min read
This story originally appeared on Business Insider

Snapchat is on track to generate $100 million in revenue on an annualized basis, according to a new report from the Financial Times.

The mobile messaging company is also ramping up its advertising efforts, wasting no time in transforming its new selfie-photo feature into a money-making, ad-friendly product.

According to the FT, Snapchat will start pushing "sponsored lenses" later this month to brands, which can pay $450,000 for a lens on a normal day or $750,000 on a "peak day" -- basically a holiday -- like Halloween or Thanksgiving.

Brands are already signing on for next year with $10 million commitments, according to the FT.

These sponsored lenses will appear among users' regular lenses and will be designed by Snapchat.

Lenses, a new feature debuted last month, lets you take a selfie and then choose one of a handful of face filters to animate your selfie. The filters, or lenses, will pop up automatically when a user's camera is in selfie mode, and they press and hold down on their face on the screen. You can make yourself look old and wrinkly, or make it look like you're barfing rainbows. 

Revenue ramp

Snapchat has now reached a projected $100 million revenue "run rate," the FT said, meaning that the company's most recent revenue figures would total $100 million if they continued at the same pace for a 12-month period.

Snapchat's new revenue figures, if they are to be believed, represent a big improvement from the company's financials for 2014.

Snapchat -- which is valued around $16 billion -- was far from profitable last year. For context, many growing tech startups are in the red, and some even go public before they're profitable. 

According to financials obtained by Gawker's Sam Biddle, the company lost $128 million last year and generated only $3 million in revenue, up presumably from $0 the year prior. The largest expenses, excluding payroll, were $47 million spent on product and $13 million for a line item titled "outside services." Snapchat spends next to nothing on marketing (under $1 million).

The startup didn't try to generate revenue until October 2014, so that $3 million was probably all collected during the last few months of the year. Its Discover product, where advertisers are spending the most dollars on Snapchat, didn't launch until January 2015, so its performance isn't included in this financial snapshot. 

Live Stories, a feature where users can share photos and videos of a live event, is one of Snapchat's most lucrative business drivers.

Snapchat charges marketers two cents per view on a 10-second ad that shows up on one of the Live Stories contents, according to an earlier report in Re/code. Live Stories can apparently attract about 20 million people on average in a 24-hour span, which means that ad space on a 20 million view story can be worth about $400,000.

Snapchat ads don't include what's called a pre-roll video -- ads that run before your content starts playing -- which CEO Evan Spiegel thinks people find "annoying." All Snapchat ads are also arranged vertically so they fill the entire screen on smartphones, which is a big theme on Snapchat.

We've reached out to Snapchat for comment and will update this story if we hear back.

You can read the FT's full report here.

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