Not on advertising, not from monetizing its 400 million daily users, not on selling off pieces of itself.
Six years post-IPO and Snap, the company best known for vanishing messages, is still making profits disappear.
Snap has been profitable on a quarterly basis just once. And that’s using a special measure called Ebitda, preferred by companies because it lets them exclude life’s little complications.
So where is Snap making its money? For that you can look at one line on its income statement: interest income. The social-media company’s best money-making venture is its money earning interest in the bank. Snap didn’t respond to requests for comment.
Quick number crunch: Snap’s interest income was $43 million for the three months that ended in September. Adjusted Ebitda (a version not included among the Generally Accepted Accounting Principles because it paints a rosier picture of a company’s operations)? $40 million. Snap’s dollars, just chilling in an account, are making more than Snap’s day job of being a social-media giant.
That’s not a fluke or one-off occurrence brought on by high interest rates.
Forbes analysis shows that since 2016, Snap has earned $296 million just from interest. Compare that with a GAAP Ebitda — earnings before interest, taxes, depreciation and amortization — of negative $9.8 billion, and adjusted Ebitda of negative $915 million.
With roughly $3.6 billion in the bank, Snap managed something like 1.2% on its cash for the quarter.
Still, analysts weren’t dismayed by the company’s results. Reports from Canaccord Genuity and Stifel Nicolaus called out positive revenue growth and improvement across key metrics like daily active users during the period. Yet, both still maintained their “hold” ratings on the company.
“While a return to top-line growth may signify that recent platform changes and investments may be paying off,” analysts at Stifel wrote in a note following Snap’s earnings, “we remain on the sidelines until we have a better handle on whether these under-the-hood changes will translate into consistent revenue growth.”