Their infrastructure commitments are ridiculously high.
"In its disclosure, Snap has said that it is contractually obligated 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.” Of the current losses at Snap, more than 80 percent of those funds go straight into Google’s pockets."
Imagine the sales commission on that one. “Here’s a $10B - Closed Won”.
When talking about deals that are the enterprise valuations of Fortune 500 companies, do you value the sale as if it were an acquisition? Or, some other way?
Yeah except imagine instead when you should be due that commission but then they find a creative way to bake it into a new cushy position that they carve out just for you (with no more comms on other deals) and they pay that comm out to you over 5-10 years. And in the process, putting you in a position you dislike in an effort to hope you'll leave some of it at the table.
"In its disclosure, Snap has said that it is contractually obligated 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.” Of the current losses at Snap, more than 80 percent of those funds go straight into Google’s pockets."
https://www.recode.net/2017/2/7/14526832/snap-ipo-snapchat-s...
https://www.forbes.com/sites/quora/2017/02/22/could-snapchat...
https://www.cnbc.com/2017/02/09/snap-cloud-bill-aws-google-c...
EDIT: @dfee How that revenue is recognized is usually based on when the services are delivered, but I am not an accountant.