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Snap CEO EVan Spiegel. Photo: Steve Jennings/Getty Images for TechCrunch

Snap CEO Evan Spiegel sent a company-wide note to employees "several months ago" outlining a zealous goal to break even in 2018, according to The Information.

Why it matters: It's a very ambitious goal considering Snap lost $720 million last year and analysts expect the company to continue to lose money this year. While the company has been steadily increasing its average revenue per user, it has invested some cash flow into other parts of its business, like marketing and research and development, which has eaten at its profitability.

Our thought bubble: It makes sense that Spiegel, the CEO of a now publicly-traded company, would aim for profitability, although the timing seems rushed. The company increased adjusted losses by roughly 56% year over year in 2017.

The report does not specify on which terms the company would break even — ie. based on EBITDA, GAAP profitability or free cash flow. However, it can be assumed from the company's Q4 earnings report that increasing margins on revenue, mostly through developing its advertising capabilities and expanding into new markets, will be a major factor in helping to drive revenues past costs to hit profitability.

Cost-cutting through restructuring of staff and resources could also be a means of increasing margins, although staff layoffs as of late seem more about strategic direction of specific departments than an effort to cut costs to drive profitability.

  • Snapchat CEO Evan Spiegel said last year that all managers would be assessing their team sizes and locations, which could mean hiring, cuts or no change.
  • Snapchat recently laid off 120 engineers, the biggest round of layoffs to-date. According to an email obtained by Cheddar from Snap's Head of Engineering Jerry Hunter, the layoffs are part of a larger effort by the engineering team to replace less experienced talent with higher-performing technical experts.
  • Snapchat laid off roughly two dozen human resources staffers in January as an effort to cut back on hiring upon having reached a point of maturity at around 3,000 employees.

The company has faced increased pressure from investors to focus on revenue growth and profitability in light of missing earnings in its first few quarters as a public company. Snapchat did show significant improvement in its fourth quarter as a public company, surprising investors that had modest expectations for the camera company.

  • At the time analysts argued that the bar was set low for Snapchat, and that it still had a long way to go until raising revenues enough to hit profitability.

Go deeper

Gaming CEO calls on industry to help fight climate change

"Catalyst Black." Screenshot: Super Evil Megacorp

Gaming CEO Kristian Segerstrale is calling on leaders in his industry to take action on climate change, after completing a $1.4 million fundraising campaign this summer.

Why it matters: Gaming's pandemic-fueled boom creates an opportunity, and maybe even an obligation, to do some good.

3 hours ago - World

U.S. releases updated vaccination, testing rules for foreign travelers

Photo: Patrick T. Fallon/AFP via Getty Images

Foreign travelers will be allowed entry to the U.S. beginning Nov. 8 if they can provide proof of full COVID-19 vaccination with a shot authorized by the World Health Organization and a negative test within three days of departure, the White House announced Monday.

Why it matters: The updated guidance, which exempts children under the age of 18 from the vaccine requirement, is intended to provide further clarity for airlines and foreign nationals who have been restricted from traveling to the U.S. since early 2020.

4 hours ago - Sports

Unvaccinated athletes face 21-day quarantine at Beijing Olympics

Logos for the 2022 Winter Olympics at Yanqing Ice Festival in February 2021 in Beijing. Photo: Lintao Zhang/Getty Images)

Athletes, staff members and journalists at the 2022 Beijing Olympic and Paralympic Winter Games who have not been vaccinated against the coronavirus will be required to quarantine for three weeks, the International Olympic Committee (IOC) outlined in its newly-published "playbooks."

Why it matters: The quarantine period is longer than the Games themselves, meaning vaccinations or an earlier arrival date will be required to participate in or cover the Games.