Why Snapchat is losing so much money

Snap Inc. has managed to find revenue the past two years, but it has spent more to get those sales thanks to the needs of its growing user base.

The Snapchat parent company filed to go public last week and revealed total revenue in 2015-16 of $463.1 million, but costs of revenue of $634 million for the two years. The primary driver of Snap’s SNAP, +0.00% cost of revenue is the cloud-computing power it must buy to handle the millions of users sending messages every day, and the company expects costs to rise, including a recent commitment to spend $2 billion on those services with Google GOOGL, +0.08%GOOG, +0.17% over the next five years.

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