, parent company of the popular Snapchat application, its third-quarter results yesterday after the bell. As a company Snap has been on a well-documented rebound for some time; the company has traded for under $5 per share inside the last year despite being worth over $14 per share during yesterday’s regular trading.

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Its latest numbers paint a picture of a company still struggling with its cost structure, recapitalized with debt, and growing its revenue at a good clip.

To back that up, let’s peek at the numbers. Snap’s revenue grew 50 percent in Q3 2019 compared to the year-ago period, from $297.7 million to $446.2 million. Over the same time period, its net loss fell 30 percent from $325.1 million to $227.4 million.

Other negative metrics also improved, including its free cash flow (from negative $158.8 million in Q3 2018 to negative $84.1 million in the most recent quarter) and adjusted EBITDA (from negative $138.4 million to negative $42.4 million).

Wall Street had expected a larger adjusted loss, and revenue of $437.9 million. On the back of that double-beat, you might expect that Snap’s stock is up today. It isn’t.

After Snap reported its results, its shares fell. Why? Because the deeply unprofitable company isn’t projecting the sort of growth that Wall Street expected, :

Snap said that it expects to report adjusted Ebitda of up to $20 million on revenue of $540 million to $560 million in the holiday quarter, which is typically its largest of the year thanks to increased advertising budgets; analysts on average were projecting a break-even quarter on an adjusted basis with sales of $555 million, according to FactSet.

If Snap manages to land at the top of its revenue forecast, then, it will only beat expectations by a smidge. At the low end of its range, it would miss by three times that amount. So, despite Snap’s strong Q3, its slower-than-expected Q4 forecast cost it dearly.

Let’s parse that a bit, and relate the lessons to the private companies that make up our regular fare.

Growth

In the past, companies that went public were usually profitable. In recent years, with the private market flush with cash, companies going public have , though often growing extremely quickly. There’s a bit of a trade off: a company going public today tends to be either a high-growth company, or profitable-ish.

And as most startups in today’s market select the high-growth model (venture capitalists often advise startups to focus on growth), you can see how the IPO market has shifted towards that choice.

Snap focused on growth over turning a profit before and during its IPO; it has yet to break even as a public company. Things haven’t changed since. Snap has had to raise debt, and has a long way to go to reach free cash flow breakeven, let alone adjusted profit or GAAP net income.

As we saw above, Snap posted good growth momentum in Q3. But if the company posted strong revenue expansion, why are investors trading its shares down? Because slowing growth makes its current lack of profits less palatable. Investors are now accustomed to Snap’s quick revenue growth and clearly aren’t happy to see it fall under their expectations; slower growth means lower implied future cash flow and profit, let alone a longer ramp to gross profit covering costs. And when cash flows and profits are lower, investor returns tend to be lower as well.

No Rest For The Glow Up

So even Snap, on one of the biggest public market glow-ups of last year, is still on a knife’s edge. It can’t afford to post slower growth if it wants to be valued as highly as it was this summer, given its losses.

Maybe this is all to say, if you’re going to grow fast and go public, you’ll need to keep the growth up if you aren’t cleaning up your losses at the same time. Growth stocks tend to have volatile stocks. Why? Becaused missed results can sternly correct investor expectations; Snap has seen that happen to its benefit and detriment during its life as a public company.

For startups, perhaps we can take this as a lesson to lower your burn a bit while keeping growth as high as possible. Investors like to see more-than-tidy revenue expansion (at this point, they’ve been conditioned to) but they’ll be less than thrilled if the consequences of growing fast catch up with you.

And that’s as true today for private companies as it is their public siblings.

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, parent company of the popular Snapchat social application, this morning that it intends to borrow a billion dollars.

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According to the company, the $1.0 billion in debt will have the option of converting to shares “at the option of the holders” at the end of the debt’s term in 2026. In addition to the original $1.0 billion in debt, Snap said that it “intends to grant the initial purchasers of the notes an option to purchase up to an additional $150.0 million principal amount of notes.”

Snap could raise as much as $1.15 billion in the transaction.

Snap said in the same release that it will use the funds for “general corporate purposes, including working capital, operating expenses, capital expenditures,” along with using part of the total net sum to “acquire complementary businesses, products, services, or technologies or for repurchases of Snap’s common stock.”

That’s a lot. In short, Snap is picking up a billion or more in debt to fund its operations, buy other companies, and perhaps purchase its own stock.

Why the company needs a billion dollars is the correct question at this juncture, given its long, storied, and rich history of fundraising. Let’s find out. Afterwards, we’ll compare Snap to two recent IPOs, and see if there’s a lesson in the mix for startups.

Money In, Money Out

Snap’s is impressive. Here’s a simple chart of the firm’s pre-IPO fundraising history, for example:

The company in its IPO. Also, Snap picked up two major post-IPO investments, led by and led by . Those were open-market purchases, however, and therefore non-accretive for Snap itself.

Still, with over $2.5 billion raised while private, and $2 billion from its IPO, how could Snap possibly need more money?

The firm noted in its most recent earnings report slides () that it burned through $96 million in cash from its operations in the three-month period. Its free cash flow was an even more negative $103 million. Those results, however, are improvements for Snap, a company that used to consume far more cash.

Here’s a chart of Snap’s free cash flow over the past few years:

If you want to see the impact of that burn over time, simply check in on the firm’s earnings. In , Snap reported just about $2.8 billion in “Cash, cash equivalents, and marketable securities,” which is corporate slang for what we call cash. In , that figure was down to $2.04 billion. In the figure fell to $1.57 billion.

And so on, until we get to Snap’s most recent earnings report, . Snap had $1.18 billion in cash on hand at the end of the period.

Now as you can tell from our second chart, Snap has made material progress in limiting the amount of cash that it consumes (its GAAP losses, net and operating, are far more negative due to share-based compensation, among other items). But it isn’t too close to managing to not consume cash through operations.

This means that Snap’s cash is becoming more valuable over time, as the firm spends it. Adding a billion dollars (or more) in debt solves the growing problem at a low cost. Rates are cheap right now, and Snap’s shares are on the rebound after a in market sentiment regarding its prospects. A lovely time to borrow, in other words.

And with more cash, Snap can afford to buy what it wants. That means startups that catch its eye become easier to purchase, as it will have more cash with which to maneuver.

What About Startups?

Snap sold parts of itself throughout its early history and is now looking to take on material amounts of debt. Why? Because its business has never come close to covering its costs. Snap has come closer to break-even over time (it is currently , improbably), but not near enough to limit its need for external capital.

The company has therefore always played with borrowed time, and, soon, borrowed dollars. Its unprofitability and capital hunger has come with strong costs. Snap was once worth just $4.82 per share off its IPO price of $17. Yes, it has come back near to break-even compared to that $17 mark, but the company’s life as a public company has been troubled.

The story here is similar to what we’ve seen with (currently trading under its IPO price), and (currently trading under its IPO price). In each of the three cases formerly high-growth companies saw their revenue expansion slow, leaving them with a hefty cost structure, and not much of a story to tell investors.

Snap is now on the other side of its difficult period, showing revenue growth and user growth, but for startups the lesson is pretty plain: Losses become incredibly unattractive if growth slows. And large losses even more so. Having a path to profitability is a good thing to have if you lose money. Every startup should have one.

Especially as things get a bit dicey around the world.

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Hello, and welcome back to the best and most magical part of the quarterly cycle: earnings season. I wanted to take a moment to detail a few trends that you should keep an eye on over the coming weeks, as every single public tech company spills the numbers concerning their recent performance.

Here at Crunchbase News, focused on private firms as we are, we don’t spend much time covering the earnings of the already public. But we do care what the market’s reactions to public company earnings tell us about how to value private companies. Crunchbase News covers high-growth private startups, often venture-backed and frequently focused on the tech space. This colors which public companies we keep an eye on.

That in hand, what follows is the Q2 2019 Crunchbase News Guide To What To Care About During Earnings If Private Companies Are Your Jam.

Things To Watch

Can strong earnings keep the Great SaaS Run alive?

Your favorite public SaaS companies are enjoying strong valuations at the moment. Indeed, according to our favorite cloud index, public SaaS and cloud firms are worth about 11x times their revenue using enterprise value in place of market capitalization.

Indeed, when you look at the (BVP) over time, that SaaS and cloud stocks are on a tear. Their market run has been predicated on both revenue growth, and investors’ willingness to pay more for that revenue than before.

This is what the Index looks like over the last year:

A blip in growth could see the firms’ revenue multiples compress, lowering their valuations. It’s something that we’ve seen before. But if SaaS companies can keep their run alive, their expanding valuations should provide gas to private SaaS shops looking to go public or fundraise.

What happens to tech stocks dribbles backward into private valuations. And since so many venture-backed startups are SaaS-built, how their public cohort perform is critical to understanding the VC market, for example.

Can tech shops with scary losses hearten the market?

There are a good-sized chunk of public tech, and growth-oriented companies that have steep losses that we keep tabs on. I’m thinking about the and the of the world. These are firms with interesting products, possibly bright futures, and outsized deficits. You could throw in there too, for example.

How the market deals with their continued losses will provide a signal to private companies concerning their burn rates, specifically how sharp losses could ding their future value.

Will Uber and Lyft manage to change their narrative?

In a similar, yet distinct vein, how and perform after earnings will be interesting.

If Uber and Lyft do well, and show investors that they have a real path to profitability, the of the world could enjoy a sentiment bump. If so, more money could be made available. Of course, the opposite is also true. If Uber and Lyft struggle, all sorts of transit-based startups (! ! All of them!) could suffer.

Crunchbase News may provide notes on the earnings results from the two big American ride-hailing companies given how many tens of billions of dollars of private companies exist in their niche.

Finally, will the recently-public tech companies perform well?

Finally, the recently public. As I am sure you’ve noticed from our endless coverage of the 2019 IPO market (more here, and here, from this week), a bunch of companies that we cover are going public this year. So many it’s actually warped our coverage away from earlier-stage firms towards a more late-stage focus.

The deluge of debuts is not done. There are a host of companies that still need to get out before the IPO window closes for all companies but the very best. That means that there are a lot of startups, backed by hundreds of millions of venture capital dollars, who are hoping for a positive quarter from the newly-public.

Embarrassing results from Fiverr or Luckin or Fastly (our list here) could limit appetite for new offerings. That could lower valuations ranges, and perhaps even delay some IPOs. That would be a big yuck for the entire Silicon Valley (broadly) ecosystem.

And that’s just a bit of what we’re watching out for. It’s going to be a fun few weeks. .

Illustration: . Data and chart: .��

The unicorn IPO market is jammed while the federal government tries to unstick its gears, but that isn’t stopping the cohort from doing all sorts of fascinating things. I want to take a moment to collate the latest from the group of private tech companies worth over $1 billion, as it’s a varied list and hard to keep track of in pieces.

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So here’s the latest, greatest, and silliest from our horned friends over the past few days.

More Scooter Dollars

Big Scooter is about to get even larger with both and , the key players in the American market, raising new funds.

Bird’s round, per , may get $300 million onto its balance sheet (prior raise total: ), but at terms that aren’t super exciting. The same Axios piece notes that the firm will raise the new capital at “its existing $2 billion pre-money valuation,” likely implying a greater-than-desired amount of dilution.

Lime, Bird’s arch-rival aside from the twin evils of capex and opex, is raising $400 million at a $2 billion valuation,  (prior raise total: ). That sure sounds familiar! For Lime, however, the valuation is a doubling of its dated $1 billion price tag that it secured during its last funding round.

Regardless, we’re talking about $700 million more being invested into two companies that rent scooters to people around the world for a few nickels. As we noted just the other day, so much for a slowdown.

Katerra Raises (Again) From SoftBank (Again)

Sticking close to companies that taking another infusion from the gravy boat: is raising more money.

Katerra, a construction company that supplies pre-fab building elements for new projects, is raising $700 million from SoftBank, . Katerra raised $865 million from SoftBank about a year ago. Raising another round from the same capital bucket so quickly is notable.

The Vision Fund will eventually run out of money. What will happen to all the companies that it helped build into capital-acquisition machines when it does? What does Katerra look like without access to regular nine-figure checks? Or ?

Is Bad Corporate Governance Spelled “W-E-W-O-R-K”?

It turns out that WeWork’s CEO is leasing buildings to the company . Does that mean that Adam is using money that he raises from external parties to spend through the company he has controlling interest over to pay himself?

Sounds like a conflict of interest! The on the matter notes that “at least one instance before he secured full control over the company, Mr. Neumann wasn’t able to complete a similar deal.” But now that he does, he can!

I cannot imagine working for someone who so flagrantly put their own interests ahead of the needs of the company they run, and, ostensibly, care about. The whole setup feels both yucky and greedy. I suppose if Adam is cutting We a deal, erasing any personal profit in the matter to save We money on rent, that would be cool. But who wants to bet that that isn’t the case?

We is, therefore, enriching its CEO because no one can say no. As , Adam “has more than 65% of the overall share vote.” That’s bad news! But it’s not uniquely bad news. It’s been a bad innings for founder-controlled companies recently. Snap, which is run by a , has . And it’s and �����Ի� faster than you can laugh.

And Facebook has related problems. One person , which hasn’t gone well lately. What can be done about it? Nothing! It’s all up to Zuck, whose personal currency has gone from to to .

Airbnb Posts More Kinda-Profit

Let’s end on something positive. , one of the most famous unicorns in existence, remains nearly profitable. Here’s :

Without revealing other numbers such as revenue and profit, the company said it was profitable before accounting for interest, taxes, depreciation and amortization (EBITDA).

As far as unicorns go, being EBITDA positive is a good result. Most aren’t close. And some unicorns are super unprofitable even using adjusted metrics. EBITDA doesn’t count all costs, of course, but the metric and the result let us know that on a cash basis Airbnb is probably in pretty good shape.

How far from GAAP break-even it will be, inclusive of things like share-based compensation, isn’t clear. But that it is close to real profit is a good place for a company at Airbnb’s growth point, I’d wager.

All that and . .

Good morning everyone, and welcome to our final note on what happened to Snap in the first quarter.

We usually stick close to private companies here at Crunchbase News, but we’re taking a small breather in the case of Snap as the firm not only matters as a recent tech IPO, but also as a company that came of age in the unicorn era, fueled by private cash and a long IPO window.

And while a great number of companies have done well, in the end, after pursuing a similar trajectory (Dropbox, for example), Snap appears to be slowly coming apart.

Its shares are off just under 20 percent as of the time of writing, a stunning rebuke from public market shareholders after the company’s Q1’2018 earnings came in light twice over.

Snap missed on revenue and user growth, meaning that it missed on present-day value (revenue, cash flow) and future value, which is implied by user growth; revenue is a trailing metric, and so forth.

But just missing growth and user expansion numbers probably isn’t worth a full 20 percent reduction in value. Snap’s problem is that while it deals with troubles stemming from a change in how it sells ads, and a redesign, it is losing great gobs of money.

Check :

The company’s costs and expenses came to $623.2 million, while its revenue was just $230.7 million. That is one hell of a gap. What that means, in GAAP terms, is that Snap doesn’t have infinite time to get things figured out. It is eating too much of its seed corn, to abuse an old saw, to last more than a few winters.

And the firm isn’t just posting GAAP losses. Its cash consumption is very high as well. Per :

The firm’s free cash flow was therefore at least a local maximum of badness during the most recent quarter. There is no real way to spin Snap’s results as better than they appeared at first blush.

So it’s really a triple issue that Snap’s shares are dealing with: faster-than-anticipated revenue growth deceleration, slowing user growth implying slower future revenue expansion, and a cost profile in GAAP and cash terms that is unsettling.

That mix is worth about a fifth of its value, it turns out. Snap is trading at all-time lows today, more than $5 under its IPO price. More on its health next quarter.

From The :

• is the latest artificial intelligence-focused startup to lure an acquirer. Cisco is paying $270 million to buy the five-year-old company, which operates an AI-enabled platform for professional networking and finding sales prospects. Silicon Valley-based Accompany previously raised about $40 million in venture funding.

• , the seller of curated beauty products in a box, has sold a majority stake to hedge fund and existing shareholder Viking Global Partners. The deal reportedly leaves the New York company’s other prior backers with nothing.

US regulators mull crypto changes

• U.S. securities regulators have so far taken a mostly hands-off approach to cryptocurrencies. However, while they’ve been treating bitcoin as a commodity, regulators are considering whether they ought to classify Ethereum as a security.

Snap tanks as user growth stalls

• Shares of Snap plummeted following an earnings report that missed revenue targets amid anemic user growth and a continued high cash burn rate. The results come in the wake of its controversial redesign.

Morning Report: Happy Snap earnings day!

Happy Tuesday and welcome to an extremely interesting earnings day. Two companies of note to us will report after the bell: �����Ի� . One will make a lot of money, while the other will lose a lot of money. Can you guess which is which?

Correct, Snap will detail another period of deficits, but that’s almost beside the point. No one expects it to make money (yet). Instead, Snap’s user growth, revenue expansion, and cost control will be under the microscope.

So, before the market’s close (hell, they just opened), here’s a teaser of what to expect.

According to the analysts summed by the , here are the average expectations for the firm’s quarter:

• Revenue of $243.55 million ($149.65 million in the year-ago quarter)
• Per-share adjusted losses of $0.17 (-$0.20 in the year-ago quarter, adjusted)

In that year-ago quarter, Snap’s operating expenses totaled $196 million, while its gross profit was negative when share-based compensation expenses were included. That’s the baseline that Snap investors will measure from.

User growth is also on the menu. Snap’s decelerating user growth has weighed on its share price. However, during Q4’2017, new users got back to speed, as :

Snap’s flagship app, Snapchat, added 8.9 million daily active users in the quarter that ended Dec. 31. That’s the largest jump since the third quarter of 2016. The company now has 187 million daily active users, surpassing analysts’ estimates of 184 million.

That got investors more than excited. If Snap can meet financial expectations and beat on user growth, it could put up back-to-back earnings wins. Given , such a result could do wonders for morale.

All this is even more exciting as Twitter recently reported real GAAP net income during its Q1’2018 earnings download. Meanwhile, Facebook is heading into its own F8 conference after strong earnings and nearly infinite troubles.

So keep your eyes peeled after the bell. We’re counting down until Snap tells us more.

Shares of Twitter have risen since the company reported its earnings yesterday, which included revenue gains, strong profitability, and some positive user growth metrics.

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The social company reported $655 million in revenue, far above a forecasted $608 million. From that better-than-expected revenue result, Twitter earned an adjusted $0.16 per share, a full third greater than its anticipated $0.12 result.

The firm also bested monthly active user results, that the firm’s 336 million reported MAUs was above the “334.2 million expected by StreetAccount and FactSet.” And, according to Twitter’s earnings report, its daily active user figure rose 10 percent compared to the year-ago quarter. The firm did not provide a hard metric for that result. (Twitter’s MAU count grew 3 percent year-over-year).

But most fun in Twitter’s earnings report was the fact that it generated unadjusted profit as well as adjusted profit. Indeed, :

The company reported first quarter revenue of $665 million, an increase of 21% year-over-year. Quarterly GAAP net income was $61 million, representing a GAAP net margin of 9% and GAAP diluted EPS of $0.08. This compares with a quarterly GAAP net loss of $62 million, a GAAP net margin of (11%) and GAAP diluted EPS of ($0.09) for the same period last year.

Twitter managed to swing its GAAP net income over $120 million in a year. That’s impressive.

So Twitter grew more quickly than expected, generated more profit than expected, grew its global monthly audience some, and grew its daily active audience more. That’s a happy place to be for a social company.

The markets seem to agree Twitter is now worth $23.94 billion as of the time of writing or $31.09 per share. That’s more than double its summer, 2016 lows when the firm was worth less than $15 per share.

Here we can turn our attention to Snap, which reports earnings on the first of May. Snap has had a bad week, with its after it was reported that . Today Snap shares are up, but if that’s . (That effort .)

Regardless, Snap to report $243.55 million in revenue and a loss of $0.17 per share (presumably adjusted). What will be interesting to see is how Snap’s value (currently far below Twitter’s) reacts to its impending result. Snap will post higher revenue growth (Twitter grew 21 percent year-over-year), but from a smaller base and with huge losses.

Snap’s earnings will, therefore, show us how much a premium growth is worth in the social space, at least in contrast to profits. More when Snap reports.

From The :

Digital banking startup  has raised $250 million in a Series C round led by DST Global. The financing values the three-year-old, London-based startup at $1.7 billion.

Yet another big IPO could hit the market this summer. The Wall Street Journal is reporting that wireless speaker maker  is preparing for an IPO in June or July that would likely value the Santa Barbara, Calif.-based company at between $2.5 billion and $3 billion.

500 Durians raising growth fund

Seed investor  is raising its first growth-stage fund for its Southeast Asia program 500 Durians. The fundraising follows an active investment spree for Singapore-based Durians, which has backed over 160 companies to date.

Digital advertising company  has acquired a majority stake in news aggregator . Terms were not disclosed.

As the domestic markets came to a close on Thursday, something caught our eye that we wanted to highlight: Snap and Twitter are now (nearly) worth the same amount. It’s been a long time coming, in a sense, and it speaks either well of Twitter or poorly of Snap—or some hybrid of both.

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We’re flagging the moment as it’s close enough to count, even though, at the precise moment we took the pertinent screenshots, the firms were merely very close to sharing the same value.��If that’s not good enough for you, I am pleased to pass along a note from the local chapter of the Pedants Anonymous: You’re late.

One last pre-note before the data: According to Wolfram Alpha’s  we can see that, back in July, the two were quite close in terms of their respective market caps. But it wasn’t until Snap’s recent earnings miss that they wound up mostly in-sync.

With all that in our pocket, here’s the math per :

As you can quickly sum, Snap is worth just about $0.47 more than Twitter, which is quite the turn of affairs.

Before Snap went public, Twitter was in the tank and persistently whacked by investors for slow user growth and a history of GAAP losses. At the time, Snap was quickly expanding its userbase while its revenue exploded. Its losses were, at best, secondary to its growth.

Now Twitter and Snap have traded places. Twitter is showing nearly-surprising signs of life, with growing DAU results and a push for GAAP profits. Snap, in contrast, is far under its IPO price. It has also missed revenue and user growth targets. Both misses have served to make its huge unprofitability less cute and more biting.

Snap is now worth billions less than it was valued at at the time of its . Twitter, in fairness, is also below its IPO price. However, Twitter has rebounded from its lows while Snap is currently mired in its own.

For startups, the lesson is simple enough: Even incredibly quick year-over-year revenue growth is not enough to save you in the real markets. In fewer words: Twitter’s public-market recovery as it heads into GAAP profits isn’t a surprise.

And Snap once all the math was done.

Understanding why Snap’s shares fell is critical for startups eyeing the public markets. After all, once a firm goes public, it must endure regular repricing of its shares, something that many are loathe to accept.

Snap’s shares collapsed for a number of reasons, each material. First, it missed on revenue growth. Second, its user growth came in under expectations. Third, the firm came in light on per-user revenue. And fourth, Snap sharply wrote down hardware inventory.

We’ll examine the concerns in order.

Revenue

Snap reported $207.9 million in revenue during the period, up sharply from the year-ago quarter in which the firm brought in top line of $128.2 million.

However, analysts had  Snap to report revenue of $236.9 million. That means that Snap’s growth fell far short, leaving a yawning gap between what the company was actually able to bring in and what investors had expected.

Snap was unprofitable at the time of its IPO. Indeed, the company had a history of gross-margin negative quarters according to its S-1, though the firm had managed to claw its way to gross margin positivity by the time it filed to go public. Given its history of unprofitability, it’s easy to understand that investors in Snap at the time of its IPO, and in the following months, did not buy its shares in hopes that the company would generate profit in the short-term.

Instead, they bought revenue growth. And Snap failed to deliver on those expectations.

The lesson for startups: If you are valued on growth, public market investors are cutting slim margins for revenue misses.��

Users

Snap reported that its daily active user (DAU) count grew from 153 million in the year-ago quarter to 178 million in the most recent quarter. That figure was up 17 percent year-over-year, and up 3 percent from the sequentially preceding quarter.

User count growth was also hugely below expectations. According , the anticipated figure was 181.8 million DAUs.

User growth is a somewhat-workable proxy for future revenue growth: If a company can expand its user base, investors can expect higher future incomes driven by that larger cohort of active platform participants. This is doubly true of the company is boosting its per-user revenue over time.

In reverse, if a revenue-growth-valued firm misses user growth expectations, it can throw analyst projections into chaos. Therefore by missing on revenue and user growth, Snap managed to disappoint on a trailing and forward basis.

The lesson for startups: If you get to pick the user-metric that investors use to vet the health of your business, you can’t miss on that metric.��

Per-User Revenue

In the quarter, Snap grew its average revenue per user (ARPU) to $1.17 from $0.64 in the year-ago period. The new figure also compared favorably to the preceding quarter’s $1.05. However, investors had expected Snap to push that number up to $1.30, .

Missing on per-user revenue could raise concerns that Snap won’t be able to drive monetization as quickly as some analysts expected. If that is the case, its future user growth may be worth less than some expected. Add that to underperforming user growth and Snap’s future top line may appear smaller than before.

The lesson for startups: You might be able to get away with a revenue miss due to slow user growth, but if you miss on revenue, user growth, and per-user revenue you are have managed an anti-hat trick.��

The Surface RT

Snap took an expensive, $39.9 million expense in the quarter relating to its remaining Spectacles inventory. That Snap made far, far too many pairs of the electronic-glasses was known for some time. That the firm would have to let go of nearly $40 million over the mistake perhaps wasn’t.

Naturally, Snap’s hardware story isn’t finished, and it isn’t the first digital media company to lose money pursuing a physical product. But for Snap, a company that is short of revenue growth, the Spectacles spectacle isn’t encouraging.

The lesson for startups: Huge, expensive, embarrassing hardware fuckups are best fit for companies that can absorb the loss. Take Microsoft’s Surface RT, for example. Or Microsoft’s Nokia purchase. Or Microsoft’s Danger purchase, to cite another example. The list goes on, but let’s bring up Google’s Motorola deal here as well for good measure.��

Hard Tacks

Back to the core numbers, Snap lost $443.2 million in the quarter on a GAAP basis, up from $124.2 million in the year-ago quarter. The firm’s adjusted EBIDTA grew from negative $108.6 million a year ago to $178.9 million in the most-recent quarter.

To date this year, Snap has lost over $3 billion on a GAAP basis, a staggering sum of money. It retains around $2.3 billion in cash and short-term investments that can be treated as cash.

In the first three quarters of this year, Snap’s operating activities burned $558.6 million. Even at its current pace, Snap isn’t in danger of running out of cash for a minute.

Shares of Snap fell over 20 percent in after-hours trading before recovering slightly.

According , Snap has acquired advertising-focused startup Metamarkets, a company that works in the “buying and selling programmatic media” space, according to .

The smaller company was founded in 2010, headquartered in San Francisco, and had raised just under $58 million, which includes a debt round.

The move by Snap to acquire the startup is notable as it may provide the public company more sturdy advertising technology infrastructure, which ad buyers on Snapchat have wanted for some time. Indeed, Snap’s ad performance details have been the subject of some complaints.

Observe the following pair of quotes discussing Snap before its IPO. First:

As Snap Inc looks to gobble up a larger share of the $82 billion digital U.S. ad market, the owner of the ephemeral messaging app popular with millennials could find itself facing more demands from advertisers for reliable metrics.

And second:

While major advertisers have been eager to experiment with Snap, the measurement issues loom large in persuading advertisers to make big, long-term commitments. The digital ad industry has struggled for years with how to measure whether an ad has actually been seen, and what counts as a “view” when many users linger on a video for only a few seconds.

In this context, the Metamarkets acquisition makes quite a lot of sense. Snap is heavily reliant on ad incomes to fuel its growth, and, accordingly, making advertisers happy is of existential importance for the social media company. And if its advertisers felt that Snap’s ad platform didn’t deliver good reporting tools, why not plug that with an acquisition?

And that is just what Snap did. Lunden, :

If Snap can provide better tools to marketers, it could lure them to spend more investment on Snapchat. And potentially Metamarkets provides more: it could represent an opportunity to Snap to present itself as an analytics dashboard across a number of other properties, not just its own.

All that for less than $100 million at a company whose equity trades for a trailing price-to-sales ratio of more than 28? That’s like spending pennies that get accepted as if they were dollars.

From the :

VMware to buy VeloCloud

• VMware announced that it is buying , a developer of software-defined networking technology, for an undisclosed sum. Silicon Valley-based VeloCloud had previously raised $84 million in venture funding, including a $35 million Series D round in March.

GetYourGuide raises $75M

• , a booking platform for travel tours and activities, has raised $75 million in a Series D funding round led by Battery Ventures. The new financing brings total funding for the Berlin-based company to $170 million.

VR acquisition pace holds steady

• Even though the world’s largest technology companies are diving headfirst into augmented and virtual reality, the categories remain nascent for startups. A Crunchbase News analysis found 53 known acquisitions involving AR and VR companies since 2012, with more than half in the past two years. Most of the money spent on M&A comes from a single deal, Facebook’s 2014 purchase of Oculus.
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