Snap Inc. has established a wholly‑owned subsidiary, Specs Inc., to focus exclusively on the design, engineering, and commercialization of its next‑generation augmented‑reality glasses. The move is intended to give the AR effort greater operational focus, align it with Snap’s broader hardware strategy, and provide capital flexibility that could allow minority investment in the future.
In its most recent quarterly report, Snap posted revenue of $1.51 billion, a 10% year‑over‑year increase driven by a 54% jump in subscription revenue to $190 million and a 12% rise in advertising revenue. Adjusted EBITDA reached $182 million, and the company’s adjusted gross margin expanded to 55% from 53% in the prior year, reflecting a higher mix of high‑margin subscription and hardware sales and disciplined cost control amid rising supply‑chain costs.
For the upcoming fourth quarter, analysts expect revenue of $1.70 billion and earnings per share of $0.15, a slight decline from the $0.18 consensus for the same quarter last year. The guidance signals management’s confidence in sustaining revenue growth while acknowledging the need to invest heavily in AR hardware and software development, which will temporarily compress margins.
Snap’s AR strategy is anchored in a robust developer ecosystem—over 400,000 developers have created more than 4 million AR lenses—and a $3 billion investment over 11 years in hardware R&D. The company plans to launch consumer‑facing Specs glasses in 2026, following the June 2025 announcement of a sixth‑generation device. By creating Specs Inc., Snap aims to accelerate the development of lighter, more capable glasses, attract external partners, and position the product as a new computing platform that could diversify revenue beyond advertising and subscriptions.
Evan Spiegel, Snap’s co‑founder and CEO, said, “We believe the time is right for a revolution in computing that naturally integrates our digital experiences with the physical world, and we can’t wait to publicly launch our new Specs next year.” He added that the glasses represent “the most advanced personal computer in the world,” underscoring the company’s ambition to build a new hardware‑software ecosystem.
The establishment of Specs Inc. marks a strategic pivot for Snap, signaling a long‑term commitment to hardware and AR. By separating the AR team into its own entity, the company can streamline decision‑making, pursue capital‑intensive development, and potentially unlock new revenue streams that complement its core advertising and subscription businesses.
The content on EveryTicker is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.