SAN FRANCISCO — Snapchat may have been built on disappearing messages. But as the social media darling hovers on the cusp of becoming a public company, its parent is trying to show how durable its business is.
In its first public prospectus, Snap Inc. disclosed on Thursday that it had built a nearly $405 million advertising business in just over two years. While the filing does not indicate a price for an initial public offering, Snap is expected to seek a market valuation of more than $20 billion from investors.
In the filing, Snap said that it wanted to raise $3 billion, an estimate meant to help determine registration fees. The company may seek as much as $4 billion, a figure that would make it one of the biggest tech offerings in United States history, according to Standard & Poor’s Global Market Intelligence.
Snap filed confidentially to go public with the Securities and Exchange Commission late last year. Making the filing public was one of the company’s final steps before it begins trading on the New York Stock Exchange under the ticker symbol SNAP. If all goes well, the offering is expected to furnish its founders and early investors with a windfall.
Within weeks, Snap executives will begin formally meeting with prospective investors, along with the company’s lead underwriters at Morgan Stanley and Goldman Sachs. The pitch is straightforward: Snap is one of technology’s biggest success stories of late, and it is heading to the public markets amid a relative dearth of noteworthy offerings.
Still, company executives are expected to face questions about whether Snap can maintain its enormous growth rate, particularly as Facebook’s Instagram unit copies many of Snapchat’s major features. Potential investors may question the slowing growth rate of daily users, though Snap will probably argue that it will keep adding new products, which will accelerate growth.
Others in Snap’s class of popular start-ups — like Uber, Airbnb and Dropbox — are not expected to begin selling stock on public markets for months or even years, as they are tied up with legal issues or are overhauling their businesses.
The filing on Thursday formally pulls back the curtain on Snap’s meteoric growth. From 2011 to 2012, the number of people using the Snapchat app every day grew to one million from 1,000. By the end of last year, an average of 158 million people were using the app daily.
The average user opens the app more than 18 times a day, according to the prospectus, and the service’s users send more than 2.5 billion messages and images each day.
Snap demonstrated in the prospectus that its business model is viable. Its annual revenue grew by about seven times in just a year, to $404.5 million last year, from $58.7 million in 2015.
Martin Sorrell, chief executive of advertising conglomerate WPP, recently estimated that his company spent $90 million on Snapchat last year. He called Snap a “rogue elephant,” even as WPP deployed $5 billion to Google and $1.7 billion to Facebook in 2016.
“I would say Snapchat is the one thing that people look at and say, ‘Maybe that’s a third force that can counter the domination,’” Mr. Sorrell said last month, speaking at a conference held by Citigroup.
Still, Snap lost $514 million last year, compared with nearly $373 million in 2015. One difference between Snap and its rivals Facebook and Twitter makes it hard to compare their financials side by side: Those older social networks own their own server farms, so the expense of operating them does not show up as a line item in the companies’ financial statements. By contrast, Snap rents storage and server space from Google.
In the prospectus, Snap said that nearly all of its revenue came from advertising, a market that is expected to grow globally to $767 billion in 2020 from $652 billion in 2016. The fastest-growing segment of that market is mobile advertising, the home of Snap’s business. The segment is expected to grow to $196 billion in 2020 from $66 billion last year.
The ad market is highly concentrated in 10 countries, according to data from International Data Corporation, and about 60 percent of Snap’s users are in those countries.
By the end of 2016, the prospectus says, Snap made $1.05 for each of its users, up from 31 cents in the fourth quarter of 2015. The company made $2.15 per user in North America in the fourth quarter of 2016, compared with 67 cents the year before. In Europe, by comparison, the company made 28 cents per user at the end of last year.
Started in 2011 in a Stanford dorm room, Snap has grown from a curio for millennials into a broad social phenomenon. The start-up, founded by Evan Spiegel and Bobby Murphy, was originally built for users to send self-destructing photographs and messages to their friends
But Snap’s ambitions have risen over time. It introduced ways for users to compile “stories” about their days and innovative filters that can transform faces to look like dogs or monsters — or, crucially, branded content like Taco Bell tacos.
“When we were just getting started, many people didn’t understand what Snapchat was and said it was just for sexting, even when we knew it was being used for so much more,” the company said, employing what is surely one of the few uses of the word “sexting” in a regulatory filing.
While generally seen as a social media company like Facebook and Twitter, Snap declared in its prospectus that it “is a camera company.”
And indeed last year, Snap introduced a line of camera-equipped sunglasses, Spectacles, which help funnel even more user content onto the platform. Snap also created Discover, allowing media companies to post content onto their own channels on the service. On Thursday, The New York Times Company announced a partnership with Snapchat Discover.
Unlike Facebook or Twitter, Snap has largely avoided many of the standard trappings of Silicon Valley. Its home base in not a Bay Area enclave like Menlo Park or Palo Alto, but off the beach in Venice, a Los Angeles neighborhood. Snap employs 1,859 people — an extraordinarily small number relative to the $16.5 billion valuation it gave itself as of the end of 2016.
And though Mr. Spiegel, the Snap co-founder, has fashioned an image as an obsessive product geek not unlike Mark Zuckerberg, Facebook’s chief executive, he also poses for photographs in Italian fashion magazines. The supermodel Miranda Kerr is his fiancée.
Mr. Spiegel’s vision has attracted a number of prominent backers who are expected to reap handsome rewards — if only on paper — in the initial public offering.
According to the filing, Mr. Spiegel received $4.1 million in compensation, including salary and bonuses, over the last two years. The company’s chief strategy officer, Imran Khan, received $151 million in that period, with the bulk of it coming from stock awards he got upon joining the company from the investment bank Credit Suisse.
Among the largest current owners of Snap stock are Benchmark Capital, which owns about 12.7 percent of the company’s class A shares, and Lightspeed Venture Partners, which owns about 8 percent of that stock class.
But the biggest shareholders by far are Mr. Spiegel and Mr. Murphy. More important, they hold nearly 89 percent of the company’s voting power, and will keep it even after the initial offering, since the shares being sold to the public will hold no voting power whatsoever. The men will retain that control even if they should later leave the company.
“Mr. Spiegel and Mr. Murphy are entitled to vote their shares, and shares over which they have voting control, in their own interests, which may not always be in the interests of our stockholders generally,” the company cautioned in the filing. Snap noted that it knew of no other company that had completed an offering of nonvoting stock in the United States.