The social media company behind Snapchat will get a $2.5 million tax incentive from the state to develop a facility in Utah with 50 new employees, primarily engineers, who will focus on the company’s interests in camera technology and augmented reality.
Snap Inc. was offered the future tax credit Thursday by the Governor’s Office of Economic Development (GOED) board, which liked what it saw in the wages these 50 new jobs are projected to generate over the 15-year life of the agreement — $334 million.
The post-performance rebate will be paid if and when the company hits hiring benchmarks.
New state revenues are expected to approach $12.7 million, added GOED Executive Director Val Hale.
“Snap Inc.’s innovative approach and high paying jobs are a natural fit for our thriving tech community,” he said.
Snap acquired Utah County-based Scan Inc., a firm founded by Brigham Young University students, for $54 million in 2015. Noting that purchase, Hale said, “We are pleased that they have maintained strong ties to the state since then. Their presence will be a nice addition to the state’s growing tech industry.”
The exact location of Snap’s plant has not been decided, Hale said. But tech industry publication TechCrunch said last month that Snap had sent a team of officials to Lehi to scout for a site.
While having BYU engineering students close by would be one appeal of a Utah County site, TechCrunch observed, a bigger incentive might be “the distance from Facebook and other tech companies [that] could allow Snapchat to develop new app features or hardware devices beyond the prying eyes and ears of its competitors.”
Getting a step up on the competition is in the best interests of the Venice, Calif.-based business at this point, eight months after going public.
In its report to the U.S. Securities and Exchange Commission for the quarter ending Sept. 30, Snap said it had lost $443 million, or 36 cents per share, compared to losses of $124.2 million, or 15 cents a share, in the same quarter a year ago.
Net revenues rose 62 percent to $208 million for the quarter, the company said, noting that the number of daily active users went up 17 percent, from 153 million in 2016 to 178 million this year.
“We always learn a lot from the incredibly diverse local communities where we operate and are excited to build a new team in Utah,” said Jerry Hunter, vice president of engineering for Snap, which has 3,000 employees worldwide.
Having a multinational company such as Snap join Utah’s cluster of tech companies, nicknamed Silicon Slopes, was applauded by Theresa Foxley, president of the Economic Development Corporation of Utah. She said officials are excited to “see Utah’s talented workforce being utilized to continue Snap Inc.’s innovative approach to technology.”