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Snap Inc. Announces Third Quarter 2019 Financial Results

October 22, 2019 4:10 PM

Daily Active Users increased 13% year-over-year to 210 million

Revenue increased 50% year-over-year to $446 million

Operating cash flow improved 43% year-over-year to $(76) million

SANTA MONICA, Calif.--(BUSINESS WIRE)-- Snap Inc. (NYSE: SNAP) today announced financial results for the quarter ended September 30, 2019.

Financial Highlights

“We delivered strong results this quarter, and we are pleased that the investments we have made are continuing to drive the growth of our community and our business,” said Evan Spiegel, CEO. “We are a high growth business, with strong operating leverage, a clear path to profitability, a distinct vision for the future, and the ability to invest over the long term. We are excited about executing on the many opportunities in front of us.”

Three Months Ended September 30,

Percent

Nine Months Ended September 30,

Percent

2019

2018

Change

2019

2018

Change

(Unaudited)

(in thousands, except per share amounts)

Cash used in operating activities

$

(76,149

)

$

(132,543

)

(43

)%

$

(238,116

)

$

(563,870

)

(58

)%

Free Cash Flow

$

(84,087

)

$

(158,828

)

47

%

$

(265,501

)

$

(661,371

)

60

%

Common shares outstanding plus shares underlying stock-based awards

1,565,208

1,476,019

6

%

1,565,208

1,476,019

6

%

Operating loss

$

(228,853

)

$

(323,371

)

(29

)%

$

(849,732

)

$

(1,073,743

)

(21

)%

Revenue

$

446,199

$

297,695

50

%

$

1,154,646

$

790,624

46

%

Net loss

$

(227,375

)

$

(325,148

)

(30

)%

$

(792,956

)

$

(1,064,243

)

(25

)%

Adjusted EBITDA

$

(42,375

)

$

(138,377

)

69

%

$

(244,537

)

$

(525,274

)

53

%

Diluted net loss per share attributable to common shareholders

$

(0.16

)

$

(0.25

)

(34

)%

$

(0.58

)

$

(0.83

)

(30

)%

Non-GAAP diluted net loss per share

$

(0.04

)

$

(0.12

)

(67

)%

$

(0.20

)

$

(0.43

)

(55

)%

Q3 2019 Summary & Key Highlights

We added 7 million Daily Active Users in the third quarter and saw increased engagement across key metrics:

We continue to invest in our Discover platform, with a particular focus on building a sustainable premium content ecosystem:

We continue to invest in our augmented reality platform:

We continue to build on our Snap Games platform to better enhance the gaming experience for our large and engaged community:

We continue to build and improve Snap Kit, our set of developer tools that allow our partners to bring Snapchat features into their services:

We strengthened our ad platform products and capabilities to drive improved outcomes for advertisers:

Financial Guidance

The following forward-looking statements reflect our expectations for the fourth quarter of 2019 as of October 22, 2019, and are subject to substantial uncertainty. This guidance assumes, among other things, that no business acquisitions, investments, restructurings, or legal settlements are concluded in the quarter. Our results are based on assumptions that we believe to be reasonable as of this date, but may be materially affected by many factors, as discussed below in “Forward-Looking Statements.”

Q4 2019 Outlook

Conference Call Information

Snap Inc. will host a conference call to discuss the results at 2:00 p.m. Pacific / 5:00 p.m. Eastern today. The live audio webcast along with supplemental information will be accessible at investor.snap.com. A recording of the webcast will also be available following the conference call.

Snap Inc. uses the investor.snap.com and snap.com/news websites as means of disclosing material non-public information and for complying with its disclosure obligation under Regulation FD.

Definitions

Free Cash Flow is defined as net cash provided by (used in) operating activities, reduced by purchases of property and equipment.

Common shares outstanding plus shares underlying stock-based awards includes common shares outstanding, restricted stock units, restricted stock awards, and outstanding stock options.

Adjusted EBITDA is defined as net income (loss), excluding interest income; interest expense; other income (expense) net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense and related payroll tax expense; and certain other non-cash or non-recurring items impacting net income (loss) from time to time.

A Daily Active User (DAU) is defined as a registered Snapchat user who opens the Snapchat application at least once during a defined 24-hour period. We calculate average DAUs for a particular quarter by adding the number of DAUs on each day of that quarter and dividing that sum by the number of days in that quarter.

Average revenue per user (ARPU) is defined as quarterly revenue divided by the average DAUs.

A Monthly Active User (MAU) is defined as a registered Snapchat user who opens the Snapchat application at least once during the 30-day period ending on the calendar month-end. We calculate average Monthly Active Users for a particular quarter by calculating the average of the MAUs as of each calendar month-end in that quarter.

Addressable reach is defined as the approximate number of Snapchat users that an ad could reach over a 28-day period in a given locality. When we calculate the percentage of a demographic group that can be reached, we do so by dividing addressable reach by relevant census figures. Addressable reach and age data are subject to limitations. For more information, see Snap’s SEC filings and businesshelp.snapchat.com.

Note: For adjustments and additional information regarding the non-GAAP financial measures and other items discussed, please see “Non-GAAP Financial Measures,” “Reconciliation of GAAP to Non-GAAP Financial Measures,” and “Supplemental Financial Information and Business Metrics.”

About Snap Inc.

Snap Inc. is a camera company. We believe that reinventing the camera represents our greatest opportunity to improve the way people live and communicate. We contribute to human progress by empowering people to express themselves, live in the moment, learn about the world, and have fun together. For more information, visit snap.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this press release, including statements regarding guidance, our future results of operations or financial condition, business strategy and plans, user growth and engagement, product initiatives, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “going to,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. We caution you that the foregoing may not include all of the forward-looking statements made in this press release.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this press release primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. These forward-looking statements are subject to risks and uncertainties related to: our financial performance; our lack of profitability to date; our ability to generate and sustain positive cash flow; our ability to attract and retain users, publishers, and advertisers; competition and new market entrants; managing our international expansion and our growth and future expenses; compliance with new laws and regulations; our ability to maintain, protect, and enhance our intellectual property; our ability to attract and retain qualified and key personnel; our ability to repay outstanding debt; and future acquisitions or investments, as well as risks, uncertainties, and other factors described in “Risk Factors” and elsewhere in our quarterly report on Form 10-Q for the quarter ended June 30, 2019 filed with the SEC, which is available on the SEC’s website at www.sec.gov. Additional information will be made available in Snap Inc.’s quarterly report on Form 10-Q for the quarter ended September 30, 2019 and other filings that we make from time to time with the SEC. In addition, any forward-looking statements contained in this press release are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use the non-GAAP financial measure of Free Cash Flow, which is defined as net cash provided by (used in) operating activities, reduced by purchases of property and equipment. We believe Free Cash Flow is an important liquidity measure of the cash that is available, after capital expenditures, for operational expenses and investment in our business and is a key financial indicator used by management. Additionally, we believe that Free Cash Flow is an important measure since we use third-party infrastructure partners to host our services and therefore we do not incur significant capital expenditures to support revenue generating activities. Free Cash Flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth.

We use the non-GAAP financial measure of Adjusted EBITDA, which is defined as net income (loss); excluding interest income; interest expense; other income (expense), net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense and related payroll tax expense; and certain other non-cash or non-recurring items impacting net income (loss) from time to time. We believe that Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in Adjusted EBITDA.

We use the non-GAAP financial measure of non-GAAP net loss, which is defined as net income (loss); excluding amortization of intangible assets; stock-based compensation expense and related payroll tax expense; certain other non-cash or non-recurring items impacting net income (loss) from time to time; and related income tax adjustments. Non-GAAP net loss and weighted average diluted shares are then used to calculate non-GAAP diluted net loss per share. Similar to Adjusted EBITDA, we believe these measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses we exclude in the measure.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to key metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP measures to assist investors in seeing our financial performance through the eyes of management, and because we believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see “Reconciliation of GAAP to Non-GAAP Financial Measures.”

Snap Inc., “Snapchat,” and our other registered and common law trade names, trademarks, and service marks are the property of Snap Inc. or our subsidiaries.

SNAP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Cash flows from operating activities

Net loss

$

(227,375

)

$

(325,148

)

$

(792,956

)

$

(1,064,243

)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

20,646

24,898

66,625

68,966

Stock-based compensation

161,228

126,809

519,358

416,439

Deferred income taxes

170

(124

)

195

129

Lease exit charges

—

29,340

—

33,268

Gain on divestiture

—

—

(39,883

)

—

Amortization of debt discount and issuance costs

6,412

—

6,412

—

Other

(1,245

)

8,608

(4,561

)

(679

)

Change in operating assets and liabilities, net of effect of acquisitions:

Accounts receivable, net of allowance

(62,855

)

(18,834

)

(30,736

)

15,937

Prepaid expenses and other current assets

(490

)

(435

)

(4,980

)

(3,059

)

Operating lease right-of-use asset

35,633

—

57,254

—

Other assets

2,139

7,089

4,540

20,314

Accounts payable

4,220

2,084

28,319

(44,638

)

Accrued expenses and other current liabilities

23,243

14,841

16,655

(14,664

)

Operating lease liabilities

(36,008

)

—

(63,259

)

—

Other liabilities

(1,867

)

(1,671

)

(1,099

)

8,360

Net cash used in operating activities

(76,149

)

(132,543

)

(238,116

)

(563,870

)

Cash flows from investing activities

Purchases of property and equipment

(7,938

)

(26,285

)

(27,385

)

(97,501

)

Sales of property and equipment

—

—

29

—

Proceeds from divestiture, net

—

—

73,796

—

Non-marketable investments

(1,050

)

(250

)

(3,750

)

(21,260

)

Purchases of marketable securities

(1,115,358

)

(444,369

)

(1,924,398

)

(1,318,467

)

Sales of marketable securities

24,948

—

102,437

45,007

Maturities of marketable securities

411,079

560,465

1,193,739

1,926,802

Other

—

—

1,000

(2,565

)

Net cash provided by (used in) investing activities

(688,319

)

89,561

(584,532

)

532,016

Cash flows from financing activities

Proceeds from issuance of convertible notes, net of issuance costs

1,251,848

—

1,251,848

—

Purchase of capped calls

(102,086

)

—

(102,086

)

—

Proceeds from the exercise of stock options

7,788

142

14,726

47,865

Stock repurchases from employees for tax withholdings

—

—

—

(551

)

Net cash provided by financing activities

1,157,550

142

1,164,488

47,314

Change in cash, cash equivalents, and restricted cash

393,082

(42,840

)

341,840

15,460

Cash, cash equivalents, and restricted cash, beginning of period

337,732

395,307

388,974

337,007

Cash, cash equivalents, and restricted cash, end of period

$

730,814

$

352,467

$

730,814

$

352,467

Supplemental disclosures

Cash paid for income taxes, net

$

643

$

758

$

564

$

3,155

SNAP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts, unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Revenue

$

446,199

$

297,695

$

1,154,646

$

790,624

Costs and expenses:

Cost of revenue

223,140

197,554

642,399

585,917

Research and development

211,599

203,510

663,983

607,742

Sales and marketing

123,240

97,552

332,626

301,350

General and administrative

117,073

122,450

365,370

369,358

Total costs and expenses

675,052

621,066

2,004,378

1,864,367

Operating loss

(228,853

)

(323,371

)

(849,732

)

(1,073,743

)

Interest income

10,317

7,011

25,579

19,715

Interest expense

(8,654

)

(919

)

(10,219

)

(2,783

)

Other income (expense), net

(1,481

)

(7,625

)

41,477

(4,533

)

Loss before income taxes

(228,671

)

(324,904

)

(792,895

)

(1,061,344

)

Income tax benefit (expense)

1,296

(244

)

(61

)

(2,899

)

Net loss

$

(227,375

)

$

(325,148

)

$

(792,956

)

$

(1,064,243

)

Net loss per share attributable to Class A, Class B, and Class C common stockholders:

Basic

$

(0.16

)

$

(0.25

)

$

(0.58

)

$

(0.83

)

Diluted

$

(0.16

)

$

(0.25

)

$

(0.58

)

$

(0.83

)

Weighted average shares used in computation of net loss per share:

$

—

Basic

1,393,358

1,309,918

1,364,327

1,277,293

Diluted

1,393,358

1,309,918

1,364,327

1,277,293

SNAP INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

September 30,

2019

December 31, 2018

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

728,828

$

387,149

Marketable securities

1,531,902

891,914

Accounts receivable, net of allowance

374,090

354,965

Prepaid expenses and other current assets

42,243

41,900

Total current assets

2,677,063

1,675,928

Property and equipment, net

177,073

212,560

Operating lease right-of-use assets

250,225

—

Intangible assets, net

72,371

126,054

Goodwill

621,758

632,370

Other assets

65,882

67,194

Total assets

$

3,864,372

$

2,714,106

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

56,572

$

30,876

Operating lease liabilities

49,725

—

Accrued expenses and other current liabilities

262,766

261,815

Total current liabilities

369,063

292,691

Convertible senior notes, net

880,391

—

Operating lease liabilities, noncurrent

284,798

—

Other liabilities

5,705

110,416

Total liabilities

1,539,957

403,107

Commitments and contingencies

Stockholders’ equity

Class A non-voting common stock, $0.00001 par value. 3,000,000 shares

authorized, 999,304 shares issued and outstanding at December 31, 2018, and

3,000,000 shares authorized, 1,132,915 shares issued and outstanding

at September 30, 2019.

11

10

Class B voting common stock, $0.00001 par value. 700,000 shares authorized,

93,846 shares issued and outstanding at December 31, 2018, and 700,000 shares

authorized, 32,057 shares issued and outstanding at September 30, 2019.

—

1

Class C voting common stock, $0.00001 par value. 260,888 shares authorized,

224,611 shares issued and outstanding at December 31, 2018, and 260,888 shares

authorized, 229,564 shares issued and outstanding at September 30, 2019.

2

2

Additional paid-in capital

9,036,801

8,220,417

Accumulated other comprehensive income (loss)

(7,173

)

3,147

Accumulated deficit

(6,705,226

)

(5,912,578

)

Total stockholders’ equity

2,324,415

2,310,999

Total liabilities and stockholders’ equity

$

3,864,372

$

2,714,106

SNAP INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands, unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Free Cash Flow reconciliation:

Net cash used in operating activities

$

(76,149

)

$

(132,543

)

$

(238,116

)

$

(563,870

)

Less:

Purchases of property and equipment

(7,938

)

(26,285

)

(27,385

)

(97,501

)

Free Cash Flow

$

(84,087

)

$

(158,828

)

$

(265,501

)

$

(661,371

)

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Adjusted EBITDA reconciliation:

Net loss

$

(227,375

)

$

(325,148

)

$

(792,956

)

$

(1,064,243

)

Add (deduct):

Interest income

(10,317

)

(7,011

)

(25,579

)

(19,715

)

Interest expense

8,654

919

10,219

2,783

Other (income) expense, net

1,481

7,625

(41,477

)

4,533

Income tax (benefit) expense

(1,296

)

244

61

2,899

Depreciation and amortization

20,646

24,898

66,625

68,966

Stock-based compensation expense

161,228

126,809

519,358

416,439

Payroll tax expense related to stock-based compensation

4,604

3,947

19,212

19,912

Reduction in force charges(1)

—

—

—

9,884

Lease exit charges(2)

—

29,340

—

33,268

Adjusted EBITDA

$

(42,375

)

$

(138,377

)

$

(244,537

)

$

(525,274

)

(1)

Reduction in force charges in the first quarter of 2018 were related to a reduction in force plan impacting approximately 7% of our then global headcount, primarily in engineering and sales. The charges are composed primarily of severance expense and related payroll tax expense. These charges are non-recurring and not reflective of underlying trends in our business. Additionally, we recognized a stock-based compensation forfeiture benefit of $31.5 million, which is included in the stock-based compensation expense line item above.

(2)

Lease exit charges were related to our exit of various operating leases prior to the end of the contractual lease term, primarily as a result of moving to a centralized corporate office located in Santa Monica, California. We recorded a lease exit charge of $3.9 million in the second quarter of 2018. The charge reflects the present value of our remaining lease obligation on the cease use dates that occurred during the quarter, net of sublease income. These charges are non-recurring and not reflective of underlying trends in our business.

SNAP INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued)

(in thousands, except per share amounts, unaudited)

Total depreciation and amortization expense by function:

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Depreciation and amortization expense:

Cost of revenue

$

4,580

$

5,582

$

16,368

$

16,394

Research and development

8,632

10,174

24,470

28,454

Sales and marketing

3,109

4,054

10,169

11,614

General and administrative

4,325

5,088

15,618

12,504

Total

$

20,646

$

24,898

$

66,625

$

68,966

Total stock-based compensation expense by function:

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Stock-based compensation expense:

Cost of revenue

$

1,332

$

1,368

$

4,967

$

3,111

Research and development

108,176

95,329

353,028

265,447

Sales and marketing

23,333

25,082

67,567

63,264

General and administrative

28,387

5,030

93,796

84,617

Total

$

161,228

$

126,809

$

519,358

$

416,439

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Non-GAAP net loss reconciliation:

Net loss

$

(227,375

)

$

(325,148

)

$

(792,956

)

$

(1,064,243

)

Amortization of intangible assets

6,915

10,610

26,331

32,187

Stock-based compensation expense

161,228

126,809

519,358

416,439

Payroll tax expense related to stock-based compensation

4,604

3,947

19,212

19,912

Gain on divestiture

—

—

(39,883

)

—

Reduction in force charges

—

—

—

9,884

Lease exit charges

—

29,340

—

33,268

Income tax adjustments

200

(253

)

462

(372

)

Non-GAAP net loss

$

(54,428

)

$

(154,695

)

$

(267,476

)

$

(552,925

)

Weighted-average common shares - Diluted

1,393,358

1,309,918

1,364,327

1,277,293

Non-GAAP diluted net loss per share reconciliation:

Diluted net loss per share

$

(0.16

)

$

(0.25

)

$

(0.58

)

$

(0.83

)

Non-GAAP adjustment to net loss

0.12

0.13

0.38

0.40

Non-GAAP diluted net loss per share

$

(0.04

)

$

(0.12

)

$

(0.20

)

$

(0.43

)

SNAP INC.

SUPPLEMENTAL FINANCIAL INFORMATION AND BUSINESS METRICS

(dollars and shares in thousands, except as noted below, unaudited)

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Cash Flows and Shares

Net cash used in operating activities

$

(199,346

)

$

(132,543

)

$

(126,054

)

$

(66,178

)

$

(95,789

)

$

(76,149

)

Net cash used in operating activities - YoY (year-over-year)

5

%

32

%

28

%

71

%

52

%

43

%

Net cash used in operating activities - TTM (trailing twelve months)

$

(801,423

)

$

(739,953

)

$

(689,924

)

$

(524,121

)

$

(420,564

)

$

(364,170

)

Purchases of property and equipment

$

(34,901

)

$

(26,285

)

$

(22,741

)

$

(11,814

)

$

(7,633

)

$

(7,938

)

Purchases of property and equipment - YoY

80

%

1

%

7

%

(67

)%

(78

)%

(70

)%

Purchases of property and equipment - TTM

$

(118,376

)

$

(118,713

)

$

(120,242

)

$

(95,741

)

$

(68,473

)

$

(50,126

)

Free Cash Flow

$

(234,247

)

$

(158,828

)

$

(148,795

)

$

(77,992

)

$

(103,422

)

$

(84,087

)

Free Cash Flow - YoY

(2

)%

28

%

25

%

71

%

56

%

47

%

Free Cash Flow - TTM

$

(919,799

)

$

(858,666

)

$

(810,166

)

$

(619,862

)

$

(489,037

)

$

(414,296

)

Common shares outstanding

1,273,163

1,291,217

1,317,760

1,334,931

1,372,149

1,389,395

Common shares outstanding - YoY

8

%

7

%

8

%

6

%

8

%

8

%

Shares underlying stock-based awards

205,595

184,802

188,863

209,055

180,585

175,813

Shares underlying stock-based awards - YoY

(19

)%

(23

)%

(18

)%

3

%

(12

)%

(5

)%

Total common shares outstanding plus shares underlying stock-based awards

1,478,758

1,476,019

1,506,623

1,543,986

1,552,734

1,565,208

Total common shares outstanding plus shares underlying stock-based awards - YoY

3

%

2

%

4

%

6

%

5

%

6

%

Results of Operations

Revenue

$

262,263

$

297,695

$

389,822

$

320,426

$

388,021

$

446,199

Revenue - YoY

44

%

43

%

36

%

39

%

48

%

50

%

Revenue - TTM

$

986,559

$

1,076,317

$

1,180,446

$

1,270,206

$

1,395,964

$

1,544,468

Revenue by region(1)

North America

$

177,410

$

207,477

$

268,858

$

225,705

$

260,017

$

316,028

North America - YoY

20

%

24

%

23

%

32

%

47

%

52

%

North America - TTM

$

734,599

$

774,769

$

824,233

$

879,450

$

962,057

$

1,070,608

Europe

$

40,241

$

50,478

$

62,470

$

47,448

$

60,633

$

68,553

Europe - YoY

82

%

85

%

56

%

45

%

51

%

36

%

Europe - TTM

$

140,200

$

163,416

$

185,910

$

200,637

$

221,029

$

239,104

Rest of World

$

44,612

$

39,740

$

58,495

$

47,273

$

67,374

$

61,618

Rest of World - YoY

272

%

197

%

122

%

72

%

51

%

55

%

Rest of World - TTM

$

111,761

$

138,133

$

170,305

$

190,120

$

212,882

$

234,760

Operating loss

$

(357,842

)

$

(323,371

)

$

(194,707

)

$

(316,061

)

$

(304,818

)

$

(228,853

)

Operating loss - YoY

20

%

30

%

46

%

19

%

15

%

29

%

Operating loss - Margin

(136

)%

(109

)%

(50

)%

(99

)%

(79

)%

(51

)%

Operating loss - TTM

$

(1,573,163

)

$

(1,434,707

)

$

(1,268,450

)

$

(1,191,981

)

$

(1,138,957

)

$

(1,044,439

)

Net loss

$

(353,310

)

$

(325,148

)

$

(191,668

)

$

(310,407

)

$

(255,174

)

$

(227,375

)

Net loss - YoY

(20

)%

(27

)%

(45

)%

(20

)%

(28

)%

(30

)%

Net loss - TTM

$

(1,532,231

)

$

(1,414,220

)

$

(1,255,911

)

$

(1,180,533

)

$

(1,082,397

)

$

(984,624

)

Adjusted EBITDA

$

(169,032

)

$

(138,377

)

(50,363

)

(123,449

)

(78,713

)

(42,375

)

Adjusted EBITDA - YoY

13

%

23

%

68

%

43

%

53

%

69

%

Adjusted EBITDA - Margin(2)

(64

)%

(46

)%

(13

)%

(39

)%

(20

)%

(9

)%

Adjusted EBITDA - TTM

$

(724,722

)

$

(684,198

)

$

(575,637

)

$

(481,221

)

$

(390,902

)

$

(294,900

)

(1)

Total revenue for geographic reporting is apportioned to each region based on our determination of the geographic location in which advertising impressions are delivered, as this approximates revenue based on user activity. This allocation is consistent with how we determine ARPU.

(2)

We define adjusted EBITDA margin as Adjusted EBITDA divided by GAAP revenue.

SNAP INC.

SUPPLEMENTAL FINANCIAL INFORMATION AND BUSINESS METRICS (continued)

(dollars and shares in thousands, except as noted below, unaudited)

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Other

DAU (in millions)

188

186

186

190

203

210

DAU - YoY

8

%

5

%

(0

)%

(0

)%

8

%

13

%

DAU by region (in millions)

North America

80

79

79

80

83

84

North America - YoY

7

%

3

%

(1

)%

(1

)%

3

%

6

%

Europe

61

59

60

61

64

65

Europe - YoY

7

%

4

%

(1

)%

(2

)%

5

%

9

%

Rest of World

47

47

47

49

56

61

Rest of World - YoY

12

%

8

%

1

%

2

%

21

%

28

%

ARPU

$

1.40

$

1.60

$

2.09

$

1.68

$

1.91

$

2.12

ARPU - YoY

34

%

37

%

37

%

39

%

37

%

33

%

ARPU by region

North America

$

2.21

$

2.62

$

3.38

$

2.81

$

3.14

$

3.75

North America - YoY

12

%

20

%

23

%

34

%

42

%

43

%

Europe

$

0.66

$

0.85

$

1.04

$

0.77

$

0.95

$

1.05

Europe - YoY

70

%

78

%

57

%

47

%

43

%

24

%

Rest of World

$

0.96

$

0.84

$

1.24

$

0.97

$

1.20

$

1.01

Rest of World - YoY

233

%

175

%

120

%

68

%

25

%

21

%

Employees (full-time; excludes part-time, contractors, and temporary personnel)

2,879

2,903

2,884

2,818

2,734

2,908

Employees - YoY

10

%

(2

)%

(6

)%

(6

)%

(5

)%

0

%

Depreciation and amortization expense

Cost of revenue

$

5,610

$

5,582

$

9,888

$

6,146

$

5,642

$

4,580

Research and development

9,489

10,174

4,547

8,650

7,188

8,632

Sales and marketing

3,991

4,054

3,475

4,015

3,045

3,109

General and administrative

3,424

5,088

4,772

4,508

6,785

4,325

Total

$

22,514

$

24,898

$

22,682

$

23,319

$

22,660

$

20,646

Depreciation and amortization expense - YoY

79

%

43

%

21

%

8

%

1

%

(17

)%

Stock-based compensation expense

Cost of revenue

$

1,467

$

1,368

$

1,283

$

1,849

$

1,786

$

1,332

Research and development

92,303

95,329

75,086

112,242

132,610

108,176

Sales and marketing

21,996

25,082

20,795

17,760

26,474

23,333

General and administrative

40,605

5,030

24,608

30,705

34,704

28,387

Total

$

156,371

$

126,809

$

121,772

$

162,556

$

195,574

$

161,228

Stock-based compensation expense - YoY

(36

)%

(43

)%

(33

)%

22

%

25

%

27

%

Investors and Analysts:

[email protected]

Press:

[email protected]

Source: Snap Inc.

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