Revenue increased 43% to a record $298
millionTrailing twelve months revenue increased 53% to $1.1
billion
Snap Inc. (NYSE: SNAP) today announced financial results for the
quarter ended September 30, 2018.
Financial Highlights
- Operating cash flow improved by $61
million to $(133) million in Q3 2018, compared to the prior
year.
- Free Cash Flow improved by $61 million
to $(159) million in Q3 2018, compared to the prior year.
- Common shares outstanding plus shares
underlying stock-based awards totaled 1,476 million at September
30, 2018, compared with 1,441 million one year ago.
- Revenue increased 43% to a record $298
million and trailing twelve months revenue increased 53% to $1.1
billion, compared to the prior year.
- Operating loss improved $138 million to
$(323) million in Q3 2018, compared to the prior year.
- Net loss improved $118 million to
$(325) million in Q3 2018, compared to the prior year.
- Adjusted EBITDA loss improved $41
million to $(138) million in Q3 2018, compared to the prior
year.
“We’re investing in long-term growth opportunities and driving
operational efficiencies,” said Tim Stone, Snap CFO. “We achieved
record revenue and strong bottom-line results this quarter and
expect a record fourth quarter, as we continue to invest in
innovation for our community and scale our business.”
Three Months Ended September 30,
Percent Nine Months Ended September 30,
Percent 2017 2018 Change
2017 2018 Change (Unaudited)
(dollars and shares in thousands, except per share amounts)
Cash used in operating activities $ (194,013 ) $
(132,543 ) (32 )% $ (558,584 ) $ (563,870 ) (1 )% Free Cash Flow $
(219,961 ) $ (158,828 ) 28 % $ (621,890 ) $ (661,371 ) (6 )% Common
shares outstanding plus shares underlying stock-based awards
1,441,300 1,476,019 2 % 1,441,300 1,476,019 2 % Operating loss $
(461,827 ) $ (323,371 ) (30 )% $ (3,124,612 ) $ (1,073,743 ) (66 )%
Revenue $ 207,937 $ 297,695 43 % $ 539,256 $ 790,624 47 % Net loss
$ (443,159 ) $ (325,148 ) (27 )% $ (3,095,089 ) $ (1,064,243 ) (66
)% Adjusted EBITDA $ (178,901 ) $ (138,377 ) 23 % $ (561,134 ) $
(525,274 ) 6 % Diluted net loss per share attributable to common
shareholders $ (0.36 ) $ (0.25 ) (31 )% $ (2.71 ) $ (0.83 ) (69 )%
Non-GAAP diluted net loss per share $ (0.14 ) $ (0.12 ) (13 )% $
(0.49 ) $ (0.43 ) (11 )%
Community and Engagement Highlights
- Our community grew 5% year-over-year to
186 million Daily Active Users. DAUs were down 1% compared to the
prior quarter.
- We launched Snap Original Shows and the
debut of serialized Shows, our first slate of exclusive scripted
Shows and docuseries.
- In Q3, 21 unique Shows in Discover
reached a monthly active audience of over 10 million viewers.
- CBS’ Snapchat Show “James Corden’s Next
James Corden” won two Emmy awards: Outstanding Short Form Comedy or
Drama Series and Outstanding Actor in a Short Form Comedy or Drama
Series.
- We announced partner curated Our
Stories and added over 25 media partners to increase the volume and
variety of content available in Discover on Snapchat. Partners
include CNN, digital brands like Overtime, and longtime partners
like Hearst.
- We extended our partnerships with
NBCUniversal and Viacom to create even more content for our users
worldwide. NBCUniversal extended its content production commitments
through 2019, and Viacom has committed to creating 10 new Snap
Original Shows. Viacom also committed to syndicating at least 500
episodes of its network’s shows to the Snapchat audience.
- We partnered with Amazon to bring a new
shopping experience to our community, accessible right from the
Snapchat camera. Snapchatters can simply point the Snapchat camera
at a physical product or barcode, and press and hold the screen to
get started.
- We introduced two new styles of
Spectacles: Nico and Veronica. Both designs come in black-on-black
with polarized lenses.
- On National Voter Registration Day, we
offered a new way for our community to register to vote quickly and
easily — right in Snapchat with TurboVote — and attracted over
400,000 new voter registrations according to TurboVote.
- Snapchatters have saved more than 200
billion Snaps in Memories.
Monetization Highlights
- We announced two new products focused
on e-commerce advertisers to enhance our e-commerce offering ahead
of the holiday season:
- Product Catalogs, which allow
advertisers to upload their standard product catalog, a format
utilized broadly by other ad platforms, and quickly generate a
product catalog in the form of a Story Ad.
- Collection Ads, which give users the
ability to interact with four products in a single Snap Ad, rather
than swiping up to a single product / category. Wish, eBay, and
Guess, who were all part of the initial testing group for
Collection Ads, saw significantly higher engagement rates compared
to typical Snap Ads. eBay’s engagement rate, for example, was five
times higher.
- We brought Commercials to our
self-serve platform. Commercials are our 6-second, non-skippable ad
that appears only within premium content, including 12 new Snap
Original Shows.
- The Snap Pixel, which helps advertisers
measure the cross-device impact of their campaigns continued to see
impressive growth with over 230 million purchase events in Q3, up
from 70 million in Q2.
- Our Snapchat Show “Fashion Five Ways”
included our first ever shoppable brand integration within a Show
on Snapchat. This campaign helped the Adidas Falcon sneaker to sell
out.
- We expanded the availability of
goal-based bidding for conversions to all advertisers and
introduced new automated audience creation capabilities for the
Snap Pixel, allowing advertisers to automatically generate
audiences on various events measured by the Snap Pixel.
- We expanded augmented reality
marketing, and have added ‘attachments’ to our self-serve augmented
reality buying tools, which means lower funnel goals such as App
Installs can be driven directly from augmented reality.
- We started connecting the insights we
share with advertisers with actions they can take in Ad Manager.
This month, we added the ability to build re-engagement audiences
off of foot traffic data, meaning advertisers can engage audiences
who have visited their retail locations.
Financial Guidance
The following forward-looking statements reflect our
expectations for the fourth quarter of 2018 as of October 25, 2018,
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 2018 Outlook
- Revenue is expected to reach a new high
of between $355 million and $380 million, or grow between 24% and
33% compared to Q4 2017.
- Adjusted EBITDA is expected to be
between $(100) million and $(75) million, compared to $(159)
million in Q4 2017.
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,
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.
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, 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,” “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
attract and retain users, publishers, and advertisers; competition;
managing our international expansion and our growth and future
expenses; our ability to maintain, protect, and enhance our
intellectual property; compliance with new laws and regulations;
our ability to attract and retain qualified and key personnel; 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, 2018, 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, 2018 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, 2017 2018
2017 2018 Cash flows from operating
activities Net loss $ (443,159 ) $ (325,148 ) $ (3,095,089 ) $
(1,064,243 ) Adjustments to reconcile net loss to net cash used in
operating activities: Depreciation and amortization 17,467 24,898
42,502 68,966 Stock-based compensation 221,702 126,809 2,458,851
416,439 Deferred income taxes (12,632 ) (124 ) (14,397 ) 129 Excess
inventory reserve and related asset impairment 21,997 — 21,997 —
Lease exit charges — 29,340 — 33,268 Other (2,042 ) 8,608 (3,714 )
(679 ) Change in operating assets and liabilities, net of effect of
acquisitions: Accounts receivable, net of allowance (16,304 )
(18,834 ) (24,513 ) 15,937 Prepaid expenses and other current
assets (1,130 ) (435 ) (48,965 ) (3,059 ) Other assets 1,563 7,089
(8,545 ) 20,314 Accounts payable (5,214 ) 2,084 4,103 (44,638 )
Accrued expenses and other current liabilities 21,259 14,841
103,449 (14,664 ) Other liabilities 2,480 (1,671 )
5,737 8,360 Net cash used in operating activities
(194,013 ) (132,543 ) (558,584 )
(563,870 )
Cash flows from investing activities Purchases of
property and equipment (25,948 ) (26,285 ) (63,306 ) (97,501 )
Purchases of intangible assets (305 ) — (8,025 ) (2,565 )
Non-marketable investments — (250 ) (7,530 ) (21,260 ) Cash paid
for acquisitions, net of cash acquired (128,231 ) — (352,407 ) —
Purchases of marketable securities (670,406 ) (444,369 ) (3,412,776
) (1,318,467 ) Sales of marketable securities 203,994 — 441,089
45,007 Maturities of marketable securities 783,848
560,465 1,831,327 1,926,802 Net cash provided by
(used in) investing activities 162,952 89,561
(1,571,628 ) 532,016
Cash flows from financing
activities Proceeds from the exercise of stock options 6,072
142 6,855 47,865 Stock repurchases from employees for tax
withholdings (158,827 ) — (367,234 ) (551 ) Proceeds from issuance
of Class A common stock in initial public offering, net of
underwriting commissions — — 2,657,797 — Payments of initial public
offering issuance costs (307 ) — (9,672 )
— Net cash provided by (used in) financing activities
(153,062 ) 142 2,287,746 47,314 Change in
cash, cash equivalents, and restricted cash (184,123 ) (42,840 )
157,534 15,460 Cash, cash equivalents, and restricted cash,
beginning of period 504,993 395,307 163,336
337,007 Cash, cash equivalents, and restricted cash, end of
period $ 320,870 $ 352,467 $ 320,870 $ 352,467
Supplemental
disclosures Cash paid for income taxes $ (53 ) $ 758 $ 5,437 $
3,155
Supplemental disclosures of non-cash activities
Assumed equity awards in acquisitions $ 3,911 $ — $ 3,911 $ —
Purchase consideration liabilities related to acquisitions $ 530 $
— $ 11,772 $ — Construction in progress related to financing lease
obligations $ 424 $ 436 $ 1,107 $ 1,292 Net change in accounts
payable and accrued expenses and other current liabilities related
to property and equipment additions $ (412 ) $ (6,278 ) $ (4,155 )
$ (5,690 )
SNAP INC. CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share amounts,
unaudited)
Three Months Ended September 30, Nine
Months Ended September 30, 2017 2018
2017 2018 Revenue $ 207,937 $ 297,695 $
539,256 $ 790,624 Costs and expenses: Cost of revenue 210,710
197,554 526,216 585,917 Research and development 239,442 203,510
1,301,025 607,742 Sales and marketing 101,511 97,552 412,147
301,350 General and administrative 118,101 122,450
1,424,480 369,358 Total costs and expenses
669,764 621,066 3,663,868 1,864,367 Operating
loss (461,827 ) (323,371 ) (3,124,612 ) (1,073,743 ) Interest
income 6,253 7,011 15,026 19,715 Interest expense (887 ) (919 )
(2,580 ) (2,783 ) Other income (expense), net 1,002
(7,625 ) 1,975 (4,533 ) Loss before income taxes
(455,459 ) (324,904 ) (3,110,191 ) (1,061,344 ) Income tax benefit
(expense) 12,300 (244 ) 15,102 (2,899 )
Net loss $ (443,159 ) $ (325,148 ) $ (3,095,089 ) $ (1,064,243 )
Net loss per share attributable to Class A, Class B, and Class C
common stockholders: Basic $ (0.36 ) $ (0.25 ) $ (2.71 ) $ (0.83 )
Diluted $ (0.36 ) $ (0.25 ) $ (2.71 ) $ (0.83 ) Weighted average
shares used in computation of net loss per share: Basic
1,232,993 1,309,918 1,140,004 1,277,293
Diluted 1,232,993 1,309,918 1,140,004
1,277,293
SNAP INC. CONSOLIDATED BALANCE
SHEETS
(In thousands, except per share
amounts)
December 31,2017
June 30,
2018
September 30,2018
(Unaudited) (Unaudited) Assets Current assets
Cash and cash equivalents $ 334,063 $ 393,183 $ 350,398 Marketable
securities 1,708,976 1,176,820 1,064,009 Accounts receivable, net
of allowance 279,473 244,815 261,833 Prepaid expenses and other
current assets 44,282 54,032 48,887 Total
current assets 2,366,794 1,868,850 1,725,127 Property and
equipment, net 166,762 214,230 216,609 Intangible assets, net
166,473 147,197 136,473 Goodwill 639,882 635,482 634,186 Other
assets 81,655 84,954 71,381 Total assets $
3,421,566 $ 2,950,713 $ 2,783,776
Liabilities and Stockholders’
Equity Current liabilities Accounts payable $ 71,194 $ 22,644 $
20,175 Accrued expenses and other current liabilities
275,062 256,698 265,345 Total current liabilities
346,256 279,342 285,520 Other liabilities 82,983
87,303 114,164 Total liabilities 429,239
366,645 399,684 Commitments and contingencies Stockholders’
equity Class A non-voting common stock, $0.00001 par value.
3,000,000 shares authorized, 883,022, 958,801, and 976,066 shares
issued and outstanding at December 31, 2017, June 30, 2018, and
September 30, 2018, respectively. 9 10 10 Class B voting common
stock, $0.00001 par value. 700,000 shares authorized, 122,564,
94,471, and 93,660 shares issued and outstanding at December 31,
2017, June 30, 208, and September 30, 2018, respectively. 1 1 1
Class C voting common stock, $0.00001 par value. 260,888 shares
authorized, 216,616, 219,891, and 221,491 shares issued and
outstanding at December 31, 2017, June 30, 2018, and September 30,
2018, respectively. 2 2 2 Additional paid-in capital 7,634,825
7,971,610 8,098,519 Accumulated other comprehensive income (loss)
14,157 8,207 6,470 Accumulated deficit (4,656,667 )
(5,395,762 ) (5,720,910 ) Total stockholders’ equity
2,992,327 2,584,068 2,384,092 Total liabilities and
stockholders’ equity $ 3,421,566 $ 2,950,713 $ 2,783,776
SNAP INC. RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES
(In thousands, unaudited)
Three Months Ended September 30, Nine
Months Ended September 30, 2017 2018
2017 2018 Free Cash Flow reconciliation: Net
cash used in operating activities $ (194,013 ) $ (132,543 ) $
(558,584 ) $ (563,870 ) Less: Purchases of property and equipment
(25,948 ) (26,285 ) (63,306 ) (97,501 )
Free Cash Flow $ (219,961 ) $ (158,828 ) $ (621,890 ) $ (661,371 )
Three Months Ended September 30, Nine Months Ended
September 30, 2017 2018 2017 2018
Adjusted EBITDA reconciliation: Net loss $ (443,159 ) $
(325,148 ) $ (3,095,089 ) $ (1,064,243 ) Add (deduct): Interest
income (6,253 ) (7,011 ) (15,026 ) (19,715 ) Interest expense 887
919 2,580 2,783 Other (income) expense, net (1,002 ) 7,625 (1,975 )
4,533 Income tax (benefit) expense (12,300 ) 244 (15,102 ) 2,899
Depreciation and amortization 17,467 24,898 42,502 68,966
Stock-based compensation expense 221,702 126,809 2,458,851 416,439
Payroll tax expense related to stock-based compensation 3,890 3,947
22,258 19,912 Spectacles inventory-related charges(1) 39,867 —
39,867 — Reduction in force charges(2) — — — 9,884 Lease exit
charges(3) — 29,340 — 33,268 Adjusted
EBITDA $ (178,901 ) $ (138,377 ) $ (561,134 ) $ (525,274 )
(1) Spectacles inventory-related charges in the third
quarter of 2017 were primarily related to excess inventory reserves
and inventory purchase commitment cancellation charges. These
charges are non-recurring and not reflective of underlying trends
in our business. (2) Reduction in force charges during the
first quarter of 2018 were related to a reduction in force plan we
implemented during March 2018, impacting approximately 7% of our
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. (3) 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. In the three and nine
months ended September 30, 2018, we recorded lease exit charges of
$29.3 million and $33.3 million, respectively. The charges
primarily include the present value of our remaining lease
obligation on the cease use dates that occurred during the quarter,
net of estimated 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, 2017 2018
2017 2018 Depreciation and amortization
expense: Cost of revenue $ 5,404 $ 5,582 $ 10,043 $ 16,394 Research
and development 6,401 10,174 18,139 28,454 Sales and marketing
2,820 4,054 7,009 11,614 General and administrative 2,842
5,088 7,311 12,504 Total $ 17,467 $ 24,898 $
42,502 $ 68,966
Total stock-based compensation expense by
function:
Three Months Ended September 30, Nine Months Ended
September 30, 2017 2018 2017 2018
Stock-based compensation expense: Cost of revenue $ 1,951 $ 1,368 $
23,882 $ 3,111 Research and development 143,303 95,329 1,025,231
265,447 Sales and marketing 27,254 25,082 207,538 63,264 General
and administrative 49,194 5,030 1,202,200
84,617 Total $ 221,702 $ 126,809 $ 2,458,851 $ 416,439
Three Months Ended September 30, Nine Months Ended
September 30, 2017 2018 2017 2018
Non-GAAP net loss reconciliation: Net loss $ (443,159 ) $
(325,148 ) $ (3,095,089 ) $ (1,064,243 ) Amortization of intangible
assets 9,743 10,610 20,947 32,187 Stock-based compensation expense
221,702 126,809 2,458,851 416,439 Payroll tax expense related to
stock-based compensation 3,890 3,947 22,258 19,912 Spectacles
inventory-related charges 39,867 — 39,867 Reduction in force
charges — — — 9,884 Lease exit charges — 29,340 — 33,268 Income tax
adjustments (123 ) (253 ) (2,313 ) (372
) Non-GAAP net loss $ (168,080 ) $ (154,695 ) $ (555,479 ) $
(552,925 ) Weighted-average common shares - Diluted
1,232,993 1,309,918 1,140,004 1,277,293
Non-GAAP diluted
net loss per share reconciliation: Diluted net loss per share $
(0.36 ) $ (0.25 ) $ (2.71 ) $ (0.83 ) Non-GAAP adjustment to net
loss 0.22 0.13 2.22 $ 0.40 Non-GAAP diluted
net loss per share $ (0.14 ) $ (0.12 ) $ (0.49 ) $ (0.43 )
SNAP INC. SUPPLEMENTAL FINANCIAL INFORMATION AND
BUSINESS METRICS
(Dollars and shares in thousands, except
as noted below, unaudited)
Q2 2017 Q3
2017 Q4 2017 Q1 2018 Q2 2018 Q3
2018 Cash Flows and Shares Net cash used in operating
activities $ (209,574 ) $ (194,013 ) $ (176,083 ) $ (231,981 ) $
(199,346 ) $ (132,543 ) Net cash used in operating activities - YoY
(year-over-year) (56 )% 11 % (5 )% (50 )% 5 % 32 % Net cash used in
operating activities - TTM (trailing twelve months) $ (749,165 ) $
(726,312 ) $ (734,667 ) $ (811,651 ) $ (801,423 ) $ (739,953 )
Purchases of property and equipment $ (19,365 ) $ (25,948 ) $
(21,212 ) $ (36,315 ) $ (34,901 ) $ (26,285 ) Purchases of property
and equipment - YoY 18 % 51 % 4 % 102 % 80 % 1 % Purchases of
property and equipment - TTM $ (74,926 ) $ (83,682 ) $ (84,518 ) $
(102,840 ) $ (118,376 ) $ (118,713 ) Free Cash Flow $ (228,939 ) $
(219,961 ) $ (197,295 ) $ (268,296 ) $ (234,247 ) $ (158,828 ) Free
Cash Flow - YoY (52 )% 6 % (5 )% (55 )% (2 )% 28 % Free Cash Flow -
TTM $ (824,091 ) $ (809,994 ) $ (819,185 ) $ (914,491 ) $ (919,799
) $ (858,666 ) Common shares outstanding 1,180,002 1,201,736
1,222,202 1,254,439 1,273,163 1,291,217 Common shares outstanding -
YoY NM NM NM 6 % 8 % 7 % Shares underlying stock-based awards
254,344 239,564 230,802 202,175 205,595 184,802 Shares underlying
stock-based awards - YoY NM NM NM (20 )% (19 )% (23 )% Total common
shares outstanding plus shares underlying stock-based awards
1,434,346 1,441,300 1,453,004 1,456,613 1,478,758 1,476,019 Total
common shares outstanding plus shares underlying stock-based awards
- YoY NM NM NM 2 % 3 % 2 %
Results of Operations
Revenue $ 181,671 $ 207,937 $ 285,693 $ 230,666 $ 262,263 $ 297,695
Revenue - YoY 153 % 62 % 72 % 54 % 44 % 43 % Revenue - TTM $
625,205 $ 704,938 $ 824,949 $ 905,967 $ 986,559 $ 1,076,317 Revenue
by region(1) North America $ 147,638 $ 167,306 $ 219,394 $ 170,488
$ 177,410 $ 207,477 North America - YoY 126 % 46 % 51 % 32 % 20 %
24 % North America - TTM $ 536,467 $ 589,018 $ 663,057 $ 704,827 $
734,599 $ 774,769 Europe $ 22,052 $ 27,262 $ 39,976 $ 32,721 $
40,241 $ 50,478 Europe - YoY 254 % 131 % 173 % 150 % 82 % 85 %
Europe - TTM $ 61,610 $ 77,081 $ 102,392 $ 122,011 $ 140,200 $
163,416 Rest of World $ 11,981 $ 13,368 $ 26,323 $ 27,458 $ 44,612
$ 39,740 Rest of World - YoY NM NM NM 251 % 272 % 197 % Rest of
World - TTM $ 27,129 $ 38,839 $ 59,501 $ 79,130 $ 111,761 $ 138,133
Operating loss $ (449,018 ) $ (461,827 ) $ (360,964 ) $ (392,530 )
$ (357,842 ) $ (323,371 ) Operating loss - YoY (288 )% (253 )% (113
)% 82 % 20 % 30 % Operating loss - Margin (247 )% (222 )% (126 )%
(170 )% (136 )% (109 )% Operating loss - TTM $ (2,963,490 ) $
(3,294,349 ) $ (3,485,576 ) $ (1,664,339 ) $ (1,573,163 ) $
(1,434,707 ) Net loss $ (443,093 ) $ (443,159 ) $ (349,977 ) $
(385,785 ) $ (353,310 ) $ (325,148 ) Net loss - YoY 282 % 257 % 106
% (83 )% (20 )% (27 )% Net loss - TTM $ (2,946,103 ) $ (3,265,034 )
$ (3,445,066 ) $ (1,622,014 ) $ (1,532,231 ) $ (1,414,220 )
Adjusted EBITDA $ (193,990 ) $ (178,901 ) $ (158,922 ) $ (217,867 )
$ (169,032 ) (138,377 ) Adjusted EBITDA - YoY (85 )% (65 )% (4 )%
(16 )% 13 % 23 % Adjusted EBITDA - Margin (107 )% (86 )% (56 )% (94
)% (64 )% (46 )% Adjusted EBITDA - TTM $ (643,121 ) $ (713,418 ) $
(720,056 ) $ (749,680 ) $ (724,722 ) $ (684,198 ) (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.
SNAP INC. SUPPLEMENTAL
FINANCIAL INFORMATION AND BUSINESS METRICS (continued)
(Dollars and shares in thousands, except
as noted below, unaudited)
Q2 2017 Q3
2017 Q4 2017 Q1 2018 Q2 2018 Q3
2018 Other DAU (in millions) 173 178 187 191 188 186 DAU
- YoY 21 % 17 % 18 % 15 % 8 % 5 % DAU by region (in millions) North
America 75 77 80 81 80 79 North America - YoY 22 % 18 % 18 % 14 % 7
% 3 % Europe 57 57 60 62 61 59 Europe - YoY 24 % 17 % 17 % 13 % 7 %
4 % Rest of World 42 44 47 48 47 47 Rest of World - YoY 16 % 14 %
21 % 18 % 12 % 8 % ARPU $ 1.05 $ 1.17 $ 1.53 $ 1.21 $ 1.40 $ 1.60
ARPU - YoY 109 % 39 % 46 % 34 % 34 % 37 % ARPU by region North
America $ 1.97 $ 2.17 $ 2.75 $ 2.10 $ 2.21 $ 2.62 North America -
YoY 85 % 24 % 28 % 16 % 12 % 20 % Europe $ 0.39 $ 0.48 $ 0.66 $
0.53 $ 0.66 $ 0.85 Europe - YoY 186 % 98 % 133 % 120 % 70 % 78 %
Rest of World $ 0.29 $ 0.30 $ 0.56 $ 0.58 $ 0.96 $ 0.84 Rest of
World - YoY NM NM 284 % 198 % 233 % 175 % Employees (full-time;
excludes part-time, contractors, and temporary personnel) 2,607
2,958 3,069 2,989 2,879 2,903 Employees - YoY 146 % 109 % 65 % 27 %
10 % (2 )%
Depreciation and amortization expense Cost
of revenue $ 2,970 $ 5,404 $ 5,179 $ 5,202 $ 5,610 5,582 Research
and development 5,983 6,401 6,937 8,791 9,489 10,174 Sales and
marketing 1,589 2,820 3,441 3,569 3,991 4,054 General and
administrative 2,043 2,842 3,229 3,991
3,424 5,088 Total $ 12,585 $ 17,467 $ 18,786 $ 21,553
$ 22,514 $ 24,898 Depreciation and amortization expense - YoY 110 %
135 % 77 % 73 % 79 % 43 %
Stock-based compensation
expense Cost of revenue $ 2,223 $ 1,951 $ 2,189 $ 276 $ 1,467
1,368 Research and development 163,848 143,303 129,199 77,815
92,303 95,329 Sales and marketing 20,558 27,254 28,936 16,185
21,996 25,082 General and administrative 58,399
49,194 20,720 38,982 40,605 5,030 Total
$ 245,028 $ 221,702 $ 181,044 $ 133,258 $ 156,371 $ 126,809
Stock-based compensation expense - YoY NM NM NM (93 )% (36 )% (43
)%
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