Revenue increased 5% year-over-year to $1,189
million
Daily Active Users increased 12% year-over-year
to 406 million
Net loss was $368 million and Adjusted EBITDA
was positive $40 million
Snap Inc. (NYSE: SNAP) today announced financial results for the
quarter ended September 30, 2023.
“Our revenue returned to positive growth in Q3, increasing 5%
year-over-year and flowing through to positive adjusted EBITDA as
our reprioritized cost structure demonstrated the leverage in our
business model,” said Evan Spiegel, CEO. “We are focused on
improving our advertising platform to drive higher return on
investment for our advertising partners, and we have evolved our
go-to-market efforts to better serve our partners and drive
customer success.”
Jerry Hunter, Chief Operating Officer, has notified Snap that he
will retire. Mr. Hunter joined Snap seven years ago and served an
important role in building the company’s engineering and business
structures. Mr. Hunter’s duties and responsibilities will be
transitioned by the end of the month and he will continue to
support Snap through July 1, 2024 to help ensure this transition is
effective.
“I am deeply grateful to Jerry for the meaningful contributions
he has made over his many years at Snap,” said Evan Spiegel. “His
work to improve our advertising platform, serve our community, and
build a strong team has helped lay the foundation for our future
growth.”
Snap Inc. also announced today its board of directors has
authorized a stock repurchase program of up to $500 million of its
Class A common stock. Repurchases of the Class A common stock may
be made from time to time, either through open market transactions
(including through Rule 10b5-1 trading plans) or through privately
negotiated transactions in accordance with applicable securities
laws. The timing and actual number of shares repurchased will
depend on a variety of factors, including stock price, trading
volume, market and economic conditions, and other general business
considerations. Repurchases under the program have been authorized
for 12 months but the program may be modified, suspended, or
terminated at any time.
The goal of the program is to utilize the company’s strong
balance sheet to opportunistically offset a portion of the dilution
related to the issuance of restricted stock units to employees as
part of the overall compensation program designed to foster an
ownership culture.
Repurchases under this program will be funded from existing cash
and cash equivalents. As of September 30, 2023, Snap had $3.6
billion in cash, cash equivalents, and marketable securities.
Q3 2023 Financial Summary
- Revenue was $1,189 million, compared to $1,128 million in the
prior year, an increase of 5% year-over-year.
- Net loss was $368 million, compared to $360 million in the
prior year.
- Adjusted EBITDA was $40 million, compared to $73 million in the
prior year.
- Operating cash flow was $13 million, compared to $56 million in
the prior year.
- Free Cash Flow was $(61) million, compared to $18 million in
the prior year.
- Trailing twelve months operating cash flow was $207 million and
trailing twelve months Free Cash Flow was $2 million.
Three Months Ended
September 30,
Percent Change
Nine Months Ended
September 30,
Percent Change
2023
2022
2023
2022
(Unaudited)
(in thousands, except per
share amounts)
Revenue
$
1,188,551
$
1,128,476
5
%
$
3,244,828
$
3,302,112
(2
)%
Operating loss
$
(380,063
)
$
(435,242
)
13
%
$
(1,149,666
)
$
(1,107,709
)
(4
)%
Net loss
$
(368,256
)
$
(359,502
)
(2
)%
$
(1,074,238
)
$
(1,141,193
)
6
%
Adjusted EBITDA(1)
$
40,094
$
72,640
(45
)%
$
2,428
$
144,298
(98
)%
Net cash provided by (used in) operating
activities
$
12,781
$
55,945
(77
)%
$
81,947
$
59,323
38
%
Free Cash Flow(2)
$
(60,654
)
$
18,109
(435
)%
$
(76,061
)
$
(23,058
)
(230
)%
Diluted net loss per share attributable to
common stockholders
$
(0.23
)
$
(0.22
)
(5
)%
$
(0.67
)
$
(0.70
)
4
%
Non-GAAP diluted net income (loss) per
share(3)
$
0.02
$
0.08
(75
)%
$
0.01
$
0.04
(75
)%
(1)
See page 10 for reconciliation of net loss
to Adjusted EBITDA. In the third quarter of 2023, we initiated a
wind down of our AR Enterprise business, which included a reduction
of our global employee headcount by approximately 3%. Restructuring
charges in the third quarter of 2023 were $18.6 million, composed
primarily of cash severance and stock-based compensation expenses.
In the third quarter of 2022, we initiated a strategic
reprioritization plan, which included a reduction of our global
employee headcount by approximately 20%. Restructuring charges in
the third quarter of 2022 were $154.6 million, composed primarily
of severance and related charges, stock-based compensation expense,
lease exit and related charges, impairment charges, and contract
termination charges.
(2)
See page 10 for reconciliation of net cash
provided by (used in) operating activities to Free Cash Flow.
(3)
See page 11 for reconciliation of diluted
net loss per share to non-GAAP diluted net income (loss) per
share.
Q3 2023 Summary & Key Highlights
We grew and deepened our engagement with our
community:
- DAUs were 406 million in Q3 2023, an increase of 43 million, or
12%, year-over-year.
- Total time spent watching Spotlight increased over 200%
year-over-year.
- Since launching My AI, our AI-powered chatbot, over 200 million
people have sent over 20 billion messages, which we believe makes
My AI among the most widely used AI chatbots available today.
- We launched our new Generative AI powered feature called
Dreams, which enables Snapchatters to create generative AI
selfies.
- We are seeing more creators posting content to Snapchat, with
nearly three times more public Stories posted in the US compared to
Q3 2022.
We are focused on accelerating and diversifying our revenue
growth:
- We returned to positive revenue growth this quarter as we
continue to execute against our strategy of accelerating and
diversifying our revenue growth.
- During Q3, we implemented over 17 major machine learning
ranking and optimization improvements for App, Web, and Dynamic
Product Ad (DPA) optimization goals.
- We launched our Total Takeover solution, which includes First
Commercial, First Lens, and First Story, and lets advertisers
reserve the first Commercial, Lens, or Snap Ad a Snapchatter
sees.
- Snapchat+, our subscription service that offers exclusive,
experimental, and pre-release features, reached over 5 million
subscribers in Q3 2023.
- We integrated with Shopify Audiences, which enables Shopify
Plus merchants to extend their reach and find new customers on
Snapchat who have high intent to purchase their products.
- At our 2023 Beauty Summit in September, we announced new
advertising tools for beauty brands such as beauty AR Lenses and
Bitmoji beauty drops.
We invested in our augmented reality platform:
- We launched the Real-Time Neural Rendering ML Model in Lens
Studio, which enables developers to build AR assets from 2D images
captured on a phone.
- We launched Diffuse Indirect Lighting, a new Ray Tracing
feature that brings a level of realism to how colors and lights
reflect and glow onto other objects.
- We introduced Lens Creator Rewards, a new opportunity for Snap
AR creators, developers, and teams to be rewarded for building
top-performing Lenses on Snapchat.
- We partnered with MTV for their 2023 Video Music Awards to let
the audience live cast their vote for the Best New Artist category
through an innovative Snapchat Lens via Camera Kit.
- For the 2023 NFL season, we partnered with the LA Rams and
Disguise to deliver a sponsored Princess Cruises AR experience
powered by Camera Kit in SoFi Stadium.
- This summer, our AR technology enhanced music festivals across
the world, including AR experiences for Lollapalooza Paris, in
partnership with Live Nation.
- For the 2023 FIFA Women’s World Cup, we debuted a USWNT “Team
Tracker” AR Lens that used advanced AR technology, with 3D Bitmoji
avatars, stats, news, fun facts, and highlights that updated in
real time.
Q4 2023 Outlook
As we enter Q4, we anticipate continued growth in our global
community and, as a result, our financial forecast for Q4 is built
on the assumption that DAU will reach 410 million to 412 million.
We believe we are on the right path with our direct-response
advertising platform and are focused on executing against our
roadmap to deliver further improvements. That said, forward
visibility of advertising demand remains limited due to several
factors. First, revenue in Q4 is historically backweighted, and the
revenue mix in Q4 has historically included a relatively higher
share from brand advertising revenue, and brand advertising grew at
a slower rate than direct-response advertising in Q3. In addition,
we observed pauses in spending from a large number of primarily
brand-oriented advertising campaigns immediately following the
onset of the war in the Middle East, and this has been a headwind
to revenue quarter-to-date. While some of these campaigns have now
resumed, and the impact on our revenue has partially diminished, we
continue to observe new pauses and the risk that these pauses could
persist or increase in magnitude remains. Due to the unpredictable
nature of war, we believe it would be imprudent to provide formal
guidance for Q4. Our internal forecast assumes a revenue range of
$1,320 million to $1,375 million, implying year-over-year revenue
growth of approximately 2% to 6%. Within this range of revenue, we
estimate that adjusted EBITDA will be between $65 million and $105
million.
Conference Call Information
Snap Inc. will host a conference call to discuss the results at
2:30 p.m. Pacific / 5:30 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 its websites (including snap.com and
investor.snap.com) 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; payroll and other tax expense
related to stock-based compensation; 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 technology company. We believe the camera
presents the 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, future stock
repurchase programs or stock dividends, business strategy and
plans, user growth and engagement, product initiatives, objectives
of management for future operations, and advertiser and partner
offerings, 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,
including our financial outlook, macroeconomic uncertainty, and
geo-political conflicts, that we believe may continue to 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
ability to attain and sustain profitability; our ability to
generate and sustain positive cash flow; our ability to attract and
retain users, partners, and advertisers; competition and new market
entrants; managing our growth and future expenses; compliance with
new laws, regulations, and executive actions; our ability to
maintain, protect, and enhance our intellectual property; our
ability to succeed in existing and new market segments; our ability
to attract and retain qualified team members and key personnel; our
ability to repay or refinance outstanding debt, or to access
additional financing; future acquisitions, divestitures, or
investments; and the potential adverse impact of climate change,
natural disasters, health epidemics, macroeconomic conditions, and
war or other armed conflict, as well as risks, uncertainties, and
other factors described in “Risk Factors” and elsewhere in our most
recent periodic report filed with the U.S. Securities and Exchange
Commission, or SEC, which is available on the SEC’s website at
www.sec.gov. Additional information will be made available in our
periodic report that will be filed with the SEC for the period
covered by this press release 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,
including future developments related to geo-political conflicts
and macroeconomic conditions, 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; payroll and other tax expense related to stock-based
compensation; 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 income
(loss), which is defined as net income (loss); excluding
amortization of intangible assets; stock-based compensation
expense; payroll and other tax expense related to stock-based
compensation; certain other non-cash or non-recurring items
impacting net income (loss) from time to time; and related income
tax adjustments. Non-GAAP net income (loss) and weighted average
diluted shares are then used to calculate non-GAAP diluted net
income (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,
2023
2022
2023
2022
Cash flows from operating
activities
Net loss
$
(368,256
)
$
(359,502
)
$
(1,074,238
)
$
(1,141,193
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
41,209
36,291
116,117
153,682
Stock-based compensation
357,933
342,959
990,807
937,213
Amortization of debt issuance costs
1,842
1,835
5,517
5,028
Losses (gains) on debt and equity
securities, net
21,155
(75,778
)
5,888
15,559
Other
(4,395
)
12,133
(31,098
)
16,337
Change in operating assets and
liabilities, net of effect of acquisitions:
Accounts receivable, net of allowance
(128,972
)
17,410
55,772
62,436
Prepaid expenses and other current
assets
(837
)
7,044
(15,139
)
(32,114
)
Operating lease right-of-use assets
17,904
17,922
53,379
53,205
Other assets
(2,767
)
(5,095
)
(3,192
)
(12,633
)
Accounts payable
(16,951
)
9,381
(45,497
)
60,442
Accrued expenses and other current
liabilities
105,907
60,036
68,697
(17,184
)
Operating lease liabilities
(16,181
)
(12,116
)
(52,523
)
(46,431
)
Other liabilities
5,190
3,425
7,457
4,976
Net cash provided by (used in) operating
activities
12,781
55,945
81,947
59,323
Cash flows from investing
activities
Purchases of property and equipment
(73,435
)
(37,836
)
(158,008
)
(82,381
)
Purchases of strategic investments
—
(6,000
)
(7,770
)
(12,350
)
Sales of strategic investments
5,151
—
5,151
63,276
Cash paid for acquisitions, net of cash
acquired
—
(19,650
)
(50,254
)
(31,658
)
Purchases of marketable securities
(537,046
)
(821,830
)
(2,042,317
)
(2,732,266
)
Sales of marketable securities
16,451
39,158
107,724
51,917
Maturities of marketable securities
557,579
923,871
2,093,737
1,820,442
Other
(308
)
(12,648
)
(432
)
(18,141
)
Net cash provided by (used in) investing
activities
(31,608
)
65,065
(52,169
)
(941,161
)
Cash flows from financing
activities
Proceeds from issuance of convertible
notes, net of issuance costs
—
—
—
1,483,500
Purchase of capped calls
—
—
—
(177,000
)
Proceeds from the exercise of stock
options
5
217
416
3,871
Payments of debt issuance costs
—
—
—
(3,006
)
Repurchases of Class A non-voting common
stock
—
(500,513
)
—
(500,513
)
Deferred payments for acquisitions
(10,441
)
—
(254,557
)
—
Net cash provided by (used in) financing
activities
(10,436
)
(500,296
)
(254,141
)
806,852
Change in cash, cash equivalents, and
restricted cash
(29,263
)
(379,286
)
(224,363
)
(74,986
)
Cash, cash equivalents, and restricted
cash, beginning of period
1,228,676
2,299,023
1,423,776
1,994,723
Cash, cash equivalents, and restricted
cash, end of period
$
1,199,413
$
1,919,737
$
1,199,413
$
1,919,737
Supplemental disclosures
Cash paid for income taxes, net
$
4,145
$
1,482
$
27,210
$
8,966
Cash paid for interest
$
4,406
$
4,186
$
9,559
$
8,191
SNAP INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
amounts, unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenue
$
1,188,551
$
1,128,476
$
3,244,828
$
3,302,112
Costs and expenses:
Cost of revenue
555,753
466,757
1,492,613
1,334,031
Research and development
494,559
564,258
1,427,334
1,524,858
Sales and marketing
297,251
270,336
846,281
823,596
General and administrative
221,051
262,367
628,266
727,336
Total costs and expenses
1,568,614
1,563,718
4,394,494
4,409,821
Operating loss
(380,063
)
(435,242
)
(1,149,666
)
(1,107,709
)
Interest income
43,839
18,445
124,931
29,899
Interest expense
(5,521
)
(5,425
)
(16,749
)
(16,147
)
Other income (expense), net
(20,662
)
71,961
(7,967
)
(22,486
)
Loss before income taxes
(362,407
)
(350,261
)
(1,049,451
)
(1,116,443
)
Income tax benefit (expense)
(5,849
)
(9,241
)
(24,787
)
(24,750
)
Net loss
$
(368,256
)
$
(359,502
)
$
(1,074,238
)
$
(1,141,193
)
Net loss per share attributable to Class
A, Class B, and Class C common stockholders:
Basic
$
(0.23
)
$
(0.22
)
$
(0.67
)
$
(0.70
)
Diluted
$
(0.23
)
$
(0.22
)
$
(0.67
)
$
(0.70
)
Weighted average shares used in
computation of net loss per share:
Basic
1,625,917
1,608,523
1,603,672
1,619,885
Diluted
1,625,917
1,608,523
1,603,672
1,619,885
SNAP INC.
CONSOLIDATED BALANCE
SHEETS
(in thousands, except par value,
unaudited)
September 30,
2023
December 31,
2022
Assets
Current assets
Cash and cash equivalents
$
1,199,366
$
1,423,121
Marketable securities
2,414,132
2,516,003
Accounts receivable, net of allowance
1,116,511
1,183,092
Prepaid expenses and other current
assets
144,251
134,431
Total current assets
4,874,260
5,256,647
Property and equipment, net
377,320
271,777
Operating lease right-of-use assets
344,681
370,952
Intangible assets, net
183,866
204,480
Goodwill
1,691,542
1,646,120
Other assets
251,236
279,562
Total assets
$
7,722,905
$
8,029,538
Liabilities and Stockholders’
Equity
Current liabilities
Accounts payable
$
128,546
$
181,774
Operating lease liabilities
62,111
46,485
Accrued expenses and other current
liabilities
818,915
987,340
Total current liabilities
1,009,572
1,215,599
Convertible senior notes, net
3,747,677
3,742,520
Operating lease liabilities,
noncurrent
346,508
386,271
Other liabilities
126,127
104,450
Total liabilities
5,229,884
5,448,840
Commitments and contingencies
Stockholders’ equity
Class A non-voting common stock, $0.00001
par value. 3,000,000 shares authorized, 1,434,766 shares issued,
1,384,738 shares outstanding at September 30, 2023, and 3,000,000
shares authorized, 1,371,242 shares issued, 1,319,930 shares
outstanding at December 31, 2022.
14
13
Class B voting common stock, $0.00001 par
value. 700,000 shares authorized, 22,540 shares issued and
outstanding at September 30, 2023, and 700,000 shares authorized,
22,529 shares issued and outstanding at December 31, 2022.
—
—
Class C voting common stock, $0.00001 par
value. 260,888 shares authorized, 231,627 shares issued and
outstanding at September 30, 2023 and December 31, 2022.
2
2
Treasury stock, at cost. 50,028 and 51,312
shares of Class A non-voting common stock at September 30, 2023 and
December 31, 2022, respectively.
(487,982
)
(500,514
)
Additional paid-in capital
14,287,664
13,309,828
Accumulated deficit
(11,288,895
)
(10,214,657
)
Accumulated other comprehensive income
(loss)
(17,782
)
(13,974
)
Total stockholders’ equity
2,493,021
2,580,698
Total liabilities and stockholders’
equity
$
7,722,905
$
8,029,538
SNAP INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(in thousands, unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Free Cash Flow reconciliation:
Net cash provided by (used in) operating
activities
$
12,781
$
55,945
$
81,947
$
59,323
Less:
Purchases of property and equipment
(73,435
)
(37,836
)
(158,008
)
(82,381
)
Free Cash Flow
$
(60,654
)
$
18,109
$
(76,061
)
$
(23,058
)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Adjusted EBITDA reconciliation:
Net loss
$
(368,256
)
$
(359,502
)
$
(1,074,238
)
$
(1,141,193
)
Add (deduct):
Interest income
(43,839
)
(18,445
)
(124,931
)
(29,899
)
Interest expense
5,521
5,425
16,749
16,147
Other (income) expense, net
20,662
(71,961
)
7,967
22,486
Income tax (benefit) expense
5,849
9,241
24,787
24,750
Depreciation and amortization
41,209
34,068
116,117
151,459
Stock-based compensation expense
353,846
312,690
986,720
906,944
Payroll and other tax expense related to
stock-based compensation
6,463
6,561
30,618
39,041
Restructuring charges (1)
18,639
154,563
18,639
154,563
Adjusted EBITDA
$
40,094
$
72,640
$
2,428
$
144,298
(1)
Restructuring charges in the third quarter
of 2023 were composed primarily of cash severance and stock-based
compensation expense. Restructuring charges in the third quarter of
2022 were composed primarily of severance and related charges of
$91.1 million, stock-based compensation expense, lease exit and
related charges, impairment charges, and contract termination
charges. These charges are non-recurring and not reflective of
underlying trends in our business.
Total depreciation and amortization expense by function:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Depreciation and amortization expense:
(1)
Cost of revenue
$
3,184
$
5,548
$
9,580
$
16,121
Research and development
26,252
23,722
75,238
68,207
Sales and marketing
5,466
4,586
16,144
61,039
General and administrative
6,307
2,435
15,155
8,315
Total
$
41,209
$
36,291
$
116,117
$
153,682
(1)
Depreciation and amortization expense for
the three and nine months ended September 30, 2022 includes
restructuring charges.
SNAP INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES (continued)
(in thousands, except per share
amounts, unaudited)
Total stock-based compensation expense by
function:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Stock-based compensation expense: (1)
Cost of revenue
$
2,640
$
2,745
$
6,890
$
8,040
Research and development
234,615
246,783
672,030
651,299
Sales and marketing
72,783
43,098
185,319
133,746
General and administrative
47,895
50,333
126,568
144,128
Total
$
357,933
$
342,959
$
990,807
$
937,213
(1)
Stock-based compensation expense for the
three and nine months ended September 30, 2023 and 2022 includes
restructuring charges.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Non-GAAP net income (loss)
reconciliation:
Net loss
$
(368,256
)
$
(359,502
)
$
(1,074,238
)
$
(1,141,193
)
Amortization of intangible assets
19,134
18,701
55,294
105,340
Stock-based compensation expense
353,846
312,690
986,720
906,944
Payroll and other tax expense related to
stock-based compensation
6,463
6,561
30,618
39,041
Restructuring charges (1)
18,639
154,563
18,639
154,563
Income tax adjustments
(573
)
(954
)
(810
)
(1,519
)
Non-GAAP net income (loss)
$
29,253
$
132,059
$
16,223
$
63,176
Weighted-average common shares -
Diluted
1,625,917
1,608,523
1,603,672
1,619,885
Non-GAAP diluted net income (loss) per
share reconciliation:
Diluted net loss per share
$
(0.23
)
$
(0.22
)
$
(0.67
)
$
(0.70
)
Non-GAAP adjustment to net loss
0.25
0.30
0.68
0.74
Non-GAAP diluted net income (loss) per
share
$
0.02
$
0.08
$
0.01
$
0.04
(1)
Restructuring charges in the third quarter
of 2023 were composed primarily of cash severance and stock-based
compensation expenses. Restructuring charges in the third quarter
of 2022 were composed primarily of severance and related charges of
$91.1 million, stock-based compensation expense, lease exit and
related charges, impairment charges, and contract termination
charges. These charges are non-recurring and not reflective of
underlying trends in our business.
SNAP INC.
SUPPLEMENTAL FINANCIAL
INFORMATION AND BUSINESS METRICS
(dollars and shares in thousands,
except per user amounts, unaudited)
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
(NM = Not Meaningful)
Cash Flows and Shares
Net cash provided by (used in) operating
activities
$
(124,081
)
$
55,945
$
125,291
$
151,102
$
(81,936
)
$
12,781
Net cash provided by (used in) operating
activities - YoY (year-over-year)
23
%
(22
)%
(32
)%
19
%
34
%
(77
)%
Net cash provided by (used in) operating
activities - TTM (trailing twelve months)
$
260,458
$
244,851
$
184,614
$
208,257
$
250,402
$
207,238
Purchases of property and equipment
$
(23,370
)
$
(37,836
)
$
(46,925
)
$
(47,630
)
$
(36,943
)
$
(73,435
)
Purchases of property and equipment -
YoY
60
%
91
%
91
%
(125
)%
(58
)%
(94
)%
Purchases of property and equipment -
TTM
$
(88,946
)
$
(106,946
)
$
(129,306
)
$
(155,761
)
$
(169,334
)
$
(204,933
)
Free Cash Flow
$
(147,451
)
$
18,109
$
78,366
$
103,472
$
(118,879
)
$
(60,654
)
Free Cash Flow - YoY
(27
)%
(65
)%
(51
)%
(3
)%
19
%
(435
)%
Free Cash Flow - TTM
$
171,512
$
137,905
$
55,308
$
52,496
$
81,068
$
2,305
Common shares outstanding
1,644,974
1,605,868
1,574,086
1,595,205
1,616,119
1,638,905
Common shares outstanding - YoY
4
%
—
%
(3
)%
(2
)%
(2
)%
2
%
Shares underlying stock-based awards
92,105
94,772
131,718
128,218
149,065
154,525
Shares underlying stock-based awards -
YoY
(12
)%
2
%
59
%
71
%
62
%
63
%
Total common shares outstanding plus
shares underlying stock-based awards
1,737,079
1,700,640
1,705,804
1,723,423
1,765,184
1,793,430
Total common shares outstanding plus
shares underlying stock-based awards - YoY
3
%
—
%
—
%
1
%
2
%
5
%
Results of Operations
Revenue
$
1,110,909
$
1,128,476
$
1,299,735
$
988,608
$
1,067,669
$
1,188,551
Revenue - YoY
13
%
6
%
0.1
%
(7
)%
(4
)%
5
%
Revenue - TTM
$
4,538,992
$
4,599,997
$
4,601,847
$
4,527,728
$
4,484,488
$
4,544,563
Revenue by region (1)
North America
$
785,681
$
811,602
$
880,310
$
639,896
$
686,829
$
786,154
North America - YoY
12
%
3
%
(6
)%
(16
)%
(13
)%
(3
)%
North America - TTM
$
3,262,936
$
3,287,621
$
3,235,854
$
3,117,489
$
3,018,637
$
2,993,189
Europe
$
170,097
$
161,396
$
218,552
$
157,760
$
182,109
$
200,272
Europe - YoY
12
%
5
%
5
%
(3
)%
7
%
24
%
Europe - TTM
$
694,262
$
702,537
$
712,177
$
707,805
$
719,817
$
758,693
Rest of World
$
155,131
$
155,478
$
200,873
$
190,952
$
198,731
$
202,125
Rest of World - YoY
21
%
22
%
28
%
34
%
28
%
30
%
Rest of World - TTM
$
581,794
$
609,839
$
653,816
$
702,434
$
746,034
$
792,681
Operating loss
$
(400,940
)
$
(435,242
)
$
(287,597
)
$
(365,264
)
$
(404,339
)
$
(380,063
)
Operating loss - YoY
(108
)%
(141
)%
NM
(35
)%
(1
)%
13
%
Operating loss - Margin
(36
)%
(39
)%
(22
)%
(37
)%
(38
)%
(32
)%
Operating loss - TTM
$
(878,418
)
$
(1,132,836
)
$
(1,395,306
)
$
(1,489,043
)
$
(1,492,442
)
$
(1,437,263
)
Net income (loss)
$
(422,067
)
$
(359,502
)
$
(288,460
)
$
(328,674
)
$
(377,308
)
$
(368,256
)
Net income (loss) - YoY
(178
)%
(400
)%
NM
9
%
11
%
(2
)%
Net income (loss) - TTM
$
(831,100
)
$
(1,118,643
)
$
(1,429,653
)
$
(1,398,703
)
$
(1,353,944
)
$
(1,362,698
)
Adjusted EBITDA
$
7,190
$
72,640
$
233,275
$
813
$
(38,479
)
$
40,094
Adjusted EBITDA - YoY
(94
)%
(58
)%
(29
)%
(99
)%
(635
)%
(45
)%
Adjusted EBITDA - Margin (2)
1
%
6
%
18
%
0.1
%
(4
)%
3
%
Adjusted EBITDA - TTM
$
572,650
$
471,091
$
377,573
$
313,918
$
268,249
$
235,703
(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 per user amounts, unaudited)
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Other
DAU (in millions) (1)
347
363
375
383
397
406
DAU - YoY
18
%
19
%
17
%
15
%
14
%
12
%
DAU by region (in millions)
North America
99
100
100
100
101
101
North America - YoY
4
%
4
%
3
%
3
%
2
%
1
%
Europe
86
88
92
93
94
95
Europe - YoY
10
%
11
%
12
%
10
%
9
%
7
%
Rest of World
162
175
183
190
202
211
Rest of World - YoY
35
%
34
%
31
%
27
%
25
%
21
%
ARPU
$
3.20
$
3.11
$
3.47
$
2.58
$
2.69
$
2.93
ARPU - YoY
(4
)%
(11
)%
(15
)%
(19
)%
(16
)%
(6
)%
ARPU by region
North America
$
7.93
$
8.13
$
8.77
$
6.37
$
6.83
$
7.82
North America - YoY
8
%
(1
)%
(9
)%
(18
)%
(14
)%
(4
)%
Europe
$
1.98
$
1.83
$
2.38
$
1.70
$
1.93
$
2.11
Europe - YoY
2
%
(5
)%
(6
)%
(12
)%
(2
)%
15
%
Rest of World
$
0.96
$
0.89
$
1.10
$
1.00
$
0.98
$
0.96
Rest of World - YoY
(11
)%
(9
)%
(2
)%
6
%
3
%
8
%
Employees (full-time; excludes part-time,
contractors, and temporary personnel)
6,446
5,706
5,288
5,201
5,286
5,367
Employees - YoY
38
%
10
%
(7
)%
(15
)%
(18
)%
(6
)%
Depreciation and amortization
expense
Cost of revenue
$
5,061
$
5,548
$
8,114
$
3,226
$
3,170
$
3,184
Research and development
22,362
23,722
29,834
24,139
24,847
26,252
Sales and marketing
49,061
4,586
6,130
5,073
5,605
5,466
General and administrative
2,807
2,435
4,413
2,782
6,066
6,307
Total
$
79,291
$
36,291
$
48,491
$
35,220
$
39,688
$
41,209
Depreciation and amortization expense -
YoY
180
%
12
%
39
%
(8
)%
(50
)%
14
%
Stock-based compensation
expense
Cost of revenue
$
2,849
$
2,745
$
4,248
$
1,885
$
2,365
$
2,640
Research and development
221,650
246,783
319,447
219,850
217,565
234,615
Sales and marketing
48,577
43,098
69,346
54,939
57,597
72,783
General and administrative
45,734
50,333
57,533
38,257
40,416
47,895
Total
$
318,810
$
342,959
$
450,574
$
314,931
$
317,943
$
357,933
Stock-based compensation expense - YoY
24
%
14
%
51
%
14
%
—
%
4
%
(1)
Numbers may not foot due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231024228852/en/
Investors and Analysts: ir@snap.com Press: press@snap.com
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