SNAP
$23.82
Snap
($.48)
(1.98%)
Earnings Details
2nd Quarter June 2020
Tuesday, July 21, 2020 4:10:00 PM
Tweet Share Watch
Summary

Snap Misses

Snap (SNAP) reported a 2nd Quarter June 2020 loss of $0.09 per share on revenue of $454.2 million. The consensus estimate was a loss of $0.09 per share on revenue of $418.6 million. The Earnings Whisper number was for a loss of $0.07 per share. Revenue grew 17.0% on a year-over-year basis.

Results
Reported Earnings
($0.09)
Earnings Whisper
($0.07)
Consensus Estimate
($0.09)
Reported Revenue
$454.2 Mil
Revenue Estimate
$418.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Snap Inc. Announces Second Quarter 2020 Financial Results

Daily Active Users increased 17% year-over-year to 238 million

Second quarter revenue increased 17% year-over-year to $454 million

Second quarter operating cash flow improved 31% year-over-year to $(67) million

SANTA MONICA, Calif.--(BUSINESS WIRE)--Snap Inc. (NYSE: SNAP) today announced financial results for the quarter ended June 30, 2020.

Financial Highlights

  • Operating cash flow improved by $29 million to $(67) million in Q2 2020, compared to the prior year.
  • Free Cash Flow improved by $21 million to $(82) million in Q2 2020, compared to the prior year.
  • Common shares outstanding plus shares underlying stock-based awards totaled 1,616 million at June 30, 2020, compared to 1,553 million one year ago.
  • Revenue increased 17% to $454 million in Q2 2020, compared to the prior year.
  • Net loss was $(326) million in Q2 2020, compared to $(255) million in the prior year.
  • Adjusted EBITDA was $(96) million in Q2 2020, compared to $(79) million in the prior year.

“We continued to grow our community and business in a challenging and uncertain environment,” said Evan Spiegel, CEO. “I am proud of our team for innovating on new experiences for our community and driving value for our partners, demonstrating the importance of our service in people's lives. We are grateful that the resilience of our business has allowed us to remain focused on our future growth and opportunity.”

 

Three Months Ended June 30,

 

 

Percent

 

 

Six Months Ended June 30,

 

 

Percent

 

 

2020

 

 

2019

 

 

Change

 

 

2020

 

 

2019

 

 

Change

 

(Unaudited)

(in thousands, except per share amounts)

 

Cash used in operating activities

$

(66,554

)

 

$

(95,789

)

 

 

(31

)%

 

$

(60,271

)

 

$

(161,967

)

 

 

(63

)%

Free Cash Flow

$

(82,321

)

 

$

(103,422

)

 

 

20

%

 

$

(86,929

)

 

$

(181,414

)

 

 

52

%

Common shares outstanding plus shares underlying stock-based awards

 

1,616,146

 

 

 

1,552,734

 

 

 

4

%

 

 

1,616,146

 

 

 

1,552,734

 

 

 

4

%

Operating loss

$

(310,608

)

 

$

(304,818

)

 

 

2

%

 

$

(596,972

)

 

$

(620,879

)

 

 

(4

)%

Revenue

$

454,158

 

 

$

388,021

 

 

 

17

%

 

$

916,636

 

 

$

708,447

 

 

 

29

%

Net loss

$

(325,951

)

 

$

(255,174

)

 

 

28

%

 

$

(631,887

)

 

$

(565,581

)

 

 

12

%

Adjusted EBITDA

$

(95,570

)

 

$

(78,713

)

 

 

(21

)%

 

$

(176,807

)

 

$

(202,162

)

 

 

13

%

Diluted net loss per share attributable to common stockholders

$

(0.23

)

 

$

(0.19

)

 

 

20

%

 

$

(0.44

)

 

$

(0.42

)

 

 

5

%

Non-GAAP diluted net loss per share

$

(0.09

)

 

$

(0.06

)

 

 

42

%

 

$

(0.17

)

 

$

(0.16

)

 

 

5

%

Q2 2020 Summary & Key Highlights

Daily Active Users grew by 17% year-over-year and we saw increased engagement across key metrics:

  • DAUs were 238 million in Q2 2020, an increase of 35 million or 17% year-over-year.
  • DAUs increased sequentially and year-over-year in each of North America, Europe, and Rest of World.
  • DAUs increased sequentially and year-over-year on each of iOS and Android platforms.
  • On average, Snapchatters opened Snapchat over 30 times every day in Q2 2020.

We continue to invest in our Discover platform as a destination for content that entertains and informs:

  • The daily average number of Snapchatters watching Shows increased by over 45% year-over-year in Q2 2020.
  • The daily average number of Snapchatters over the age of 35 engaging with Discover content increased by over 40% year-over-year in Q2 2020.
  • We launched Happening Now, a dedicated feed on Discover providing real-time, curated news from media partners such as The Washington Post, ESPN, and BuzzFeed.
  • We announced expanded multi-year content partnerships with Disney, ESPN, NBC, ViacomCBS, the NBA, and the NFL.
  • Digital native companies Wave and Barcroft Studios, top creators of sports and lifestyle content, now reach average monthly audiences of more than 50 million Snapchatters.
  • We’ve expanded our international programming with Channel 4 in the United Kingdom, Le Figaro in France, and Rotana, who now reaches an average of nearly 10 million Snapchatters in the Middle East each month.

We continue to invest in our camera and augmented reality platforms:

  • On average, over 180 million Snapchatters engaged with augmented reality daily in Q2 2020.
  • We’ve added new camera partners, such as PlantSnap, Dog Scanner, and Nutrition Scanner to provide more experiences for our community.
  • We announced Voice Scan, which allows Snapchatters to activate AR Lenses with their voice.
  • We announced Local Lenses, which enable shared and persistent AR experiences in much larger areas around the world.
  • We launched music Lenses in Lens Explorer, a new category of Lenses that enable Snapchatters to add songs to their Lenses.
  • We launched Dynamic Lenses, which allow developers to bring real-time information from their app into Snapchat Lenses.

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

  • We introduced Brand Profiles, which offer a permanent home for brands on Snapchat, and Snapchatters can currently subscribe to some of the world’s largest brands, including Dior, Target, and Universal Pictures.
  • We introduced First Commercial, which gives advertisers a way to reserve the initial Commercial a Snapchatter sees that day in their first Snapchat show session.
  • To ensure advertisers can easily reach different audiences in Discover, we launched content bundles in Snap Select that allow brands to align their message with popular verticals like ‘Sports’, ‘Entertainment’, and ‘News’.
  • We have enabled app and web attribution for Commercials to help advertisers understand the impact that video on Snapchat has on any business.
  • We launched Snap Focus, an online learning portal where advertisers can learn more about Snapchat’s advertising solutions.

We continue to innovate to better serve our large and engaged community:

  • We introduced Snap Minis, bite-sized utilities made to be shared between friends and integrated into conversations. Our most recent Mini partners include Headspace, Atom Tickets, and Tembo.
  • We launched Action Bar, making it easier to navigate across our platform features in Snapchat with just one tap.
  • We improved Snap Map, which already reaches over 200 million Snapchatters every month, by launching Places, which features Stories, hours, reviews and delivery options for local businesses.
  • More than 800 apps have integrated with Snap Kit, and nearly 150 million Snapchatters are engaging with these integrations every month.
  • Since launching in April 2019, more than 100 million Snapchatters have played Snap Games.

We added new tools and capabilities to support our developer community:

  • We launched Camera Kit for developers and brands to leverage the best of Snapchat’s AR features on their own app.
  • We launched Bitmoji for Games, which allows game developers to personalize the player experience by putting players and friends directly into their games.
  • We launched SnapML, which enables our Lens creator community to bring their own machine learning models directly into Lens Studio to power their Lenses.
  • We partnered with Google’s new Depth API for Android devices to launch several depth-enabled Lenses and Lens Studio templates, enabling Lens creators to make Lenses using Google’s new technology.
  • We launched Material Editor, a visual programming tool for making custom 3D effects in Lens Studio.

Financial Guidance

Given the uncertainties related to the ongoing COVID-19 pandemic and the rapidly shifting macro conditions, we are not providing our expectations for revenue or Adjusted EBITDA for the third quarter of 2020.

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, and the impact of COVID-19 on our business and the economy as a whole, 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 the ongoing COVID-19 pandemic 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 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 succeed in existing and new market segments; 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 most recent quarterly report on Form 10-Q for the quarter ended March 31, 2020 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 June 30, 2020 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 the COVID-19 pandemic, 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 June 30,

 

 

Six Months Ended June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(325,951

)

 

$

(255,174

)

 

$

(631,887

)

 

$

(565,581

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

20,925

 

 

 

22,660

 

 

 

42,129

 

 

 

45,979

 

Stock-based compensation

 

186,171

 

 

 

195,574

 

 

 

358,220

 

 

 

358,130

 

Deferred income taxes

 

(2,118

)

 

 

291

 

 

 

(2,512

)

 

 

25

 

Gain on divestiture

 

 

 

 

(39,883

)

 

 

 

 

 

(39,883

)

Amortization of debt discount and issuance costs

 

20,412

 

 

 

 

 

 

31,975

 

 

 

 

Other

 

(2,307

)

 

 

(1,399

)

 

 

8,117

 

 

 

(3,316

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net of allowance

 

15,654

 

 

 

(39,751

)

 

 

108,546

 

 

 

32,119

 

Prepaid expenses and other current assets

 

4,123

 

 

 

(4,761

)

 

 

(8,744

)

 

 

(4,490

)

Operating lease right-of-use assets

 

9,537

 

 

 

11,809

 

 

 

18,253

 

 

 

21,621

 

Other assets

 

108

 

 

 

2,769

 

 

 

(1,047

)

 

 

2,401

 

Accounts payable

 

2,279

 

 

 

21,009

 

 

 

8,013

 

 

 

24,099

 

Accrued expenses and other current liabilities

 

14,863

 

 

 

7,735

 

 

 

32,773

 

 

 

(6,588

)

Operating lease liabilities

 

(10,985

)

 

 

(16,781

)

 

 

(24,979

)

 

 

(27,251

)

Other liabilities

 

735

 

 

 

113

 

 

 

872

 

 

 

768

 

Net cash used in operating activities

 

(66,554

)

 

 

(95,789

)

 

 

(60,271

)

 

 

(161,967

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

(15,767

)

 

 

(7,633

)

 

 

(26,658

)

 

 

(19,447

)

Proceeds from divestiture, net

 

 

 

 

73,796

 

 

 

 

 

 

73,796

 

Non-marketable investments

 

(56,341

)

 

 

(450

)

 

 

(91,841

)

 

 

(2,700

)

Cash paid for acquisitions, net of cash acquired

 

(20,204

)

 

 

 

 

 

(20,204

)

 

 

 

Purchases of marketable securities

 

(875,873

)

 

 

(283,520

)

 

 

(1,428,548

)

 

 

(809,040

)

Sales of marketable securities

 

 

 

 

77,489

 

 

 

217,958

 

 

 

77,489

 

Maturities of marketable securities

 

476,561

 

 

 

324,033

 

 

 

1,229,246

 

 

 

782,660

 

Other

 

(500

)

 

 

1,000

 

 

 

(500

)

 

 

1,029

 

Net cash provided by (used in) investing activities

 

(492,124

)

 

 

184,715

 

 

 

(120,547

)

 

 

103,787

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of convertible notes, net of issuance costs

 

988,582

 

 

 

 

 

 

988,582

 

 

 

 

Purchase of capped calls

 

(100,000

)

 

 

 

 

 

(100,000

)

 

 

 

Proceeds from the exercise of stock options

 

20,477

 

 

 

1,342

 

 

 

23,607

 

 

 

6,938

 

Net cash provided by financing activities

 

909,059

 

 

 

1,342

 

 

 

912,189

 

 

 

6,938

 

Change in cash, cash equivalents, and restricted cash

 

350,381

 

 

 

90,268

 

 

 

731,371

 

 

 

(51,242

)

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

 

902,250

 

 

 

247,464

 

 

 

521,260

 

 

 

388,974

 

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

$

1,252,631

 

 

$

337,732

 

 

$

1,252,631

 

 

$

337,732

 

Supplemental disclosures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for income taxes, net

$

562

 

 

$

(399

)

 

$

1,370

 

 

$

(79

)

Cash paid for interest

$

366

 

 

$

438

 

 

 

5,265

 

 

 

796

 

SNAP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts, unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

$

454,158

 

 

$

388,021

 

 

$

916,636

 

 

$

708,447

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

250,454

 

 

 

215,492

 

 

 

503,864

 

 

 

419,259

 

Research and development

 

260,863

 

 

 

236,199

 

 

 

499,476

 

 

 

452,384

 

Sales and marketing

 

132,118

 

 

 

111,504

 

 

 

254,323

 

 

 

209,386

 

General and administrative

 

121,331

 

 

 

129,644

 

 

 

255,945

 

 

 

248,297

 

Total costs and expenses

 

764,766

 

 

 

692,839

 

 

 

1,513,608

 

 

 

1,329,326

 

Operating loss

 

(310,608

)

 

 

(304,818

)

 

 

(596,972

)

 

 

(620,879

)

Interest income

 

4,768

 

 

 

7,446

 

 

 

13,357

 

 

 

15,262

 

Interest expense

 

(24,727

)

 

 

(809

)

 

 

(39,840

)

 

 

(1,565

)

Other income (expense), net

 

3,575

 

 

 

44,085

 

 

 

(8,814

)

 

 

42,958

 

Loss before income taxes

 

(326,992

)

 

 

(254,096

)

 

 

(632,269

)

 

 

(564,224

)

Income tax benefit (expense)

 

1,041

 

 

 

(1,078

)

 

 

382

 

 

 

(1,357

)

Net loss

$

(325,951

)

 

$

(255,174

)

 

$

(631,887

)

 

$

(565,581

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(0.23

)

 

$

(0.19

)

 

$

(0.44

)

 

$

(0.42

)

Diluted

$

(0.23

)

 

$

(0.19

)

 

$

(0.44

)

 

$

(0.42

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

1,447,022

 

 

 

1,362,544

 

 

 

1,436,085

 

 

 

1,350,763

 

Diluted

 

1,447,022

 

 

 

1,362,544

 

 

 

1,436,085

 

 

 

1,350,763

 

SNAP INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

 

 

June 30,

2020

 

 

December 31,

2019

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

1,251,721

 

 

$

520,317

 

Marketable securities

 

1,577,848

 

 

 

1,592,488

 

Accounts receivable, net of allowance

 

379,046

 

 

 

492,194

 

Prepaid expenses and other current assets

 

49,734

 

 

 

38,987

 

Total current assets

 

3,258,349

 

 

 

2,643,986

 

Property and equipment, net

 

175,125

 

 

 

173,667

 

Operating lease right-of-use assets

 

259,564

 

 

 

275,447

 

Intangible assets, net

 

87,285

 

 

 

92,121

 

Goodwill

 

775,185

 

 

 

761,153

 

Other assets

 

148,521

 

 

 

65,550

 

Total assets

$

4,704,029

 

 

$

4,011,924

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable

$

58,618

 

 

$

46,886

 

Operating lease liabilities

 

42,755

 

 

 

42,179

 

Accrued expenses and other current liabilities

 

442,239

 

 

 

410,610

 

Total current liabilities

 

543,612

 

 

 

499,675

 

Convertible senior notes, net

 

1,625,743

 

 

 

891,776

 

Operating lease liabilities, noncurrent

 

278,073

 

 

 

303,178

 

Other liabilities

 

61,936

 

 

 

57,382

 

Total liabilities

 

2,509,364

 

 

 

1,752,011

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

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

authorized, 1,160,127 shares issued and outstanding at December 31, 2019, and

3,000,000 shares authorized, 1,204,957 shares issued and outstanding

at June 30, 2020.

 

12

 

 

 

12

 

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

24,522 shares issued and outstanding at December 31, 2019, and 700,000 shares

authorized, 24,215 shares issued and outstanding at June 30, 2020.

 

 

 

 

 

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

231,147 shares issued and outstanding at December 31, 2019, and 260,888 shares

authorized, 234,448 shares issued and outstanding at June 30, 2020.

 

2

 

 

 

2

 

Additional paid-in capital

 

9,773,857

 

 

 

9,205,256

 

Accumulated other comprehensive income (loss)

 

(609

)

 

 

573

 

Accumulated deficit

 

(7,578,597

)

 

 

(6,945,930

)

Total stockholders’ equity

 

2,194,665

 

 

 

2,259,913

 

Total liabilities and stockholders’ equity

$

4,704,029

 

 

$

4,011,924

 

SNAP INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands, unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Free Cash Flow reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

$

(66,554

)

 

$

(95,789

)

 

$

(60,271

)

 

$

(161,967

)

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

(15,767

)

 

 

(7,633

)

 

 

(26,658

)

 

 

(19,447

)

Free Cash Flow

$

(82,321

)

 

$

(103,422

)

 

$

(86,929

)

 

$

(181,414

)

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Adjusted EBITDA reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(325,951

)

 

$

(255,174

)

 

$

(631,887

)

 

$

(565,581

)

Add (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

(4,768

)

 

 

(7,446

)

 

 

(13,357

)

 

 

(15,262

)

Interest expense

 

24,727

 

 

 

809

 

 

 

39,840

 

 

 

1,565

 

Other (income) expense, net

 

(3,575

)

 

 

(44,085

)

 

 

8,814

 

 

 

(42,958

)

Income tax (benefit) expense

 

(1,041

)

 

 

1,078

 

 

 

(382

)

 

 

1,357

 

Depreciation and amortization

 

20,925

 

 

 

22,660

 

 

 

42,129

 

 

 

45,979

 

Stock-based compensation expense

 

186,171

 

 

 

195,574

 

 

 

358,220

 

 

 

358,130

 

Payroll tax expense related to stock-based compensation

 

7,942

 

 

 

7,871

 

 

 

19,816

 

 

 

14,608

 

Adjusted EBITDA

$

(95,570

)

 

$

(78,713

)

 

$

(176,807

)

 

$

(202,162

)

Total depreciation and amortization expense by function:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Depreciation and amortization expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

5,532

 

 

$

5,642

 

 

$

11,057

 

 

$

11,788

 

Research and development

 

8,463

 

 

 

7,188

 

 

 

17,378

 

 

 

15,838

 

Sales and marketing

 

3,381

 

 

 

3,045

 

 

 

6,547

 

 

 

7,060

 

General and administrative

 

3,549

 

 

 

6,785

 

 

 

7,147

 

 

 

11,293

 

Total

$

20,925

 

 

$

22,660

 

 

$

42,129

 

 

$

45,979

 

Total stock-based compensation expense by function:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Stock-based compensation expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

2,066

 

 

$

1,786

 

 

$

3,848

 

 

$

3,635

 

Research and development

 

127,516

 

 

 

132,610

 

 

 

245,833

 

 

 

244,852

 

Sales and marketing

 

27,107

 

 

 

26,474

 

 

 

51,913

 

 

 

44,234

 

General and administrative

 

29,482

 

 

 

34,704

 

 

 

56,626

 

 

 

65,409

 

Total

$

186,171

 

 

$

195,574

 

 

$

358,220

 

 

$

358,130

 

SNAP INC.

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

(in thousands, except per share amounts, unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Non-GAAP net loss reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(325,951

)

 

$

(255,174

)

 

$

(631,887

)

 

$

(565,581

)

Amortization of intangible assets

 

7,378

 

 

 

9,048

 

 

 

15,358

 

 

 

19,417

 

Stock-based compensation expense

 

186,171

 

 

 

195,574

 

 

 

358,220

 

 

 

358,130

 

Payroll tax expense related to stock-based compensation

 

7,942

 

 

 

7,871

 

 

 

19,816

 

 

 

14,608

 

Gain on divestiture

 

 

 

 

(39,883

)

 

 

 

 

 

(39,883

)

Income tax adjustments

 

86

 

 

 

376

 

 

 

27

 

 

 

262

 

Non-GAAP net loss

$

(124,374

)

 

$

(82,188

)

 

$

(238,466

)

 

$

(213,047

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares - Diluted

 

1,447,022

 

 

 

1,362,544

 

 

 

1,436,085

 

 

 

1,350,763

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP diluted net loss per share reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net loss per share

$

(0.23

)

 

$

(0.19

)

 

$

(0.44

)

 

$

(0.42

)

Non-GAAP adjustment to net loss

 

0.14

 

 

 

0.13

 

 

 

0.27

 

 

 

0.26

 

Non-GAAP diluted net loss per share

$

(0.09

)

 

$

(0.06

)

 

$

(0.17

)

 

$

(0.16

)

SNAP INC.

SUPPLEMENTAL FINANCIAL INFORMATION AND BUSINESS METRICS

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

 

 

Q1 2019

 

 

Q2 2019

 

 

 

 

Q3 2019

 

 

Q4 2019

 

 

Q1 2020

 

 

Q2 2020

 

Cash Flows and Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

$

(66,178

)

 

$

(95,789

)

 

 

 

$

(76,149

)

 

$

(66,842

)

 

$

6,283

 

 

$

(66,554

)

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

 

71

%

 

 

52

%

 

 

 

 

43

%

 

 

(47

)%

 

 

109

%

 

 

31

%

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

$

(524,121

)

 

$

(420,564

)

 

 

 

$

(364,170

)

 

$

(304,958

)

 

$

(232,497

)

 

$

(203,262

)

Purchases of property and equipment

$

(11,814

)

 

$

(7,633

)

 

 

 

$

(7,938

)

 

$

(9,093

)

 

$

(10,891

)

 

$

(15,767

)

Purchases of property and equipment - YoY

 

(67

)%

 

 

(78

)%

 

 

 

 

(70

)%

 

 

(60

)%

 

 

(8

)%

 

 

107

%

Purchases of property and equipment - TTM

$

(95,741

)

 

$

(68,473

)

 

 

 

$

(50,126

)

 

$

(36,478

)

 

$

(35,555

)

 

$

(43,689

)

Free Cash Flow

$

(77,992

)

 

$

(103,422

)

 

 

 

$

(84,087

)

 

$

(75,935

)

 

$

(4,608

)

 

$

(82,321

)

Free Cash Flow - YoY

 

71

%

 

 

56

%

 

 

 

 

47

%

 

 

49

%

 

 

94

%

 

 

20

%

Free Cash Flow - TTM

$

(619,862

)

 

$

(489,037

)

 

 

 

$

(414,296

)

 

$

(341,436

)

 

$

(268,052

)

 

$

(246,951

)

Common shares outstanding

 

1,334,931

 

 

 

1,372,149

 

 

 

 

 

1,389,395

 

 

 

1,415,796

 

 

 

1,439,589

 

 

 

1,463,620

 

Common shares outstanding - YoY

 

6

%

 

 

8

%

 

 

 

 

8

%

 

 

7

%

 

 

8

%

 

 

7

%

Shares underlying stock-based awards

 

209,055

 

 

 

180,585

 

 

 

 

 

175,813

 

 

 

160,239

 

 

 

149,004

 

 

 

152,526

 

Shares underlying stock-based awards - YoY

 

3

%

 

 

(12

)%

 

 

 

 

(5

)%

 

 

(15

)%

 

 

(29

)%

 

 

(16

)%

Total common shares outstanding plus shares underlying stock-based awards

 

1,543,986

 

 

 

1,552,734

 

 

 

 

 

1,565,208

 

 

 

1,576,035

 

 

 

1,588,593

 

 

 

1,616,146

 

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

 

6

%

 

 

5

%

 

 

 

 

6

%

 

 

5

%

 

 

3

%

 

 

4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Results of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

320,426

 

 

$

388,021

 

 

 

 

$

446,199

 

 

$

560,889

 

 

$

462,477

 

 

$

454,158

 

Revenue - YoY

 

39

%

 

 

48

%

 

 

 

 

50

%

 

 

44

%

 

 

44

%

 

 

17

%

Revenue - TTM

$

1,270,206

 

 

$

1,395,964

 

 

 

 

$

1,544,468

 

 

$

1,715,535

 

 

$

1,857,586

 

 

$

1,923,723

 

Revenue by region(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

$

225,705

 

 

$

260,017

 

 

 

 

$

316,028

 

 

$

382,029

 

 

$

315,650

 

 

$

306,740

 

North America - YoY

 

32

%

 

 

47

%

 

 

 

 

52

%

 

 

42

%

 

 

40

%

 

 

18

%

North America - TTM

$

879,450

 

 

$

962,057

 

 

 

 

$

1,070,608

 

 

$

1,183,779

 

 

$

1,273,724

 

 

$

1,320,447

 

Europe

$

47,448

 

 

$

60,633

 

 

 

 

$

68,553

 

 

$

91,873

 

 

$

76,498

 

 

$

78,635

 

Europe - YoY

 

45

%

 

 

51

%

 

 

 

 

36

%

 

 

47

%

 

 

61

%

 

 

30

%

Europe - TTM

$

200,637

 

 

$

221,029

 

 

 

 

$

239,104

 

 

$

268,507

 

 

$

297,557

 

 

$

315,559

 

Rest of World

$

47,273

 

 

$

67,374

 

 

 

 

$

61,618

 

 

$

86,987

 

 

$

70,329

 

 

$

68,783

 

Rest of World - YoY

 

72

%

 

 

51

%

 

 

 

 

55

%

 

 

49

%

 

 

49

%

 

 

2

%

Rest of World - TTM

$

190,120

 

 

$

212,882

 

 

 

 

$

234,760

 

 

$

263,252

 

 

$

286,308

 

 

$

287,717

 

Operating loss

$

(316,061

)

 

$

(304,818

)

 

 

 

$

(228,853

)

 

$

(253,596

)

 

$

(286,364

)

 

$

(310,608

)

Operating loss - YoY

 

(19

)%

 

 

(15

)%

 

 

 

 

(29

)%

 

 

30

%

 

 

(9

)%

 

 

2

%

Operating loss - Margin

 

(99

)%

 

 

(79

)%

 

 

 

 

(51

)%

 

 

(45

)%

 

 

(62

)%

 

 

(68

)%

Operating loss - TTM

$

(1,191,981

)

 

$

(1,138,957

)

 

 

 

$

(1,044,439

)

 

$

(1,103,328

)

 

$

(1,073,631

)

 

$

(1,079,421

)

Net loss

$

(310,407

)

 

$

(255,174

)

 

 

 

$

(227,375

)

 

$

(240,704

)

 

$

(305,936

)

 

$

(325,951

)

Net loss - YoY

 

(20

)%

 

 

(28

)%

 

 

 

 

(30

)%

 

 

26

%

 

 

(1

)%

 

 

28

%

Net loss - TTM

$

(1,180,533

)

 

$

(1,082,397

)

 

 

 

$

(984,624

)

 

$

(1,033,660

)

 

$

(1,029,189

)

 

$

(1,099,966

)

Adjusted EBITDA

 

(123,449

)

 

 

(78,713

)

 

 

 

 

(42,375

)

 

 

42,307

 

 

 

(81,237

)

 

 

(95,570

)

Adjusted EBITDA - YoY

 

43

%

 

 

53

%

 

 

 

 

69

%

 

 

184

%

 

 

34

%

 

 

(21

)%

Adjusted EBITDA - Margin(2)

 

(39

)%

 

 

(20

)%

 

 

 

 

(9

)%

 

 

8

%

 

 

(18

)%

 

 

(21

)%

Adjusted EBITDA - TTM

$

(481,221

)

 

$

(390,902

)

 

 

 

$

(294,900

)

 

$

(202,230

)

 

$

(160,018

)

 

$

(176,875

)

(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)

 

 

Q1 2019

 

 

Q2 2019

 

 

Q3 2019

 

 

Q4 2019

 

 

Q1 2020

 

 

Q2 2020

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DAU (in millions)

 

190

 

 

 

203

 

 

 

210

 

 

 

218

 

 

 

229

 

 

 

238

 

DAU - YoY

 

(0

)%

 

 

8

%

 

 

13

%

 

 

17

%

 

 

20

%

 

 

17

%

DAU by region (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

80

 

 

 

83

 

 

 

84

 

 

 

86

 

 

 

88

 

 

 

90

 

North America - YoY

 

(1

)%

 

 

3

%

 

 

6

%

 

 

9

%

 

 

10

%

 

 

9

%

Europe

 

61

 

 

 

64

 

 

 

65

 

 

 

67

 

 

 

70

 

 

 

71

 

Europe - YoY

 

(2

)%

 

 

5

%

 

 

9

%

 

 

12

%

 

 

14

%

 

 

12

%

Rest of World

 

49

 

 

 

56

 

 

 

61

 

 

 

64

 

 

 

71

 

 

 

77

 

Rest of World - YoY

 

2

%

 

 

21

%

 

 

28

%

 

 

36

%

 

 

45

%

 

 

37

%

ARPU

$

1.68

 

 

$

1.91

 

 

$

2.12

 

 

$

2.58

 

 

$

2.02

 

 

$

1.91

 

ARPU - YoY

 

39

%

 

 

37

%

 

 

33

%

 

 

23

%

 

 

20

%

 

 

ARPU by region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

$

2.81

 

 

$

3.14

 

 

$

3.75

 

 

$

4.42

 

 

$

3.57

 

 

$

3.40

 

North America - YoY

 

34

%

 

 

42

%

 

 

43

%

 

 

31

%

 

 

27

%

 

 

8

%

Europe

$

0.77

 

 

$

0.95

 

 

$

1.05

 

 

$

1.37

 

 

$

1.09

 

 

$

1.10

 

Europe - YoY

 

47

%

 

 

43

%

 

 

24

%

 

 

31

%

 

 

41

%

 

 

16

%

Rest of World

$

0.97

 

 

$

1.20

 

 

$

1.01

 

 

$

1.35

 

 

$

1.00

 

 

$

0.89

 

Rest of World - YoY

 

68

%

 

 

25

%

 

 

21

%

 

 

9

%

 

 

3

%

 

 

(26

)%

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

 

2,818

 

 

 

2,734

 

 

 

2,908

 

 

 

3,195

 

 

 

3,427

 

 

 

3,550

 

Employees - YoY

 

(6

)%

 

 

(5

)%

 

 

0

%

 

 

11

%

 

 

22

%

 

 

30

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

6,146

 

 

$

5,642

 

 

$

4,580

 

 

$

4,903

 

 

$

5,525

 

 

$

5,532

 

Research and development

 

8,650

 

 

 

7,188

 

 

 

8,632

 

 

 

8,738

 

 

 

8,915

 

 

 

8,463

 

Sales and marketing

 

4,015

 

 

 

3,045

 

 

 

3,109

 

 

 

3,087

 

 

 

3,166

 

 

 

3,381

 

General and administrative

 

4,508

 

 

 

6,785

 

 

 

4,325

 

 

 

3,892

 

 

 

3,598

 

 

 

3,549

 

Total

$

23,319

 

 

$

22,660

 

 

$

20,646

 

 

$

20,620

 

 

$

21,204

 

 

$

20,925

 

Depreciation and amortization expense - YoY

 

8

%

 

 

1

%

 

 

(17

)%

 

 

(9

)%

 

 

(9

)%

 

 

(8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

1,849

 

 

$

1,786

 

 

$

1,332

 

 

$

1,398

 

 

$

1,782

 

 

$

2,066

 

Research and development

 

112,242

 

 

 

132,610

 

 

 

108,176

 

 

 

111,611

 

 

 

118,317

 

 

 

127,516

 

Sales and marketing

 

17,760

 

 

 

26,474

 

 

 

23,333

 

 

 

25,788

 

 

 

24,806

 

 

 

27,107

 

General and administrative

 

30,705

 

 

 

34,704

 

 

 

28,387

 

 

 

27,858

 

 

 

27,144

 

 

 

29,482

 

Total

$

162,556

 

 

$

195,574

 

 

$

161,228

 

 

$

166,655

 

 

$

172,049

 

 

$

186,171

 

Stock-based compensation expense - YoY

 

22

%

 

 

25

%

 

 

27

%

 

 

37

%

 

 

6

%

 

 

(5

)%

 

Investors and Analysts:
ir@snap.com

Press:
press@snap.com

Source: Snap Inc.