Business Wire | Oct 21, 2021 04:10PM EDT

Snap Inc. Announces Third Quarter 2021 Financial Results

Oct. 21, 2021

SANTA MONICA, Calif.--(BUSINESS WIRE)--Oct. 21, 2021--Snap Inc. (NYSE: SNAP) today announced financial results for the quarter ended September 30, 2021.

Financial Highlights

* Revenue increased 57% to $1,067 million in Q3 2021, compared to the prior year. * Net loss improved 64% to $(72) million in Q3 2021, compared to the prior year. * Adjusted EBITDA improved 209% to $174 million in Q3 2021, compared to the prior year. * Operating cash flow was $72 million in Q3 2021, compared to $(55) million in the prior year. * Free Cash Flow was $52 million in Q3 2021, compared to $(70) million in the prior year. * Common shares outstanding plus shares underlying stock-based awards totaled 1,698 million at September 30, 2021, compared to 1,624 million one year ago.

"Snap celebrated its 10th anniversary this quarter, and we are excited about the long-term opportunity and potential for our business, as we grew our community to 306 million daily active users, and grew our revenue 57% year-over-year to reach $1.067 billion for the quarter," said Evan Spiegel, CEO. "We're now operating at the scale necessary to navigate significant headwinds, including changes to the iOS platform that impact the way advertising is targeted, measured, and optimized, as well as global supply chain issues and labor shortages impacting our partners. We will continue to focus on delivering strong results for our advertising partners and innovating to expand the capabilities of our platform and better serve our community."

Three Months Ended Percent Nine Months Ended September Percent September 30, 30,

2021 2020 Change 2021 2020 Change

(Unaudited) (in thousands, except per share amounts)

Revenue $ 1,067,471 $ 678,668 57 % $ 2,819,163 $ 1,595,304 77 %

Operating $ (180,824 ) $ (167,864 ) (8 ) $ (676,942 ) $ (764,836 ) 11 %loss %

Net loss $ (71,959 ) $ (199,853 ) 64 % $ (510,505 ) $ (831,740 ) 39 %

Adjusted $ 174,199 $ 56,361 209 % $ 289,893 $ (120,446 ) 341 %EBITDA^(1)

Cashprovided by(used in) $ 71,552 $ (54,828 ) 231 % $ 107,352 $ (115,099 ) 193 %operatingactivities

Free Cash $ 51,716 $ (69,555 ) 174 % $ 62,042 $ (156,484 ) 140 %Flow^(2)

Diluted netloss pershare $ (0.05 ) $ (0.14 ) 67 % $ (0.33 ) $ (0.58 ) 43 %attributableto commonstockholders

Non-GAAPdiluted netincome $ 0.17 $ 0.01 2,089 % $ 0.27 $ (0.16 ) 271 %(loss) pershare^(3)

Commonsharesoutstandingplus shares 1,697,879 1,623,630 5 % 1,697,879 1,623,630 5 %underlyingstock-basedawards

* See page 10 for reconciliation of net loss to Adjusted EBITDA. * See page 10 for reconciliation of cash provided by (used in) operating activities to Free Cash Flow. * See page 11 for reconciliation of GAAP diluted net loss per share to non-GAAP diluted net income (loss) per share. Q3 2021 Summary & Key Highlights

The Snapchat community is active, engaged, and growing:

* DAUs were 306 million in Q3 2021, an increase of 57 million, or 23%, year-over-year. * Year-over-year growth in DAUs has exceeded 20% for four consecutive quarters.

We invested and innovated in our camera and augmented reality platforms:

* We released the next generation of Scan, adding new categories of intelligence to Scan and allowing Snapchatters to access our powerful visual search capabilities right from the Camera home screen. * In Q3 2021, five of our new augmented reality Lenses driven by SnapML, our machine learning platform in Lens Studio, generated more than 1 billion impressions each, achieving over 11 billion impressions in total. * We featured nine new community try-on Lenses for Fashion Week, drawing inspiration from unique trends within the major Fashion Week cities to showcase virtual outfits. * We partnered with SignAll to introduce three AR Lenses teaching Snapchatters how to fingerspell in American Sign Language. * We partnered with Sotheby's to launch the 'The Final Christo: Original Works for The Arc de Triomphe' Lens, allowing Snapchatters to experience Christo and Jeanne-Claude's artistic rendition of the Arc de Triomphe from anywhere in the world.

We invested in our content offerings:

* Content submissions on Spotlight more than doubled relative to the prior quarter. * We launched Spotlight Challenges in the U.S., our newest addition to the Creator Fund that rewards top-performing submissions for specific content categories with monetary prizes. * In Q3 2021, 15 different Discover partners each reached over 50 million unique Snapchatters. * We launched new Discover channels in 14 different countries, including 22 new channels in each of India and the U.K. * Two of our new Snap Originals, "Meme Mom" and "Honestly Loren", reached over 10 million viewers each.

We expanded our product and partner ecosystem:

* We introduced 3D Bitmoji in Profiles, which enables Snapchatters to express themselves with a 3D version of their digital avatar, and over 170 million Snapchatters have engaged with their 3D Bitmoji Profile since launch. * We introduced My Places, a new feature on the Snap Map where Snapchatters can find personalized recommendations of places to eat and visit based on their friends' interests. * We launched our Run for Office Mini, allowing Snapchatters in the U.S. to explore hundreds of opportunities to run for public office based on their interests and location. * We partnered with HBO Max to launch a new Mini where Snapchatters in the U.S. can stream full-length episodes of popular HBO Max shows simultaneously with their friends. * We launched our Birthday Mini, allowing Snapchatters to see their friends' birthdays and send personalized greetings, which was used by over 10 million Snapchatters in the first 21 days after launch.

We expanded our offering for advertisers:

* We launched our 'Open Your Snapchat' marketing campaign, which invites both consumers and advertisers to experience augmented reality, unlocking hundreds of custom experiences localized to several different markets across the globe. * We introduced Snapchat Trends for advertisers, which highlights popular keywords shared among the Snapchat community and helps advertisers better engage their audience. * We introduced Campaign Lab, which allows advertisers to better track and analyze their split tests to gain insights for future campaigns. * We announced The AR Lab, our partnership with WPP to help clients build and deliver immersive experiences on Snapchat using AR. * We announced the launch of Arcadia, our new global creative studio for branded AR, which will develop new technology and deliver impactful and effective AR experiences to brand and agency partners.

Financial Guidance

The following forward-looking statements reflect our expectations for the fourth quarter of 2021 as of October 21, 2021, and are subject to substantial uncertainty. This guidance assumes constant foreign currency rates, and 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 2021 Outlook

* Revenue is estimated to be between $1,165 million and $1,205 million. * Adjusted EBITDA is estimated to be between $135 million and $175 million.

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 other payroll related 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, 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 our financial outlook and 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, 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 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 periodic report 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 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 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 other payroll related 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 other payroll related 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 Nine Months Ended September 30, 30,

2021 2020 2021 2020

Cash flowsfrom operating activities

Net loss $ (71,959 ) $ (199,853 ) $ (510,505 ) $ (831,740 )

Adjustments toreconcile netloss to netcash provided by (used in)operatingactivities:

Depreciationand 32,510 21,804 84,278 63,933 amortization

Stock-based 300,898 192,080 794,571 550,300 compensation

Amortizationof debt 1,109 24,503 3,301 56,478 discount andissuance costs

(Gains) losseson debt andequity (121,007 ) 4,142 (223,527 ) 12,114 securities,net

Inducedconversionexpense 4,536 - 41,538 - related toconvertiblenotes

Other (732 ) 1,924 4,019 (443 )

Change inoperatingassets andliabilities, net of effectof

acquisitions:

Accountsreceivable, (132,908 ) (151,856 ) (178,044 ) (43,310 )net ofallowance

Prepaidexpenses and (4,191 ) (10,608 ) (15,562 ) (19,352 )other currentassets

Operatinglease 11,470 10,054 35,217 28,307 right-of-useassets

Other assets (4,204 ) 3,390 (5,440 ) 2,343

Accounts 11,084 3,435 17,430 11,448 payable

Accruedexpenses and 56,687 61,595 89,726 94,368 other currentliabilities

Operatinglease (13,911 ) (15,760 ) (35,265 ) (40,739 )liabilities

Other 2,170 322 5,615 1,194 liabilities

Net cashprovided by(used in) 71,552 (54,828 ) 107,352 (115,099 )operatingactivities

Cash flowsfrom investing activities

Purchases ofproperty and (19,836 ) (14,727 ) (45,310 ) (41,385 )equipment

Strategic (735 ) (3,500 ) (33,510 ) (95,341 )investments

Cash paid foracquisitions, (37,375 ) (33,508 ) (176,591 ) (53,712 )net of cashacquired

Purchases ofmarketable (609,176 ) (1,148,344 ) (1,896,766 ) (2,576,892 )securities

Sales ofmarketable 19,999 155,899 367,555 373,857 securities

Maturities ofmarketable 492,921 668,930 2,006,744 1,898,176 securities

Other (1,000 ) - 35,100 (500 )

Net cashprovided by(used in) (155,202 ) (375,250 ) 257,222 (495,797 )investingactivities

Cash flowsfrom financing activities

Proceeds fromissuance ofconvertible - - 1,137,227 988,582 notes, net ofissuance costs

Purchase of - - (86,825 ) (100,000 )capped calls

Proceeds fromthe exercise 4,045 2,434 11,755 26,041 of stockoptions

Net cashprovided by 4,045 2,434 1,062,157 914,623 financingactivities

Change incash, cashequivalents, (79,605 ) (427,644 ) 1,426,731 303,727 and restrictedcash

Cash, cashequivalents,and restricted 2,052,879 1,252,631 546,543 521,260 cash,beginning ofperiod

Cash, cashequivalents,and restricted $ 1,973,274 $ 824,987 $ 1,973,274 $ 824,987 cash, end ofperiod

Supplemental disclosures

Cash paid forincome taxes, $ 1,940 $ 1,309 $ 16,228 $ 2,679 net

Cash paid for $ 3,508 $ 5,113 10,249 10,378 interest

SNAP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts, unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Revenue

$

1,067,471

$

678,668

$

2,819,163

$

1,595,304

Costs and expenses:

Cost of revenue

443,473

293,095

1,301,095

796,959

Research and development

412,021

283,639

1,131,272

783,115

Sales and marketing

217,526

143,511

547,536

397,834

General and administrative

175,275

126,287

516,202

382,232

Total costs and expenses

1,248,295

846,532

3,496,105

2,360,140

Operating loss

(180,824

)

(167,864

)

(676,942

)

(764,836

)

Interest income

1,257

2,801

3,645

16,158

Interest expense

(4,031

)

(28,212

)

(13,626

)

(68,052

)

Other income (expense), net

112,631

(5,669

)

176,971

(14,483

)

Loss before income taxes

(70,967

)

(198,944

)

(509,952

)

(831,213

)

Income tax benefit (expense)

(992

)

(909

)

(553

)

(527

)

Net loss

$

(71,959

)

$

(199,853

)

$

(510,505

)

$

(831,740

)

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

Basic

$

(0.05

)

$

(0.14

)

$

(0.33

)

$

(0.58

)

Diluted

$

(0.05

)

$

(0.14

)

$

(0.33

)

$

(0.58

)

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

Basic

1,580,966

1,466,420

1,543,568

1,446,040

Diluted

1,580,966

1,466,420

1,543,568

1,446,040

SNAP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts, unaudited)

Three Months Ended Nine Months Ended September September 30, 30,

2021 2020 2021 2020

Revenue $ 1,067,471 $ 678,668 $ 2,819,163 $ 1,595,304

Costs and expenses:

Cost of revenue 443,473 293,095 1,301,095 796,959

Research and 412,021 283,639 1,131,272 783,115 development

Sales and 217,526 143,511 547,536 397,834 marketing

General and 175,275 126,287 516,202 382,232 administrative

Total costs and 1,248,295 846,532 3,496,105 2,360,140 expenses

Operating loss (180,824 ) (167,864 ) (676,942 ) (764,836 )

Interest income 1,257 2,801 3,645 16,158

Interest expense (4,031 ) (28,212 ) (13,626 ) (68,052 )

Other income 112,631 (5,669 ) 176,971 (14,483 )(expense), net

Loss before (70,967 ) (198,944 ) (509,952 ) (831,213 )income taxes

Income tax (992 ) (909 ) (553 ) (527 )benefit (expense)

Net loss $ (71,959 ) $ (199,853 ) $ (510,505 ) $ (831,740 )

Net loss pershareattributable toClass A, Class B, and Class Ccommonstockholders:

Basic $ (0.05 ) $ (0.14 ) $ (0.33 ) $ (0.58 )

Diluted $ (0.05 ) $ (0.14 ) $ (0.33 ) $ (0.58 )

Weighted averageshares used incomputation of net loss pershare:

Basic 1,580,966 1,466,420 1,543,568 1,446,040

Diluted 1,580,966 1,466,420 1,543,568 1,446,040

SNAP INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

September 30,

2021

December 31,

2020

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

1,972,358

$

545,618

Marketable securities

1,509,463

1,991,922

Accounts receivable, net of allowance

913,539

744,288

Prepaid expenses and other current assets

76,669

56,147

Total current assets

4,472,029

3,337,975

Property and equipment, net

189,946

178,709

Operating lease right-of-use assets

291,181

269,728

Intangible assets, net

261,131

105,929

Goodwill

1,484,108

939,259

Other assets

412,770

192,638

Total assets

$

7,111,165

$

5,024,238

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$

91,769

$

71,908

Operating lease liabilities

56,191

41,077

Accrued expenses and other current liabilities

660,536

554,342

Total current liabilities

808,496

667,327

Convertible senior notes, net

2,252,079

1,675,169

Operating lease liabilities, noncurrent

292,506

287,292

Other liabilities

317,968

64,474

Total liabilities

3,671,049

2,694,262

Commitments and contingencies

Stockholders' equity

Class A non-voting common stock, $0.00001 par value. 3,000,000 shares authorized, 1,349,890 shares issued and outstanding at September 30, 2021, and 3,000,000 shares authorized, 1,248,010 shares issued and outstanding at December 31, 2020.

13

12

Class B voting common stock, $0.00001 par value. 700,000 shares authorized, 23,636 shares issued and outstanding at September 30, 2021, and 700,000 shares authorized, 23,696 shares issued and outstanding at December 31, 2020.

-

-

Class C voting common stock, $0.00001 par value. 260,888 shares authorized, 231,627 shares issued and outstanding at September 30, 2021, and 260,888 shares authorized, 231,627 shares issued and outstanding at December 31, 2020.

2

2

Additional paid-in capital

11,737,338

10,200,141

Accumulated other comprehensive income (loss)

9,779

21,363

Accumulated deficit

(8,307,016

)

(7,891,542

)

Total stockholders' equity

3,440,116

2,329,976

Total liabilities and stockholders' equity

$

7,111,165

$

5,024,238

SNAP INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

September December 31, 30, 2020 2021

(unaudited)

Assets

Current assets

Cash and cash equivalents $ 1,972,358 $ 545,618

Marketable securities 1,509,463 1,991,922

Accounts receivable, net of allowance 913,539 744,288

Prepaid expenses and other current 76,669 56,147 assets

Total current assets 4,472,029 3,337,975

Property and equipment, net 189,946 178,709

Operating lease right-of-use assets 291,181 269,728

Intangible assets, net 261,131 105,929

Goodwill 1,484,108 939,259

Other assets 412,770 192,638

Total assets $ 7,111,165 $ 5,024,238

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable $ 91,769 $ 71,908

Operating lease liabilities 56,191 41,077

Accrued expenses and other current 660,536 554,342 liabilities

Total current liabilities 808,496 667,327

Convertible senior notes, net 2,252,079 1,675,169

Operating lease liabilities, noncurrent 292,506 287,292

Other liabilities 317,968 64,474

Total liabilities 3,671,049 2,694,262

Commitments and contingencies

Stockholders' equity

Class A non-voting common stock,$0.00001 par value. 3,000,000 sharesauthorized, 1,349,890 shares issued andoutstanding at September 30, 2021, and 13 12 3,000,000 shares authorized, 1,248,010shares issued and outstanding atDecember 31, 2020.

Class B voting common stock, $0.00001par value. 700,000 shares authorized,23,636 shares issued and outstanding at - - September 30, 2021, and 700,000 sharesauthorized, 23,696 shares issued andoutstanding at December 31, 2020.

Class C voting common stock, $0.00001par value. 260,888 shares authorized,231,627 shares issued and outstandingat September 30, 2021, and 260,888 2 2 shares authorized, 231,627 sharesissued and outstanding at December 31,2020.

Additional paid-in capital 11,737,338 10,200,141

Accumulated other comprehensive income 9,779 21,363 (loss)

Accumulated deficit (8,307,016 ) (7,891,542 )

Total stockholders' equity 3,440,116 2,329,976

Total liabilities and stockholders' $ 7,111,165 $ 5,024,238 equity

SNAP INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands, unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Free Cash Flow reconciliation:

Net cash provided by (used in) operating activities

$

71,552

$

(54,828

)

$

107,352

$

(115,099

)

Less:

Purchases of property and equipment

(19,836

)

(14,727

)

(45,310

)

(41,385

)

Free Cash Flow

$

51,716

$

(69,555

)

$

62,042

$

(156,484

)

SNAP INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands, unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Free Cash Flow reconciliation:

Net cash provided by(used in) operating $ 71,552 $ (54,828 ) $ 107,352 $ (115,099 )activities

Less:

Purchases of property and (19,836 ) (14,727 ) (45,310 ) (41,385 )equipment

Free Cash Flow $ 51,716 $ (69,555 ) $ 62,042 $ (156,484 )

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Adjusted EBITDA reconciliation:

Net loss

$

(71,959

)

$

(199,853

)

$

(510,505

)

$

(831,740

)

Add (deduct):

Interest income

(1,257

)

(2,801

)

(3,645

)

(16,158

)

Interest expense

4,031

28,212

13,626

68,052

Other (income) expense, net

(112,631

)

5,669

(176,971

)

14,483

Income tax (benefit) expense

992

909

553

527

Depreciation and amortization

32,510

21,804

84,278

63,933

Stock-based compensation expense

300,898

192,080

794,571

550,300

Payroll and other tax expense related to stock-based compensation

21,615

10,341

87,986

30,157

Adjusted EBITDA

$

174,199

$

56,361

$

289,893

$

(120,446

)

Total depreciation and amortization expense by function:

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Adjusted EBITDA reconciliation:

Net loss $ (71,959 ) $ (199,853 ) $ (510,505 ) $ (831,740 )

Add (deduct):

Interest income (1,257 ) (2,801 ) (3,645 ) (16,158 )

Interest expense 4,031 28,212 13,626 68,052

Other (income) (112,631 ) 5,669 (176,971 ) 14,483 expense, net

Income tax (benefit) 992 909 553 527 expense

Depreciation and 32,510 21,804 84,278 63,933 amortization

Stock-based 300,898 192,080 794,571 550,300 compensation expense

Payroll and other taxexpense related to 21,615 10,341 87,986 30,157 stock-basedcompensation

Adjusted EBITDA $ 174,199 $ 56,361 $ 289,893 $ (120,446 )

Total depreciation and amortization expense by function:

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Depreciation and amortization expense:

Cost of revenue $ 4,876 $ 5,615 $ 14,879 $ 16,672

Research and development 17,321 9,526 42,715 26,904

Sales and marketing 6,306 3,233 14,654 9,780

General and 4,007 3,430 12,030 10,577 administrative

Total $ 32,510 $ 21,804 $ 84,278 $ 63,933

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,

2021

2020

2021

2020

Stock-based compensation expense:

Cost of revenue

$

9,132

$

2,623

$

14,635

$

6,471

Research and development

198,893

132,003

537,177

377,836

Sales and marketing

51,675

27,393

118,250

79,306

General and administrative

41,198

30,061

124,509

86,687

Total

$

300,898

$

192,080

$

794,571

$

550,300

SNAP INC.

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

(in thousands, except per share amounts, unaudited)

Total stock-basedcompensation expense byfunction:

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Stock-based compensation expense:

Cost of revenue $ 9,132 $ 2,623 $ 14,635 $ 6,471

Research and development 198,893 132,003 537,177 377,836

Sales and marketing 51,675 27,393 118,250 79,306

General and administrative 41,198 30,061 124,509 86,687

Total $ 300,898 $ 192,080 $ 794,571 $ 550,300

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Non-GAAP net income (loss) reconciliation:

Net loss

$

(71,959

)

$

(199,853

)

$

(510,505

)

$

(831,740

)

Amortization of intangible assets

18,148

8,422

42,956

23,780

Stock-based compensation expense

300,898

192,080

794,571

550,300

Payroll and other tax expense related to stock-based compensation

21,615

10,341

87,986

30,157

Income tax adjustments

(208

)

388

182

415

Non-GAAP net income (loss)

$

268,494

$

11,378

$

415,190

$

(227,088

)

Weighted-average common shares - Diluted

1,580,966

1,466,420

1,543,568

1,446,040

Non-GAAP diluted net income (loss) per share reconciliation:

Diluted net loss per share

$

(0.05

)

$

(0.14

)

$

(0.33

)

$

(0.58

)

Non-GAAP adjustment to net loss

0.22

0.15

0.60

0.42

Non-GAAP diluted net income (loss) per share

$

0.17

$

0.01

$

0.27

$

(0.16

)

Three Months Ended Nine Months Ended September September 30, 30,

2021 2020 2021 2020

Non-GAAP netincome (loss) reconciliation:

Net loss $ (71,959 ) $ (199,853 ) $ (510,505 ) $ (831,740 )

Amortization of 18,148 8,422 42,956 23,780 intangible assets

Stock-basedcompensation 300,898 192,080 794,571 550,300 expense

Payroll and othertax expenserelated to 21,615 10,341 87,986 30,157 stock-basedcompensation

Income tax (208 ) 388 182 415 adjustments

Non-GAAP net $ 268,494 $ 11,378 $ 415,190 $ (227,088 )income (loss)



Weighted-averagecommon shares - 1,580,966 1,466,420 1,543,568 1,446,040 Diluted



Non-GAAP dilutednet income (loss) per sharereconciliation:

Diluted net loss $ (0.05 ) $ (0.14 ) $ (0.33 ) $ (0.58 )per share

Non-GAAPadjustment to net 0.22 0.15 0.60 0.42 loss

Non-GAAP dilutednet income (loss) $ 0.17 $ 0.01 $ 0.27 $ (0.16 )per share

SNAP INC.

SUPPLEMENTAL FINANCIAL INFORMATION AND BUSINESS METRICS

(dollars and shares in thousands, except per user amounts, unaudited)

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Cash Flows and Shares

Net cash provided by (used in) operating activities

$

(66,554

)

$

(54,828

)

$

(52,545

)

$

136,886

$

(101,086

)

$

71,552

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

31

%

28

%

21

%

(2,079

)%

(52

)%

231

%

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

$

(203,262

)

$

(181,941

)

$

(167,644

)

$

(37,041

)

$

(71,573

)

$

54,807

Purchases of property and equipment

$

(15,767

)

$

(14,727

)

$

(16,447

)

$

(10,851

)

$

(14,623

)

$

(19,836

)

Purchases of property and equipment - YoY

107

%

86

%

81

%

-

(7

)%

35

%

Purchases of property and equipment - TTM

$

(43,689

)

$

(50,478

)

$

(57,832

)

$

(57,792

)

$

(56,648

)

$

(61,757

)

Free Cash Flow

$

(82,321

)

$

(69,555

)

$

(68,992

)

$

126,035

$

(115,709

)

$

51,716

Free Cash Flow - YoY

20

%

17

%

9

%

2,835

%

(41

)%

174

%

Free Cash Flow - TTM

$

(246,951

)

$

(232,419

)

$

(225,476

)

$

(94,833

)

$

(128,221

)

$

(6,950

)

Common shares outstanding

1,463,620

1,484,716

1,503,333

1,519,001

1,576,744

1,605,153

Common shares outstanding - YoY

7

%

7

%

6

%

6

%

8

%

8

%

Shares underlying stock-based awards

152,526

138,914

126,287

110,190

104,516

92,726

Shares underlying stock-based awards - YoY

(16

)%

(21

)%

(21

)%

(26

)%

(31

)%

(33

)%

Total common shares outstanding plus shares underlying stock-based awards

1,616,146

1,623,630

1,629,620

1,629,191

1,681,260

1,697,879

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

4

%

4

%

3

%

3

%

4

%

5

%

Results of Operations

Revenue

$

454,158

$

678,668

$

911,322

$

769,584

$

982,108

$

1,067,471

Revenue - YoY

17

%

52

%

62

%

66

%

116

%

57

%

Revenue - TTM

$

1,923,723

$

2,156,193

$

2,506,626

$

2,813,732

$

3,341,682

$

3,730,485

Revenue by region(1)

North America

$

306,740

$

492,928

$

659,163

$

552,972

$

701,735

$

786,917

North America - YoY

18

%

56

%

73

%

75

%

129

%

60

%

North America - TTM

$

1,320,447

$

1,497,347

$

1,774,481

$

2,011,803

$

2,406,798

$

2,700,787

Europe

$

78,635

$

102,480

$

141,608

$

113,619

$

152,268

$

153,121

Europe - YoY

30

%

49

%

54

%

49

%

94

%

49

%

Europe - TTM

$

315,559

$

349,486

$

399,221

$

436,342

$

509,975

$

560,616

Rest of World

$

68,783

$

83,260

$

110,551

$

102,993

$

128,105

$

127,433

Rest of World - YoY

2

%

35

%

27

%

46

%

86

%

53

%

Rest of World - TTM

$

287,717

$

309,360

$

332,924

$

365,587

$

424,909

$

469,082

Operating loss

$

(310,608

)

$

(167,864

)

$

(97,236

)

$

(303,606

)

$

(192,512

)

$

(180,824

)

Operating loss - YoY

(2

)%

27

%

62

%

(6

)%

38

%

(8

)%

Operating loss - Margin

(68

)%

(25

)%

(11

)%

(39

)%

(20

)%

(17

)%

Operating loss - TTM

$

(1,079,421

)

$

(1,018,432

)

$

(862,072

)

$

(879,314

)

$

(761,218

)

$

(774,178

)

Net loss

$

(325,951

)

$

(199,853

)

$

(113,099

)

$

(286,882

)

$

(151,664

)

$

(71,959

)

Net loss - YoY

(28

)%

12

%

53

%

6

%

53

%

64

%

Net loss - TTM

$

(1,099,966

)

$

(1,072,444

)

$

(944,839

)

$

(925,785

)

$

(751,498

)

$

(623,604

)

Adjusted EBITDA

$

(95,570

)

$

56,361

$

165,609

$

(1,709

)

$

117,403

$

174,199

Adjusted EBITDA - YoY

(21

)%

233

%

291

%

98

%

223

%

209

%

Adjusted EBITDA - Margin(2)

(21

)%

8

%

18

%

-

12

%

16

%

Adjusted EBITDA - TTM

$

(176,875

)

$

(78,139

)

$

45,163

$

124,691

$

337,664

$

455,502

* 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. * We define Adjusted EBITDA margin as Adjusted EBITDA divided by GAAP revenue.SNAP INC.

SUPPLEMENTAL FINANCIAL INFORMATION AND BUSINESS METRICS

(dollars and shares in thousands, except per user amounts, unaudited)

Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021

Cash Flows and Shares

Net cashprovided by(used in) $ (66,554 ) $ (54,828 ) $ (52,545 ) $ 136,886 $ (101,086 ) $ 71,552 operatingactivities

Net cashprovided by(used in) 31 % 28 % 21 % (2,079 ) (52 ) 231 %operating % %activities - YoY(year-over-year)

Net cashprovided by(used in)operating $ (203,262 ) $ (181,941 ) $ (167,644 ) $ (37,041 ) $ (71,573 ) $ 54,807 activities - TTM(trailing twelvemonths)

Purchases ofproperty and $ (15,767 ) $ (14,727 ) $ (16,447 ) $ (10,851 ) $ (14,623 ) $ (19,836 )equipment

Purchases of )property and 107 % 86 % 81 % - (7 % 35 %equipment - YoY

Purchases ofproperty and $ (43,689 ) $ (50,478 ) $ (57,832 ) $ (57,792 ) $ (56,648 ) $ (61,757 )equipment - TTM

Free Cash Flow $ (82,321 ) $ (69,555 ) $ (68,992 ) $ 126,035 $ (115,709 ) $ 51,716

Free Cash Flow - 20 % 17 % 9 % 2,835 % (41 ) 174 %YoY %

Free Cash Flow - $ (246,951 ) $ (232,419 ) $ (225,476 ) $ (94,833 ) $ (128,221 ) $ (6,950 )TTM

Common shares 1,463,620 1,484,716 1,503,333 1,519,001 1,576,744 1,605,153 outstanding

Common sharesoutstanding - 7 % 7 % 6 % 6 % 8 % 8 %YoY

Sharesunderlying 152,526 138,914 126,287 110,190 104,516 92,726 stock-basedawards

Sharesunderlying (16 ) (21 ) (21 ) (26 ) (31 ) (33 )stock-based % % % % % %awards - YoY

Total commonsharesoutstanding plusshares 1,616,146 1,623,630 1,629,620 1,629,191 1,681,260 1,697,879 underlyingstock-basedawards

Total commonsharesoutstanding plusshares 4 % 4 % 3 % 3 % 4 % 5 %underlyingstock-basedawards - YoY



Results of Operations

Revenue $ 454,158 $ 678,668 $ 911,322 $ 769,584 $ 982,108 $ 1,067,471

Revenue - YoY 17 % 52 % 62 % 66 % 116 % 57 %

Revenue - TTM $ 1,923,723 $ 2,156,193 $ 2,506,626 $ 2,813,732 $ 3,341,682 $ 3,730,485

Revenue by region^(1)

North America $ 306,740 $ 492,928 $ 659,163 $ 552,972 $ 701,735 $ 786,917

North America - 18 % 56 % 73 % 75 % 129 % 60 %YoY

North America - $ 1,320,447 $ 1,497,347 $ 1,774,481 $ 2,011,803 $ 2,406,798 $ 2,700,787 TTM

Europe $ 78,635 $ 102,480 $ 141,608 $ 113,619 $ 152,268 $ 153,121

Europe - YoY 30 % 49 % 54 % 49 % 94 % 49 %

Europe - TTM $ 315,559 $ 349,486 $ 399,221 $ 436,342 $ 509,975 $ 560,616

Rest of World $ 68,783 $ 83,260 $ 110,551 $ 102,993 $ 128,105 $ 127,433

Rest of World - 2 % 35 % 27 % 46 % 86 % 53 %YoY

Rest of World - $ 287,717 $ 309,360 $ 332,924 $ 365,587 $ 424,909 $ 469,082 TTM

Operating loss $ (310,608 ) $ (167,864 ) $ (97,236 ) $ (303,606 ) $ (192,512 ) $ (180,824 )

Operating loss - (2 ) 27 % 62 % (6 ) 38 % (8 )YoY % % %

Operating loss - (68 ) (25 ) (11 ) (39 ) (20 ) (17 )Margin % % % % % %

Operating loss - $ (1,079,421 ) $ (1,018,432 ) $ (862,072 ) $ (879,314 ) $ (761,218 ) $ (774,178 )TTM

Net loss $ (325,951 ) $ (199,853 ) $ (113,099 ) $ (286,882 ) $ (151,664 ) $ (71,959 )

Net loss - YoY (28 ) 12 % 53 % 6 % 53 % 64 % %

Net loss - TTM $ (1,099,966 ) $ (1,072,444 ) $ (944,839 ) $ (925,785 ) $ (751,498 ) $ (623,604 )

Adjusted EBITDA $ (95,570 ) $ 56,361 $ 165,609 $ (1,709 ) $ 117,403 $ 174,199

Adjusted EBITDA (21 ) 233 % 291 % 98 % 223 % 209 %- YoY %

Adjusted EBITDA (21 ) 8 % 18 % - 12 % 16 %- Margin^(2) %

Adjusted EBITDA $ (176,875 ) $ (78,139 ) $ 45,163 $ 124,691 $ 337,664 $ 455,502 - TTM

* 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. * 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 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021

Other

DAU (in 238 249 265 280 293 306 millions)

DAU - YoY 17 % 18 % 22 % 22 % 23 % 23 %

DAU by region (in millions)

North America 90 90 92 93 95 96

North America 9 % 7 % 6 % 5 % 6 % 7 %- YoY

Europe 71 72 74 77 78 80

Europe - YoY 12 % 10 % 10 % 9 % 10 % 11 %

Rest of World 77 87 99 111 120 130

Rest of World 37 % 43 % 55 % 57 % 55 % 49 %- YoY

ARPU $ 1.91 $ 2.73 $ 3.44 $ 2.74 $ 3.35 $ 3.49

ARPU - YoY - 28 % 33 % 36 % 76 % 28 %

ARPU by region

North America $ 3.40 $ 5.49 $ 7.19 $ 5.94 $ 7.37 $ 8.20

North America 8 % 46 % 63 % 66 % 116 % 49 %- YoY

Europe $ 1.10 $ 1.43 $ 1.91 $ 1.48 $ 1.95 $ 1.92

Europe - YoY 16 % 36 % 39 % 36 % 76 % 34 %

Rest of World $ 0.89 $ 0.95 $ 1.11 $ 0.93 $ 1.07 $ 0.98

Rest of World (26 ) (6 ) (18 ) (7 ) 20 % 3 %- YoY % % % %

Employees(full-time;excludespart-time, 3,550 3,713 3,863 4,043 4,667 5,190 contractors,and temporarypersonnel)

Employees - 30 % 28 % 21 % 18 % 31 % 40 %YoY



Depreciationand amortizationexpense

Cost of $ 5,532 $ 5,615 $ 5,533 $ 5,276 $ 4,727 $ 4,876 revenue

Research and 8,463 9,526 10,723 11,036 14,358 17,321 development

Sales and 3,381 3,233 3,136 3,186 5,162 6,306 marketing

General and 3,549 3,430 3,419 4,000 4,023 4,007 administrative

Total $ 20,925 $ 21,804 $ 22,811 $ 23,498 $ 28,270 $ 32,510

Depreciationand (8 ) 6 % 11 % 11 % 35 % 49 %amortization %expense - YoY



Stock-basedcompensation expense

Cost of $ 2,066 $ 2,623 $ 2,896 $ 2,656 $ 2,847 $ 9,132 revenue

Research and 127,516 132,003 155,436 163,793 174,491 198,893 development

Sales and 27,107 27,393 28,964 29,084 37,491 51,675 marketing

General and 29,482 30,061 32,586 41,450 41,771 41,198 administrative

Total $ 186,171 $ 192,080 $ 219,882 $ 237,073 $ 256,600 $ 300,898

Stock-based )compensation (5 % 19 % 32 % 38 % 38 % 57 %expense - YoY

View source version on businesswire.com: https://www.businesswire.com/news/home/20211021005976/en/

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