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Snap Inc. Announces Fourth Quarter and Full Year 2023 Financial Results

02/06/2024

Daily Active Users increased 10% year-over-year to 414 million

Fourth quarter revenue increased 5% year-over-year to $1,361 million

Fourth quarter operating cash flow of $165 million and Free Cash Flow of $111 million

Snap Inc. (NYSE: SNAP) today announced financial results for the quarter and full year ended December 31, 2023.

“2023 was a pivotal year for Snap, as we transformed our advertising business and continued to expand our global community, reaching 414 million daily active users,” said Evan Spiegel, CEO. “Snapchat enhances relationships with friends, family, and the world, and this unique value proposition has provided a strong foundation to build our business for long-term growth.”

Annual Financial Summary

  • Revenue was $4,606 million in 2023, compared to $4,602 million in 2022.
  • Net loss was $1,322 million in 2023, compared to $1,430 million in 2022.
  • Fourth consecutive year of positive Adjusted EBITDA at $162 million in 2023.
  • Third consecutive year of positive operating cash flow at $247 million in 2023.
  • Third consecutive year of positive Free Cash Flow at $35 million in 2023.

Q4 2023 Financial Summary

  • Revenue was $1,361 million, compared to $1,300 million in the prior year, an increase of 5% year-over-year.
  • Net loss was $248 million, compared to $288 million in the prior year.
  • Adjusted EBITDA was $159 million, compared to $233 million in the prior year.
  • Operating cash flow was $165 million, compared to $125 million in the prior year.
  • Free Cash Flow was $111 million, compared to $78 million in the prior year.

 

Three Months Ended

December 31,

 

Percent

Change

 

Twelve Months Ended

December 31,

 

Percent

Change

 

 

2023

 

 

 

2022

 

 

 

 

2023

 

 

 

2022

 

 

(Unaudited)

(in thousands, except per share amounts)

Revenue

$

1,361,287

 

 

$

1,299,735

 

 

5

%

 

$

4,606,115

 

 

$

4,601,847

 

 

%

Operating loss

$

(248,713

)

 

$

(287,597

)

 

14

%

 

$

(1,398,379

)

 

$

(1,395,306

)

 

%

Net loss

$

(248,247

)

 

$

(288,460

)

 

14

%

 

$

(1,322,485

)

 

$

(1,429,653

)

 

7

%

Adjusted EBITDA (1)

$

159,149

 

 

$

233,275

 

 

(32

)%

 

$

161,577

 

 

$

377,573

 

 

(57

)%

Net cash provided by (used in) operating activities

$

164,574

 

 

$

125,291

 

 

31

%

 

$

246,521

 

 

$

184,614

 

 

34

%

Free Cash Flow (2)

$

110,855

 

 

$

78,366

 

 

41

%

 

$

34,794

 

 

$

55,308

 

 

(37

)%

Diluted net loss per share attributable to common stockholders

$

(0.15

)

 

$

(0.18

)

 

17

%

 

$

(0.82

)

 

$

(0.89

)

 

8

%

Non-GAAP diluted net income (loss) per share (3)

$

0.08

 

 

$

0.14

 

 

(43

)%

 

$

0.09

 

 

$

0.17

 

 

(47

)%

(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%. Total restructuring charges included in our consolidated statements of operations for the three and twelve months ended December 31, 2023 were $22.2 million and $40.8 million, respectively. In the third quarter of 2022, we initiated a strategic reprioritization plan, which included a reduction of our global employee headcount by approximately 20%. Total restructuring charges included in our consolidated statements of operations for the three and twelve months ended December 31, 2022 were $34.3 million and $188.9 million, respectively.

(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.

Q4 2023 Summary & Key Highlights

We grew and deepened our engagement with our community:

  • DAUs were 414 million in Q4 2023, an increase of 39 million, or 10%, year-over-year.
  • DAUs increased sequentially and year-over-year on both iOS and Android platforms.
  • Total time spent watching Spotlight content increased more than 175% year-over-year, and Spotlight average monthly active users increased more than 35% year-over-year.
  • Total public Stories posted by Snap Stars grew over 125% year-over-year in the United States.
  • We signed a new publisher deal with Spotify in the United States that will bring shorter-form highlights from Spotify’s podcasts onto Spotlight and Stories.

We are focused on accelerating and diversifying our revenue growth:

  • Snapchat+, our subscription service that offers exclusive, experimental, and pre-release features, reached over 7 million subscribers.
  • We announced new AI-powered features for Snapchat+ subscribers, giving them the ability to enhance their Snaps and create and send AI-generated images based on a text prompt.
  • Ongoing momentum with our 7/0 Pixel Purchase optimization model led to a more than 90% increase in purchase related conversions year-over-year.
  • We launched Snap Promote, an easy-to-use ad creation interface within the Snapchat app, that helps an entire new audience of creators and small businesses discover our ads platform and grow their reach and followers by creating engaging promotions with just a few clicks.
  • With the introduction of Creator Collab Campaigns, a suite of products making it easier for advertisers to discover and partner with the influential creator community on Snapchat, we helped advertisers like e.l.f. Cosmetics activate creator-inspired beauty campaigns to drive results against their business goals.
  • We partnered with NYX Professional Makeup to release Beauty Bestie, an interactive, AR- and AI-powered sponsored Lens experience that recommends beauty products based on a Snapchatter’s aesthetic, mood, and color palettes.

We invested in our augmented reality platform:

  • Over 350,000 AR creators and developers have built nearly 3.5 million AR Lenses that have been viewed over 3 trillion times.
  • Over 300 million Snapchatters engage with augmented reality every day, on average.
  • At our annual Lens Fest, we released our Lens Studio 5.0 Beta, which features dramatically faster project load times, new AI capabilities leveraging ChatGPT, and team collaboration tools.
  • We optimized the ML Lens creation workflow by utilizing Generative models and investing into tooling and automation, which have contributed to the number of ML Lenses viewed by Snapchatters increasing more than 60% year-over-year.
  • We partnered with the Rolling Stones to celebrate the release of the new Rolling Stones album “Hackney Diamonds” with a Rolling Stones Bitmoji Show Lens that projects 3D Bitmoji avatars of Mick Jagger, Keith Richards, and Ronnie Wood using the phone’s back-facing camera.
  • We hosted our inaugural APAC AR Day in Mumbai, India, celebrating the region’s thriving AR creator and developer community and our ongoing commitment to democratizing AR for users and brands.
  • We extended the reach of our AR content via Camera Kit Live in sports venues including the stadiums of the Cincinnati Bengals, Seattle Mariners, and the Barclays Center, home of the Brooklyn Nets, and New York Liberty. Additionally, we've incorporated AR in telecasts such as the 2023 MTV Video Music Awards and ESPN's SEC Nation, and music festivals including the Bonnaroo Music & Arts Festival.
  • We teamed up with Inspirit, an edtech company, to bring our AR technology to Inspirit’s STEM curriculum powered by Camera Kit.

Q1 2024 Outlook

As we enter Q1, we anticipate continued growth of our global community and, as a result, our guidance range is built on the assumption that DAU will be approximately 420 million in Q1. We are focused on executing against our roadmap to deliver improvements to our direct-response advertising platform to drive improved results for our advertising partners and accelerate topline growth. Our guidance range is for revenue of $1,095 million to $1,135 million, implying year-over-year revenue growth of 11% to 15%. Based on this revenue range and our investment plans for the quarter, we estimate that Adjusted EBITDA will be between negative $55 million and negative $95 million in Q1.

Conference Call Information

Snap Inc. will host a conference call to discuss the results at 3 p.m. Pacific / 6 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 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. At the beginning of the first quarter 2024, we updated the definition of DAU to include web platform use. Historically, DAU from web platforms has not been material.

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. At the beginning of the first quarter 2024, we updated the definition of MAU to include web platform use. Historically, MAU from web platforms has not been material.

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 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 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

December 31,

 

Twelve Months Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net loss

$

(248,247

)

 

$

(288,460

)

 

$

(1,322,485

)

 

$

(1,429,653

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

52,324

 

 

 

48,491

 

 

 

168,441

 

 

 

202,173

 

Stock-based compensation

 

333,197

 

 

 

450,574

 

 

 

1,324,004

 

 

 

1,387,787

 

Amortization of debt issuance costs

 

1,844

 

 

 

1,837

 

 

 

7,361

 

 

 

6,865

 

Losses (gains) on debt and equity securities, net

 

27,139

 

 

 

21,279

 

 

 

33,027

 

 

 

36,838

 

Other

 

4,140

 

 

 

(741

)

 

 

(26,958

)

 

 

15,596

 

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

 

 

 

 

 

 

 

Accounts receivable, net of allowance

 

(153,899

)

 

 

(182,216

)

 

 

(98,127

)

 

 

(119,780

)

Prepaid expenses and other current assets

 

5,219

 

 

 

(8,803

)

 

 

(9,920

)

 

 

(40,917

)

Operating lease right-of-use assets

 

17,295

 

 

 

18,236

 

 

 

70,674

 

 

 

71,441

 

Other assets

 

5,430

 

 

 

12,129

 

 

 

2,238

 

 

 

(504

)

Accounts payable

 

140,485

 

 

 

(13,950

)

 

 

94,988

 

 

 

46,492

 

Accrued expenses and other current liabilities

 

(6,567

)

 

 

88,890

 

 

 

62,130

 

 

 

71,706

 

Operating lease liabilities

 

(15,484

)

 

 

(22,455

)

 

 

(68,007

)

 

 

(68,886

)

Other liabilities

 

1,698

 

 

 

480

 

 

 

9,155

 

 

 

5,456

 

Net cash provided by (used in) operating activities

 

164,574

 

 

 

125,291

 

 

 

246,521

 

 

 

184,614

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchases of property and equipment

 

(53,719

)

 

 

(46,925

)

 

 

(211,727

)

 

 

(129,306

)

Purchases of strategic investments

 

 

 

 

(13,996

)

 

 

(7,770

)

 

 

(26,346

)

Sales of strategic investments

 

2,408

 

 

 

 

 

 

7,559

 

 

 

63,276

 

Cash paid for acquisitions, net of cash acquired

 

 

 

 

(35,409

)

 

 

(50,254

)

 

 

(67,067

)

Purchases of marketable securities

 

(5,956

)

 

 

(753,372

)

 

 

(2,048,273

)

 

 

(3,485,638

)

Sales of marketable securities

 

351,757

 

 

 

23,799

 

 

 

459,481

 

 

 

75,716

 

Maturities of marketable securities

 

330,980

 

 

 

704,773

 

 

 

2,424,717

 

 

 

2,525,215

 

Other

 

(2,347

)

 

 

16

 

 

 

(2,779

)

 

 

(18,125

)

Net cash provided by (used in) investing activities

 

623,123

 

 

 

(121,114

)

 

 

570,954

 

 

 

(1,062,275

)

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

 

622

 

 

 

401

 

 

 

1,038

 

 

 

4,272

 

Payments of debt issuance costs

 

 

 

 

 

 

 

 

 

 

(3,006

)

Repurchases of Class A non-voting common stock

 

(189,394

)

 

 

(500,539

)

 

 

(189,394

)

 

 

(1,001,052

)

Deferred payments for acquisitions

 

(15,876

)

 

 

 

 

 

(270,433

)

 

 

 

Net cash provided by (used in) financing activities

 

(204,648

)

 

 

(500,138

)

 

 

(458,789

)

 

 

306,714

 

Change in cash, cash equivalents, and restricted cash

 

583,049

 

 

 

(495,961

)

 

 

358,686

 

 

 

(570,947

)

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

 

1,199,413

 

 

 

1,919,737

 

 

 

1,423,776

 

 

 

1,994,723

 

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

$

1,782,462

 

 

$

1,423,776

 

 

$

1,782,462

 

 

$

1,423,776

 

Supplemental disclosures

 

 

 

 

 

 

 

Cash paid for income taxes, net

$

3,714

 

 

$

3,121

 

 

$

30,924

 

 

$

12,087

 

Cash paid for interest

$

685

 

 

$

682

 

 

$

10,244

 

 

$

8,873

 

SNAP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts, unaudited)

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenue

$

1,361,287

 

 

$

1,299,735

 

 

$

4,606,115

 

 

$

4,601,847

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of revenue

 

621,504

 

 

 

481,311

 

 

 

2,114,117

 

 

 

1,815,342

 

Research and development

 

483,528

 

 

 

584,942

 

 

 

1,910,862

 

 

 

2,109,800

 

Sales and marketing

 

275,811

 

 

 

295,150

 

 

 

1,122,092

 

 

 

1,118,746

 

General and administrative

 

229,157

 

 

 

225,929

 

 

 

857,423

 

 

 

953,265

 

Total costs and expenses

 

1,610,000

 

 

 

1,587,332

 

 

 

6,004,494

 

 

 

5,997,153

 

Operating loss

 

(248,713

)

 

 

(287,597

)

 

 

(1,398,379

)

 

 

(1,395,306

)

Interest income

 

43,463

 

 

 

28,698

 

 

 

168,394

 

 

 

58,597

 

Interest expense

 

(5,275

)

 

 

(5,312

)

 

 

(22,024

)

 

 

(21,459

)

Other income (expense), net

 

(34,447

)

 

 

(20,043

)

 

 

(42,414

)

 

 

(42,529

)

Loss before income taxes

 

(244,972

)

 

 

(284,254

)

 

 

(1,294,423

)

 

 

(1,400,697

)

Income tax benefit (expense)

 

(3,275

)

 

 

(4,206

)

 

 

(28,062

)

 

 

(28,956

)

Net loss

$

(248,247

)

 

$

(288,460

)

 

$

(1,322,485

)

 

$

(1,429,653

)

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

 

 

 

 

 

 

 

Basic

$

(0.15

)

 

$

(0.18

)

 

$

(0.82

)

 

$

(0.89

)

Diluted

$

(0.15

)

 

$

(0.18

)

 

$

(0.82

)

 

$

(0.89

)

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

 

 

 

 

 

 

 

Basic

 

1,638,714

 

 

 

1,573,883

 

 

 

1,612,504

 

 

 

1,608,304

 

Diluted

 

1,638,714

 

 

 

1,573,883

 

 

 

1,612,504

 

 

 

1,608,304

 

SNAP INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value, unaudited)

 

 

December 31,
2023

 

December 31,
2022

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

1,780,400

 

 

$

1,423,121

 

Marketable securities

 

1,763,680

 

 

 

2,516,003

 

Accounts receivable, net of allowance

 

1,278,176

 

 

 

1,183,092

 

Prepaid expenses and other current assets

 

153,587

 

 

 

134,431

 

Total current assets

 

4,975,843

 

 

 

5,256,647

 

Property and equipment, net

 

410,326

 

 

 

271,777

 

Operating lease right-of-use assets

 

516,862

 

 

 

370,952

 

Intangible assets, net

 

146,303

 

 

 

204,480

 

Goodwill

 

1,691,827

 

 

 

1,646,120

 

Other assets

 

226,597

 

 

 

279,562

 

Total assets

$

7,967,758

 

 

$

8,029,538

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

278,961

 

 

$

181,774

 

Operating lease liabilities

 

49,321

 

 

 

46,485

 

Accrued expenses and other current liabilities

 

805,836

 

 

 

987,340

 

Total current liabilities

 

1,134,118

 

 

 

1,215,599

 

Convertible senior notes, net

 

3,749,400

 

 

 

3,742,520

 

Operating lease liabilities, noncurrent

 

546,279

 

 

 

386,271

 

Other liabilities

 

123,849

 

 

 

104,450

 

Total liabilities

 

5,553,646

 

 

 

5,448,840

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Class A non-voting common stock, $0.00001 par value. 3,000,000 shares authorized, 1,440,541 shares issued, 1,391,341 shares outstanding at December 31, 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, 22,528 shares issued and outstanding at December 31, 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 December 31, 2023 and December 31, 2022.

 

2

 

 

 

2

 

Treasury stock, at cost. 49,200 and 51,312 shares of Class A non-voting common stock at December 31, 2023 and December 31, 2022, respectively.

 

(479,903

)

 

 

(500,514

)

Additional paid-in capital

 

14,613,404

 

 

 

13,309,828

 

Accumulated deficit

 

(11,726,536

)

 

 

(10,214,657

)

Accumulated other comprehensive income (loss)

 

7,131

 

 

 

(13,974

)

Total stockholders’ equity

 

2,414,112

 

 

 

2,580,698

 

Total liabilities and stockholders’ equity

$

7,967,758

 

 

$

8,029,538

 

SNAP INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands, unaudited)

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Free Cash Flow reconciliation:

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

$

164,574

 

 

$

125,291

 

 

$

246,521

 

 

$

184,614

 

Less:

 

 

 

 

 

 

 

Purchases of property and equipment

 

(53,719

)

 

 

(46,925

)

 

 

(211,727

)

 

 

(129,306

)

Free Cash Flow

$

110,855

 

 

$

78,366

 

 

$

34,794

 

 

$

55,308

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Adjusted EBITDA reconciliation:

 

 

 

 

 

 

 

Net loss

$

(248,247

)

 

$

(288,460

)

 

$

(1,322,485

)

 

$

(1,429,653

)

Add (deduct):

 

 

 

 

 

 

 

Interest income

 

(43,463

)

 

 

(28,698

)

 

 

(168,394

)

 

 

(58,597

)

Interest expense

 

5,275

 

 

 

5,312

 

 

 

22,024

 

 

 

21,459

 

Other (income) expense, net

 

34,447

 

 

 

20,043

 

 

 

42,414

 

 

 

42,529

 

Income tax (benefit) expense

 

3,275

 

 

 

4,206

 

 

 

28,062

 

 

 

28,956

 

Depreciation and amortization

 

43,882

 

 

 

34,975

 

 

 

159,999

 

 

 

186,434

 

Stock-based compensation expense

 

333,063

 

 

 

446,339

 

 

 

1,319,783

 

 

 

1,353,283

 

Payroll and other tax expense related to stock-based compensation

 

8,706

 

 

 

5,172

 

 

 

39,324

 

 

 

44,213

 

Restructuring charges (1)

 

22,211

 

 

 

34,386

 

 

 

40,850

 

 

 

188,949

 

Adjusted EBITDA

$

159,149

 

 

$

233,275

 

 

$

161,577

 

 

$

377,573

 

(1)

Restructuring charges in 2023 relating to the wind down of our AR Enterprise business were composed primarily of cash severance, stock-based compensation expense, and charges related to the revision of the useful lives and disposal of certain acquired intangible assets. Additionally, we recognized an income tax benefit of $5.7 million for the three and twelve months ended December 31, 2023 relating to the wind down, which is included in the income tax (benefit) expense line item above. Restructuring charges in 2022 relating to the strategic reprioritization plan were composed primarily of severance and related charges of $6.0 million and $97.1 million for the three and twelve months ended December 31, 2022, respectively, stock-based compensation expense, lease exit and related charges, impairment charges, contract termination charges, and intangible asset amortization. These charges are not reflective of underlying trends in our business.

Total depreciation and amortization expense by function:

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Depreciation and amortization expense (1):

 

 

 

 

 

 

 

Cost of revenue

$

3,171

 

$

8,114

 

$

12,751

 

$

24,235

Research and development

 

31,040

 

 

29,834

 

 

106,278

 

 

98,041

Sales and marketing

 

10,017

 

 

6,130

 

 

26,161

 

 

67,169

General and administrative

 

8,096

 

 

4,413

 

 

23,251

 

 

12,728

Total

$

52,324

 

$

48,491

 

$

168,441

 

$

202,173

(1)

Depreciation and amortization expense for the three and twelve months ended December 31, 2023 and 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

December 31,

 

Twelve Months Ended

December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Stock-based compensation expense (1):

 

 

 

 

 

 

 

Cost of revenue

$

2,665

 

$

4,248

 

$

9,555

 

$

12,288

Research and development

 

220,996

 

 

319,447

 

 

893,026

 

 

970,746

Sales and marketing

 

70,369

 

 

69,346

 

 

255,688

 

 

203,092

General and administrative

 

39,167

 

 

57,533

 

 

165,735

 

 

201,661

Total

$

333,197

 

$

450,574

 

$

1,324,004

 

$

1,387,787

(1)

Stock-based compensation expense for the three and twelve months ended December 31, 2023 and 2022 includes restructuring charges.

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Non-GAAP net income (loss) reconciliation:

 

 

 

 

 

 

 

Net loss

$

(248,247

)

 

$

(288,460

)

 

$

(1,322,485

)

 

$

(1,429,653

)

Amortization of intangible assets

 

17,484

 

 

 

18,073

 

 

 

72,778

 

 

 

123,413

 

Stock-based compensation expense

 

333,063

 

 

 

446,339

 

 

 

1,319,783

 

 

 

1,353,283

 

Payroll and other tax expense related to stock-based compensation

 

8,706

 

 

 

5,172

 

 

 

39,324

 

 

 

44,213

 

Restructuring charges (1)

 

22,211

 

 

 

34,386

 

 

 

40,850

 

 

 

188,949

 

Income tax adjustments

 

(5,306

)

 

 

(988

)

 

 

(6,116

)

 

 

(2,507

)

Non-GAAP net income (loss)

$

127,911

 

 

$

214,522

 

 

$

144,134

 

 

$

277,698

 

 

 

 

 

 

 

 

 

Weighted-average common shares - Diluted

 

1,638,714

 

 

 

1,573,883

 

 

 

1,612,504

 

 

 

1,608,304

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Diluted net loss per share

$

(0.15

)

 

$

(0.18

)

 

$

(0.82

)

 

$

(0.89

)

Non-GAAP adjustment to net loss

 

0.23

 

 

 

0.32

 

 

 

0.91

 

 

 

1.06

 

Non-GAAP diluted net income (loss) per share

$

0.08

 

 

$

0.14

 

 

$

0.09

 

 

$

0.17

 

(1)

Restructuring charges in 2023 relating to the wind down of our AR Enterprise business were composed primarily of cash severance, stock-based compensation expense, and charges related to the revision of the useful lives and disposal of certain acquired intangible assets. Additionally, we recognized an income tax benefit of $5.7 million for the three and twelve months ended December 31, 2023 relating to the wind down, which is included in the income tax adjustments line item above. Restructuring charges in 2022 relating to the strategic reprioritization plan were composed primarily of severance and related charges of $6.0 million and $97.1 million for the three and twelve months ended December 31, 2022, respectively, stock-based compensation expense, lease exit and related charges, impairment charges, contract termination charges, and intangible asset amortization. These charges are 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)

 

 

Q3 2022

 

Q4 2022

 

Q1 2023

 

Q2 2023

 

Q3 2023

 

Q4 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

(NM = Not Meaningful)

Cash Flows and Shares

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

$

55,945

 

 

$

125,291

 

 

$

151,102

 

 

$

(81,936

)

 

$

12,781

 

 

$

164,574

 

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

 

(22

)%

 

 

(32

)%

 

 

19

%

 

 

34

%

 

 

(77

)%

 

 

31

%

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

$

244,851

 

 

$

184,614

 

 

$

208,257

 

 

$

250,402

 

 

$

207,238

 

 

$

246,521

 

Purchases of property and equipment

$

(37,836

)

 

$

(46,925

)

 

$

(47,630

)

 

$

(36,943

)

 

$

(73,435

)

 

$

(53,719

)

Purchases of property and equipment - YoY

 

91

%

 

 

91

%

 

 

125

%

 

 

58

%

 

 

94

%

 

 

14

%

Purchases of property and equipment - TTM

$

(106,946

)

 

$

(129,306

)

 

$

(155,761

)

 

$

(169,334

)

 

$

(204,933

)

 

$

(211,727

)

Free Cash Flow

$

18,109

 

 

$

78,366

 

 

$

103,472

 

 

$

(118,879

)

 

$

(60,654

)

 

$

110,855

 

Free Cash Flow - YoY

 

(65

)%

 

 

(51

)%

 

 

(3

)%

 

 

19

%

 

 

(435

)%

 

 

41

%

Free Cash Flow - TTM

$

137,905

 

 

$

55,308

 

 

$

52,496

 

 

$

81,068

 

 

$

2,305

 

 

$

34,794

 

Common shares outstanding

 

1,605,868

 

 

 

1,574,086

 

 

 

1,595,205

 

 

 

1,616,119

 

 

 

1,638,905

 

 

 

1,645,496

 

Common shares outstanding - YoY

 

%

 

 

(3

)%

 

 

(2

)%

 

 

(2

)%

 

 

2

%

 

 

5

%

Shares underlying stock-based awards

 

94,772

 

 

 

131,718

 

 

 

128,218

 

 

 

149,065

 

 

 

154,525

 

 

 

157,981

 

Shares underlying stock-based awards - YoY

 

2

%

 

 

59

%

 

 

71

%

 

 

62

%

 

 

63

%

 

 

20

%

Total common shares outstanding plus shares underlying stock-based awards

 

1,700,640

 

 

 

1,705,804

 

 

 

1,723,423

 

 

 

1,765,184

 

 

 

1,793,430

 

 

 

1,803,477

 

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

 

%

 

 

%

 

 

1

%

 

 

2

%

 

 

5

%

 

 

6

%

 

 

 

 

 

 

 

 

 

 

 

 

Results of Operations

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

1,128,476

 

 

$

1,299,735

 

 

$

988,608

 

 

$

1,067,669

 

 

$

1,188,551

 

 

$

1,361,287

 

Revenue - YoY

 

6

%

 

 

0.1

%

 

 

(7

)%

 

 

(4

)%

 

 

5

%

 

 

5

%

Revenue - TTM

$

4,599,997

 

 

$

4,601,847

 

 

$

4,527,728

 

 

$

4,484,488

 

 

$

4,544,563

 

 

$

4,606,115

 

Revenue by region (1)

 

 

 

 

 

 

 

 

 

 

 

North America

$

811,602

 

 

$

880,310

 

 

$

639,896

 

 

$

686,829

 

 

$

786,154

 

 

$

899,542

 

North America - YoY

 

3

%

 

 

(6

)%

 

 

(16

)%

 

 

(13

)%

 

 

(3

)%

 

 

2

%

North America - TTM

$

3,287,621

 

 

$

3,235,854

 

 

$

3,117,489

 

 

$

3,018,637

 

 

$

2,993,189

 

 

$

3,012,421

 

Europe

$

161,396

 

 

$

218,552

 

 

$

157,760

 

 

$

182,109

 

 

$

200,272

 

 

$

238,253

 

Europe - YoY

 

5

%

 

 

5

%

 

 

(3

)%

 

 

7

%

 

 

24

%

 

 

9

%

Europe - TTM

$

702,537

 

 

$

712,177

 

 

$

707,805

 

 

$

719,817

 

 

$

758,693

 

 

$

778,394

 

Rest of World

$

155,478

 

 

$

200,873

 

 

$

190,952

 

 

$

198,731

 

 

$

202,125

 

 

$

223,492

 

Rest of World - YoY

 

22

%

 

 

28

%

 

 

34

%

 

 

28

%

 

 

30

%

 

 

11

%

Rest of World - TTM

$

609,839

 

 

$

653,816

 

 

$

702,434

 

 

$

746,034

 

 

$

792,681

 

 

$

815,300

 

Operating loss

$

(435,242

)

 

$

(287,597

)

 

$

(365,264

)

 

$

(404,339

)

 

$

(380,063

)

 

$

(248,713

)

Operating loss - YoY

 

(141

)%

 

 

NM

 

 

 

(35

)%

 

 

(1

)%

 

 

13

%

 

 

14

%

Operating loss - Margin

 

(39

)%

 

 

(22

)%

 

 

(37

)%

 

 

(38

)%

 

 

(32

)%

 

 

(18

)%

Operating loss - TTM

$

(1,132,836

)

 

$

(1,395,306

)

 

$

(1,489,043

)

 

$

(1,492,442

)

 

$

(1,437,263

)

 

$

(1,398,379

)

Net income (loss)

$

(359,502

)

 

$

(288,460

)

 

$

(328,674

)

 

$

(377,308

)

 

$

(368,256

)

 

$

(248,247

)

Net income (loss) - YoY

 

(400

)%

 

 

NM

 

 

 

9

%

 

 

11

%

 

 

(2

)%

 

 

14

%

Net income (loss) - TTM

$

(1,118,643

)

 

$

(1,429,653

)

 

$

(1,398,703

)

 

$

(1,353,944

)

 

$

(1,362,698

)

 

$

(1,322,485

)

Adjusted EBITDA

$

72,640

 

 

$

233,275

 

 

$

813

 

 

$

(38,479

)

 

$

40,094

 

 

$

159,149

 

Adjusted EBITDA - YoY

 

(58

)%

 

 

(29

)%

 

 

(99

)%

 

 

(635

)%

 

 

(45

)%

 

 

(32

)%

Adjusted EBITDA - Margin (2)

 

6

%

 

 

18

%

 

 

0.1

%

 

 

(4

)%

 

 

3

%

 

 

12

%

Adjusted EBITDA - TTM

$

471,091

 

 

$

377,573

 

 

$

313,918

 

 

$

268,249

 

 

$

235,703

 

 

$

161,577

 

(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)

 

 

Q3 2022

 

Q4 2022

 

Q1 2023

 

Q2 2023

 

Q3 2023

 

Q4 2023

Other

 

 

 

 

 

 

 

 

 

 

 

DAU (in millions) (1)

 

363

 

 

 

375

 

 

 

383

 

 

 

397

 

 

 

406

 

 

 

414

 

DAU - YoY

 

19

%

 

 

17

%

 

 

15

%

 

 

14

%

 

 

12

%

 

 

10

%

DAU by region (in millions)

 

 

 

 

 

 

 

 

 

 

 

North America

 

100

 

 

 

100

 

 

 

100

 

 

 

101

 

 

 

101

 

 

 

100

 

North America - YoY

 

4

%

 

 

3

%

 

 

3

%

 

 

2

%

 

 

1

%

 

 

%

Europe

 

88

 

 

 

92

 

 

 

93

 

 

 

94

 

 

 

95

 

 

 

96

 

Europe - YoY

 

11

%

 

 

12

%

 

 

10

%

 

 

9

%

 

 

7

%

 

 

4

%

Rest of World

 

175

 

 

 

183

 

 

 

190

 

 

 

202

 

 

 

211

 

 

 

218

 

Rest of World - YoY

 

34

%

 

 

31

%

 

 

27

%

 

 

25

%

 

 

21

%

 

 

19

%

ARPU

$

3.11

 

 

$

3.47

 

 

$

2.58

 

 

$

2.69

 

 

$

2.93

 

 

$

3.29

 

ARPU - YoY

 

(11

)%

 

 

(15

)%

 

 

(19

)%

 

 

(16

)%

 

 

(6

)%

 

 

(5

)%

ARPU by region

 

 

 

 

 

 

 

 

 

 

 

North America

$

8.13

 

 

$

8.77

 

 

$

6.37

 

 

$

6.83

 

 

$

7.82

 

 

$

8.96

 

North America - YoY

 

(1

)%

 

 

(9

)%

 

 

(18

)%

 

 

(14

)%

 

 

(4

)%

 

 

2

%

Europe

$

1.83

 

 

$

2.38

 

 

$

1.70

 

 

$

1.93

 

 

$

2.11

 

 

$

2.49

 

Europe - YoY

 

(5

)%

 

 

(6

)%

 

 

(12

)%

 

 

(2

)%

 

 

15

%

 

 

5

%

Rest of World

$

0.89

 

 

$

1.10

 

 

$

1.00

 

 

$

0.98

 

 

$

0.96

 

 

$

1.03

 

Rest of World - YoY

 

(9

)%

 

 

(2

)%

 

 

6

%

 

 

3

%

 

 

8

%

 

 

(7

)%

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

 

5,706

 

 

 

5,288

 

 

 

5,201

 

 

 

5,286

 

 

 

5,367

 

 

 

5,289

 

Employees - YoY

 

10

%

 

 

(7

)%

 

 

(15

)%

 

 

(18

)%

 

 

(6

)%

 

 

%

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

5,548

 

 

$

8,114

 

 

$

3,226

 

 

$

3,170

 

 

$

3,184

 

 

$

3,171

 

Research and development

 

23,722

 

 

 

29,834

 

 

 

24,139

 

 

 

24,847

 

 

 

26,252

 

 

 

31,040

 

Sales and marketing

 

4,586

 

 

 

6,130

 

 

 

5,073

 

 

 

5,605

 

 

 

5,466

 

 

 

10,017

 

General and administrative

 

2,435

 

 

 

4,413

 

 

 

2,782

 

 

 

6,066

 

 

 

6,307

 

 

 

8,096

 

Total

$

36,291

 

 

$

48,491

 

 

$

35,220

 

 

$

39,688

 

 

$

41,209

 

 

$

52,324

 

Depreciation and amortization expense - YoY

 

12

%

 

 

39

%

 

 

(8

)%

 

 

(50

)%

 

 

14

%

 

 

8

%

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

2,745

 

 

$

4,248

 

 

$

1,885

 

 

$

2,365

 

 

$

2,640

 

 

$

2,665

 

Research and development

 

246,783

 

 

 

319,447

 

 

 

219,850

 

 

 

217,565

 

 

 

234,615

 

 

 

220,996

 

Sales and marketing

 

43,098

 

 

 

69,346

 

 

 

54,939

 

 

 

57,597

 

 

 

72,783

 

 

 

70,369

 

General and administrative

 

50,333

 

 

 

57,533

 

 

 

38,257

 

 

 

40,416

 

 

 

47,895

 

 

 

39,167

 

Total

$

342,959

 

 

$

450,574

 

 

$

314,931

 

 

$

317,943

 

 

$

357,933

 

 

$

333,197

 

Stock-based compensation expense - YoY

 

14

%

 

 

51

%

 

 

14

%

 

 

%

 

 

4

%

 

 

(26

)%

(1)

Numbers may not foot due to rounding.

 

Investors and Analysts:
ir@snap.com

Press:
press@snap.com

Source: Snap Inc.

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