SANTA MONICA, Calif.--(BUSINESS WIRE)--Snap Inc. (NYSE: SNAP) today announced financial results for the quarter ended June 30, 2018.
Financial Highlights
Cash used in operating activities was $(199) million in Q2 2018, compared to cash used in operating activities of $(210) million in Q2 2017.
Free Cash Flow was $(234) million in Q2 2018, compared to $(229) million in Q2 2017.
Common shares outstanding plus shares underlying stock-based awards totaled 1.5 billion at June 30, 2018, compared with 1.4 billion one year ago.
Revenue increased 44% to $262 million in Q2 2018, compared to revenue of $182 million in Q2 2017.
Net loss decreased 20% to $(353) million in Q2 2018, compared to a net loss of $(443) million in Q2 2017.
Adjusted EBITDA loss decreased 13% to $(169) million in Q2 2018, compared to an Adjusted EBITDA loss of $(194) million in Q2 2017.
“We are excited by the progress we have been making and are optimistic about the opportunities ahead as we continue to invest in innovation,” said Evan Spiegel, Snap CEO and Co-Founder.
| Three Months Ended June 30, | Percent | Six Months Ended June 30, | Percent | |||||||||||||||||||||
| 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||||
| (Unaudited) | (dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||
| Cash used in operating activities | $ | (199,346 | ) | $ | (209,574 | ) | 5 | % | $ | (431,327 | ) | $ | (364,571 | ) | (18 | )% | ||||||||
| Free Cash Flow | $ | (234,247 | ) | $ | (228,939 | ) | (2 | )% | $ | (502,543 | ) | $ | (401,929 | ) | (25 | )% | ||||||||
| Common shares outstanding plus shares underlying stock-based awards | 1,478,758 | 1,434,346 | 3 | % | 1,478,758 | 1,434,346 | 3 | % | ||||||||||||||||
| Revenue | $ | 262,263 | $ | 181,671 | 44 | % | $ | 492,929 | $ | 331,319 | 49 | % | ||||||||||||
| Net loss | $ | (353,310 | ) | $ | (443,093 | ) | (20 | )% | $ | (739,095 | ) | $ | (2,651,930 | ) | (72 | )% | ||||||||
| Adjusted EBITDA | $ | (169,032 | ) | $ | (193,990 | ) | 13 | % | $ | (386,897 | ) | $ | (382,233 | ) | (1 | )% | ||||||||
Business Highlights
- Daily Active Users (DAU) increased 8% to 188 million in Q2 2018, compared to 173 million in Q2 2017, and decreased 2% in Q2 2018, compared to 191 million in Q1 2018.
- Average revenue per user (ARPU) increased 34% to $1.40 in Q2 2018, compared to $1.05 in Q2 2017.
- In Q2 2018, 11 Shows reached a monthly audience of over 10 million users, up from 7 in Q1 2018.
- We introduced Group Video Chat, which allows users to video chat with up to 16 friends at one time.
- We launched Snappables, new Lenses for sharing augmented reality experiences with one or many friends. Users can control Snappables using touch, motion, and facial expressions.
- We released a new version of Spectacles, which has a smaller profile and is water resistant. Users can record videos with improved audio as well as press and hold to take a photo. Snaps captured transfer to Snapchat in HD up to 4 times faster than the original version of Spectacles.
-
We introduced Snap Kit (kit.snapchat.com) to help developers build
products powered by features of Snapchat. We have partnered with
companies such as Pandora and Tinder to make it possible for Snapchat
features to be shared within each of their platforms and on Snapchat.
- Creative Kit helps developers integrate their own stickers, filters, links, and other highlights right into the Snapchat camera.
- Login Kit lets users unlock new features on Snapchat and other apps, or use their Snapchat account as a quick, secondary way to log in.
- Bitmoji Kit lets conversations come alive with Bitmoji stickers when messaging on other apps.
- Story Kit lets developers filter and embed publicly shared Snapchat Stories into their own apps and services.
- We introduced Lens Explorer, an easier way to discover and unlock thousands of Lenses built by Snapchat users around the world. Since we launched Lens Studio in late 2017, creators have submitted over 100,000 unique Lenses which have been viewed by Snapchat users over 3.5 billion times.
Advertising Highlights
- We transitioned our Story Ad product from our managed ecosystem to our programmatic auction.
- Snap Pixel, which helps advertisers measure the cross-device impact of their campaigns, is now available to all advertisers, regardless of size. Since beta launch in Q4 2017, Snap Pixel has measured more than 100 million purchase events, 70 million of which were recorded in Q2 2018 alone as we released Snap Pixel globally.
- We introduced updates to our self-serve platform to provide performance-focused advertisers with a full-suite of tools needed to optimize and measure their Snapchat campaigns. These updates include the ability to bid on goals such as web conversions, return on ad spend reporting, and conversion lift capabilities, effectively rounding out our Snap Pixel offering.
- We announced that advertisers can purchase Lens campaigns using our Reach & Frequency tool in Ads Manager. This means that all of our advertising formats – Snap Ads (including Story Ads) and Creative Tools (Lenses and Filters) – are now available programmatically.
- We launched two new initiatives to help our content creators monetize via our programmatic marketplace. We brought Commercials, a non-skippable 6-second Snap Ad that appears in Discover Shows, to Ads Manager. We also launched our Private Marketplace, which is an invite-only tool within Ads Manager that publishers can use to allow specific advertisers to target their content.
- We’ve provided more insights to advertisers by launching three new initiatives for campaign planning and analysis. Audience Insights help advertisers understand characteristics about Snap’s audience, which they can now better target with our Advanced Location Targeting, including location categories and point + radius, and then better understand their performance with Delivery Insights.
Definitions
Free Cash Flow is defined as net cash provided by (used in) operating activities, reduced by purchases of property and equipment.
Common shares outstanding plus shares underlying stock-based awards includes common shares outstanding, restricted stock units, and outstanding stock options.
Adjusted EBITDA is defined as net income (loss), excluding interest income; interest expense; other income (expense) net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense and related payroll tax expense; and certain other non-cash or non-recurring items impacting net income (loss) from time to time.
A 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 Daily Active Users 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.
ARPU is defined as quarterly revenue divided by the average Daily Active Users.
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.”
Financial Guidance
The following forward-looking statements reflect our expectations for the third quarter of 2018 as of August 7, 2018, and are subject to substantial uncertainty. This guidance assumes, among other things, that no business acquisitions, investments, restructurings, or legal settlements are concluded in the quarter. Our results are based on assumptions that we believe to be reasonable as of this date, but may be materially affected by many factors, as discussed below in “Forward-Looking Statements.”
Q3 2018 Outlook
- Revenue is expected to be between $265 million and $290 million, growth of between 27% and 39% compared to Q3 2017.
- Adjusted EBITDA loss is expected to be between $(185) million and $(160) million, compared to $(179) million in Q3 2017.
Conference Call Information
Snap Inc. will host a conference call to discuss the results at 2:00 p.m. Pacific / 5:00 p.m. Eastern today. The live audio webcast along with supplemental information will be accessible at investor.snap.com. A recording of the webcast will also be available following the conference call.
Snap Inc. uses the investor.snap.com and snap.com/news websites as means of disclosing material non-public information and for complying with its disclosure obligation under Regulation FD.
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 that are based on our management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include statements about guidance or expected financial metrics, such as revenue, non-GAAP Adjusted EBITDA, capital expenditures, and stock-based compensation, as well as non-financial metrics, such as DAU, MAU, and video views. They also include statements about our possible or assumed business strategies, potential growth opportunities, new products, and potential market opportunities.
Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “believe,” “could,” “expect,” “potential,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. These risks include, but are not limited to, risks and uncertainties related to: our limited operating history, our lack of profitability to date, changes to our business model, our ability to monetize our products, the highly competitive and rapidly changing market for internet and advertising companies, user reception of changes to existing products, infrastructure costs, our ability to create new and innovative products, our ability to maintain users and manage any future user growth, litigation, and our international expansion strategies. Additional risks and uncertainties that could affect our financial results are included in the section titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our quarterly report on Form 10-Q for the quarter ended March 31, 2018, which is available on the SEC’s website at www.sec.gov. Additional information will be made available in Snap Inc.’s quarterly report on Form 10-Q for the quarter ended June 30, 2018 and other filings that we make from time to time with the SEC. In addition, any forward-looking statements contained in this press release are based on assumptions that we believe to be reasonable as of this date. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.
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 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 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 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, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Cash flows from operating activities | ||||||||||||||||
| Net loss | $ | (353,310 | ) | $ | (443,093 | ) | $ | (739,095 | ) | $ | (2,651,930 | ) | ||||
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
||||||||||||||||
| Depreciation and amortization | 22,514 | 12,585 | 44,068 | 25,035 | ||||||||||||
| Stock-based compensation | 156,371 | 245,028 | 289,630 | 2,237,149 | ||||||||||||
| Deferred income taxes | 17 | (277 | ) | 253 | (1,765 | ) | ||||||||||
| Other | (5,893 | ) | (3,564 | ) | (9,287 | ) | (1,672 | ) | ||||||||
|
Change in operating assets and liabilities, net of effect of
acquisitions: |
||||||||||||||||
| Accounts receivable, net of allowance | (13,926 | ) | (21,653 | ) | 34,771 | (8,209 | ) | |||||||||
| Prepaid expenses and other current assets | 7,815 | (4,399 | ) | (2,624 | ) | (47,835 | ) | |||||||||
| Other assets | 9,021 | (12,823 | ) | 13,225 | (10,108 | ) | ||||||||||
| Accounts payable | (9,653 | ) | 3,698 | (46,722 | ) | 9,317 | ||||||||||
| Accrued expenses and other current liabilities | (19,356 | ) | 12,986 | (29,505 | ) | 82,190 | ||||||||||
| Other liabilities | 7,054 | 1,938 | 13,959 | 3,257 | ||||||||||||
| Net cash used in operating activities | (199,346 | ) | (209,574 | ) | (431,327 | ) | (364,571 | ) | ||||||||
| Cash flows from investing activities | ||||||||||||||||
| Purchases of property and equipment | (34,901 | ) | (19,365 | ) | (71,216 | ) | (37,358 | ) | ||||||||
| Purchases of intangible assets | (2,505 | ) | (7,720 | ) | (2,565 | ) | (7,720 | ) | ||||||||
| Non-marketable investments | (21,010 | ) | (6,905 | ) | (21,010 | ) | (7,530 | ) | ||||||||
| Cash paid for acquisitions, net of cash acquired | — | (206,163 | ) | — | (224,176 | ) | ||||||||||
| Purchases of marketable securities | (396,885 | ) | (1,319,156 | ) | (874,098 | ) | (2,742,370 | ) | ||||||||
| Sales of marketable securities | — | 237,095 | 45,007 | 237,095 | ||||||||||||
| Maturities of marketable securities | 578,509 | 602,432 | 1,366,337 | 1,047,479 | ||||||||||||
| Net cash provided by (used in) investing activities | 123,208 | (719,782 | ) | 442,455 | (1,734,580 | ) | ||||||||||
| Cash flows from financing activities | ||||||||||||||||
| Proceeds from the exercise of stock options | 1,914 | 189 | 47,723 | 783 | ||||||||||||
| Stock repurchases from employees for tax withholdings | — | (1,828 | ) | (551 | ) | (208,407 | ) | |||||||||
| Proceeds from issuance of Class A common stock in initial public offering, net of underwriting commissions | — | — | — | 2,657,797 | ||||||||||||
| Payments of initial public offering issuance costs | — | (4,341 | ) | — | (9,365 | ) | ||||||||||
| Net cash provided by (used in) financing activities | 1,914 | (5,980 | ) | 47,172 | 2,440,808 | |||||||||||
| Change in cash, cash equivalents, and restricted cash | (74,224 | ) | (935,336 | ) | 58,300 | 341,657 | ||||||||||
| Cash, cash equivalents, and restricted cash, beginning of period | 469,531 | 1,440,329 | 337,007 | 163,336 | ||||||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 395,307 | $ | 504,993 | $ | 395,307 | $ | 504,993 | ||||||||
| Supplemental disclosures | ||||||||||||||||
| Cash paid for income taxes | $ | 1,406 | $ | 1,945 | $ | 2,397 | $ | 5,490 | ||||||||
| Supplemental disclosures of non-cash activities | ||||||||||||||||
| Purchase consideration liabilities related to acquisitions | $ | — | $ | 9,341 | $ | — | $ | 11,242 | ||||||||
| Construction in progress related to financing lease obligations | $ | 431 | $ | 426 | $ | 856 | $ | 683 | ||||||||
|
Net change in accounts payable and accrued expenses and other
current liabilities related to property and equipment additions |
$ | 143 | $ | 612 | $ | 588 | $ | (3,743 | ) | |||||||
|
SNAP INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts, unaudited) |
||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenue | $ | 262,263 | $ | 181,671 | $ | 492,929 | $ | 331,319 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of revenue | 191,565 | 152,148 | 388,363 | 315,506 | ||||||||||||
| Research and development | 203,246 | 255,735 | 404,232 | 1,061,583 | ||||||||||||
| Sales and marketing | 101,685 | 90,903 | 203,798 | 310,636 | ||||||||||||
| General and administrative | 123,609 | 131,903 | 246,908 | 1,306,379 | ||||||||||||
| Total costs and expenses | 620,105 | 630,689 | 1,243,301 | 2,994,104 | ||||||||||||
| Loss from operations | (357,842 | ) | (449,018 | ) | (750,372 | ) | (2,662,785 | ) | ||||||||
| Interest income | 6,600 | 6,349 | 12,704 | 8,773 | ||||||||||||
| Interest expense | (930 | ) | (998 | ) | (1,864 | ) | (1,693 | ) | ||||||||
| Other income (expense), net | (61 | ) | 786 | 3,092 | 973 | |||||||||||
| Loss before income taxes | (352,233 | ) | (442,881 | ) | (736,440 | ) | (2,654,732 | ) | ||||||||
| Income tax benefit (expense) | (1,077 | ) | (212 | ) | (2,655 | ) | 2,802 | |||||||||
| Net loss | $ | (353,310 | ) | $ | (443,093 | ) | $ | (739,095 | ) | $ | (2,651,930 | ) | ||||
| Net loss per share attributable to Class A, Class B, and Class C common stockholders: | ||||||||||||||||
| Basic | $ | (0.27 | ) | $ | (0.36 | ) | $ | (0.58 | ) | $ | (2.43 | ) | ||||
| Diluted | $ | (0.27 | ) | $ | (0.36 | ) | $ | (0.58 | ) | $ | (2.43 | ) | ||||
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SNAP INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) |
||||||||
|
June 30,
2018 |
December 31,
2017 |
|||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 393,183 | $ | 334,063 | ||||
| Marketable securities | 1,176,820 | 1,708,976 | ||||||
| Accounts receivable, net of allowance | 244,815 | 279,473 | ||||||
| Prepaid expenses and other current assets | 54,032 | 44,282 | ||||||
| Total current assets | 1,868,850 | 2,366,794 | ||||||
| Property and equipment, net | 214,230 | 166,762 | ||||||
| Intangible assets, net | 147,197 | 166,473 | ||||||
| Goodwill | 635,482 | 639,882 | ||||||
| Other assets | 84,954 | 81,655 | ||||||
| Total assets | $ | 2,950,713 | $ | 3,421,566 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 22,644 | $ | 71,194 | ||||
| Accrued expenses and other current liabilities | 256,698 | 275,062 | ||||||
| Total current liabilities | 279,342 | 346,256 | ||||||
| Other liabilities | 87,303 | 82,983 | ||||||
| Total liabilities | 366,645 | 429,239 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity | ||||||||
|
Class A non-voting common stock, $0.00001 par value. 3,000,000 shares
authorized, 958,801 shares issued and outstanding at June 30, 2018, and 3,000,000 shares authorized, 883,022 shares issued and outstanding at December 31, 2017. |
10 | 9 | ||||||
|
Class B voting common stock, $0.00001 par value. 700,000 shares
authorized, 94,471 shares issued and outstanding at June 30, 2018, and 700,000 shares authorized, 122,564 shares issued and outstanding at December 31, 2017. |
1 | 1 | ||||||
|
Class C voting common stock, $0.00001 par value. 260,888 shares
authorized, 219,891 shares issued and outstanding at June 30, 2018, and 260,888 shares authorized and 216,616 shares issued and outstanding at December 31, 2017. |
2 | 2 | ||||||
| Additional paid-in capital | 7,971,610 | 7,634,825 | ||||||
| Accumulated other comprehensive income (loss) | 8,207 | 14,157 | ||||||
| Accumulated deficit | (5,395,762 | ) | (4,656,667 | ) | ||||
| Total stockholders’ equity | 2,584,068 | 2,992,327 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,950,713 | $ | 3,421,566 | ||||
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SNAP INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, unaudited) |
||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Adjusted EBITDA reconciliation: | ||||||||||||||||
| Net loss | $ | (353,310 | ) | $ | (443,093 | ) | $ | (739,095 | ) | $ | (2,651,930 | ) | ||||
| Add (deduct): | ||||||||||||||||
| Interest income | (6,600 | ) | (6,349 | ) | (12,704 | ) | (8,773 | ) | ||||||||
| Interest expense | 930 | 998 | 1,864 | 1,693 | ||||||||||||
| Other (income) expense, net | 61 | (786 | ) | (3,092 | ) | (973 | ) | |||||||||
| Income tax (benefit) expense | 1,077 | 212 | 2,655 | (2,802 | ) | |||||||||||
| Depreciation and amortization | 22,514 | 12,585 | 44,068 | 25,035 | ||||||||||||
| Stock-based compensation expense | 156,371 | 245,028 | 289,630 | 2,237,149 | ||||||||||||
| Payroll tax expense related to stock-based compensation | 5,997 | (2,585 | ) | 15,965 | 18,368 | |||||||||||
| Reduction in force charges(1) | — | — | 9,884 | — | ||||||||||||
| Lease exit charges(2) | 3,928 | — | 3,928 | — | ||||||||||||
| Adjusted EBITDA | $ | (169,032 | ) | $ | (193,990 | ) | $ | (386,897 | ) | $ | (382,233 | ) | ||||
|
Total depreciation and amortization expense by function: |
||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Depreciation and amortization expense: | ||||||||||||||||
| Cost of revenue | $ | 5,610 | $ | 2,970 | $ | 10,812 | $ | 4,639 | ||||||||
| Research and development | 9,489 | 5,983 | 18,280 | 11,738 | ||||||||||||
| Sales and marketing | 3,991 | 1,589 | 7,560 | 4,189 | ||||||||||||
| General and administrative | 3,424 | 2,043 | 7,416 | 4,469 | ||||||||||||
| Total | $ | 22,514 | $ | 12,585 | $ | 44,068 | $ | 25,035 | ||||||||
|
Total stock-based compensation expense by function: |
||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Stock-based compensation expense: | ||||||||||||||||
| Cost of revenue | $ | 1,467 | $ | 2,223 | $ | 1,743 | $ | 21,931 | ||||||||
| Research and development | 92,303 | 163,848 | 170,118 | 881,928 | ||||||||||||
| Sales and marketing | 21,996 | 20,558 | 38,182 | 180,284 | ||||||||||||
| General and administrative | 40,605 | 58,399 | 79,587 | 1,153,006 | ||||||||||||
| Total | $ | 156,371 | $ | 245,028 | $ | 289,630 | $ | 2,237,149 | ||||||||
(1) Reduction in force charges during the first quarter of 2018 were related to a reduction in force plan we implemented during March 2018, impacting approximately 7% of our global headcount, primarily in engineering and sales. The charges are composed primarily of severance expense and related payroll tax expense. These charges are non-recurring and not reflective of underlying trends in our business. Additionally, we recognized a stock-based compensation forfeiture benefit of $31.5 million, which is included in the stock-based compensation expense line item above.
(2) Lease exit charges were related to our exit of various operating leases prior to the end of the contractual lease term, primarily as a result of moving to a centralized corporate office located in Santa Monica, California. We recorded a lease exit charge of $3.9 million in the second quarter of 2018. The charge reflects the present value of our remaining lease obligation on the cease use dates that occurred during the quarter, net of sublease income. We expect to incur total lease exit charges of approximately $25 million to $45 million in 2018, primarily in the third quarter, based on current exit plans. These charges are non-recurring and not reflective of underlying trends in our business.
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SNAP INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued) (In thousands, except per share amounts, unaudited) |
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| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Free Cash Flow reconciliation: | ||||||||||||||||
| Net cash used in operating activities | $ | (199,346 | ) | $ | (209,574 | ) | $ | (431,327 | ) | $ | (364,571 | ) | ||||
| Less: | ||||||||||||||||
| Purchases of property and equipment | (34,901 | ) | (19,365 | ) | (71,216 | ) | (37,358 | ) | ||||||||
| Free Cash Flow | $ | (234,247 | ) | $ | (228,939 | ) | $ | (502,543 | ) | $ | (401,929 | ) | ||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Non-GAAP Net Loss reconciliation: | ||||||||||||||||
| Net loss | $ | (353,310 | ) | $ | (443,093 | ) | $ | (739,095 | ) | $ | (2,651,930 | ) | ||||
| Amortization of intangible assets | 10,754 | 5,767 | 21,577 | 11,204 | ||||||||||||
| Stock-based compensation expense | 156,371 | 245,028 | 289,630 | 2,237,149 | ||||||||||||
| Payroll tax expense related to stock-based compensation | 5,997 | (2,585 | ) | 15,965 | 18,368 | |||||||||||
| Reduction in force charges | — | — | 9,884 | — | ||||||||||||
| Lease exit charges | 3,928 | — | 3,928 | — | ||||||||||||
| Income tax adjustments | (339 | ) | (623 | ) | (119 | ) | (2,190 | ) | ||||||||
| Non-GAAP net loss | $ | (176,599 | ) | $ | (195,506 | ) | $ | (398,230 | ) | $ | (387,399 | ) | ||||
| Weighted-average common shares - Diluted | 1,294,846 | 1,223,443 | 1,283,668 | 1,090,751 | ||||||||||||
| Non-GAAP Diluted Net Loss Per Share reconciliation: | ||||||||||||||||
| Diluted net loss per share | $ | (0.27 | ) | $ | (0.36 | ) | $ | (0.58 | ) | $ | (2.43 | ) | ||||
| Non-GAAP adjustment to net loss | 0.13 | 0.20 | 0.27 | 2.08 | ||||||||||||
| Non-GAAP diluted Net Loss per share | $ | (0.14 | ) | $ | (0.16 | ) | $ | (0.31 | ) | $ | (0.36 | ) | ||||
|
SNAP INC. SUPPLEMENTAL FINANCIAL INFORMATION AND BUSINESS METRICS (Dollars in thousands, except as noted below, unaudited) |
||||||||||||||||||||||||
| Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | Q1 2018 | Q2 2018 | |||||||||||||||||||
| Cash Flows and Shares | ||||||||||||||||||||||||
| Net cash used in operating activities | $ | (154,997 | ) | $ | (209,574 | ) | $ | (194,013 | ) | $ | (176,083 | ) | $ | (231,981 | ) | $ | (199,346 | ) | ||||||
| Net cash used in operating activities - YoY (year-over-year) | (67 | )% | (56 | )% | 11 | % | (5 | )% | (50 | )% | 5 | % | ||||||||||||
| Net cash used in operating activities - TTM (trailing twelve months) | $ | (673,701 | ) | $ | (749,165 | ) | $ | (726,312 | ) | $ | (734,667 | ) | $ | (811,651 | ) | $ | (801,423 | ) | ||||||
| Purchases of property and equipment | $ | (17,993 | ) | $ | (19,365 | ) | $ | (25,948 | ) | $ | (21,212 | ) | $ | (36,315 | ) | $ | (34,901 | ) | ||||||
| Purchases of property and equipment - YoY | 44 | % | 18 | % | 51 | % | 4 | % | 102 | % | 80 | % | ||||||||||||
| Purchases of property and equipment - TTM | $ | (71,982 | ) | $ | (74,926 | ) | $ | (83,682 | ) | $ | (84,518 | ) | $ | (102,840 | ) | $ | (118,376 | ) | ||||||
| Free Cash Flow | $ | (172,990 | ) | $ | (228,939 | ) | $ | (219,961 | ) | $ | (197,295 | ) | $ | (268,296 | ) | $ | (234,247 | ) | ||||||
| Free Cash Flow - YoY | (65 | )% | (52 | )% | 6 | % | (5 | )% | (55 | )% | (2 | )% | ||||||||||||
| Free Cash Flow - TTM | $ | (745,683 | ) | $ | (824,091 | ) | $ | (809,994 | ) | $ | (819,185 | ) | $ | (914,491 | ) | $ | (919,799 | ) | ||||||
| Common shares outstanding | 1,178,850 | 1,180,002 | 1,201,736 | 1,222,202 | 1,254,439 | 1,273,163 | ||||||||||||||||||
| Common shares outstanding - YoY | NM | NM | NM | NM | 6 | % | 8 | % | ||||||||||||||||
| Shares underlying stock-based awards | 253,300 | 254,344 | 239,564 | 230,802 | 202,175 | 205,595 | ||||||||||||||||||
| Shares underlying stock-based awards - YoY | NM | NM | NM | NM | (20 | )% | (19 | )% | ||||||||||||||||
| Total common shares outstanding plus shares underlying stock-based awards | 1,432,150 | 1,434,346 | 1,441,300 | 1,453,004 | 1,456,613 | 1,478,758 | ||||||||||||||||||
| Total common shares outstanding plus shares underlying stock-based awards - Y/Y | NM | NM | NM | NM | 2 | % | 3 | % | ||||||||||||||||
| Results of Operations | ||||||||||||||||||||||||
| Revenue | $ | 149,648 | $ | 181,671 | $ | 207,937 | $ | 285,693 | $ | 230,666 | $ | 262,263 | ||||||||||||
| Revenue - YoY | 286 | % | 153 | % | 62 | % | 72 | % | 54 | % | 44 | % | ||||||||||||
| Revenue - TTM | $ | 515,332 | $ | 625,205 | $ | 704,938 | $ | 824,949 | $ | 905,967 | $ | 986,559 | ||||||||||||
| Revenue by region(1) | ||||||||||||||||||||||||
| North America | $ | 128,718 | $ | 147,638 | $ | 167,306 | $ | 219,394 | $ | 170,488 | $ | 177,410 | ||||||||||||
| North America - YoY | 259 | % | 126 | % | 46 | % | 51 | % | 32 | % | 20 | % | ||||||||||||
| North America - TTM | $ | 454,048 | $ | 536,467 | $ | 589,018 | $ | 663,057 | $ | 704,827 | $ | 734,599 | ||||||||||||
| Europe | $ | 13,102 | $ | 22,052 | $ | 27,262 | $ | 39,976 | $ | 32,721 | $ | 40,241 | ||||||||||||
| Europe - YoY | NM | 254 | % | 131 | % | 173 | % | 150 | % | 82 | % | |||||||||||||
| Europe - TTM | $ | 45,794 | $ | 61,610 | $ | 77,081 | $ | 102,392 | $ | 122,011 | $ | 140,200 | ||||||||||||
| Rest of World | $ | 7,829 | $ | 11,981 | $ | 13,368 | $ | 26,323 | $ | 27,458 | $ | 44,612 | ||||||||||||
| Rest of World - YoY | NM | NM | NM | NM | 251 | % | 272 | % | ||||||||||||||||
| Rest of World - TTM | $ | 15,491 | $ | 27,129 | $ | 38,839 | $ | 59,501 | $ | 79,130 | $ | 111,761 | ||||||||||||
| Loss from operations | $ | (2,213,767 | ) | $ | (449,018 | ) | $ | (461,827 | ) | $ | (360,964 | ) | $ | (392,530 | ) | $ | (357,842 | ) | ||||||
| Loss from operations - YoY | NM | (288 | )% | (253 | )% | (113 | )% | 82 | % | 20 | % | |||||||||||||
| Loss from operations - Margin | NM | (247 | )% | (222 | )% | (126 | )% | (170 | )% | (136 | )% | |||||||||||||
| Loss from operations - TTM | $ | (2,630,331 | ) | $ | (2,963,490 | ) | $ | (3,294,349 | ) | $ | (3,485,576 | ) | $ | (1,664,339 | ) | $ | (1,573,163 | ) | ||||||
| Net loss(2) | $ | (2,208,837 | ) | $ | (443,093 | ) | $ | (443,159 | ) | $ | (349,977 | ) | $ | (385,785 | ) | $ | (353,310 | ) | ||||||
| Net loss - YoY | NM | 282 | % | 257 | % | 106 | % | (83 | )% | (20 | )% | |||||||||||||
| Net loss - TTM | $ | (2,618,904 | ) | $ | (2,946,103 | ) | $ | (3,265,034 | ) | $ | (3,445,066 | ) | $ | (1,622,014 | ) | $ | (1,532,231 | ) | ||||||
| Adjusted EBITDA | $ | (188,243 | ) | $ | (193,990 | ) | $ | (178,901 | ) | $ | (158,922 | ) | $ | (217,867 | ) | (169,032 | ) | |||||||
| Adjusted EBITDA - YoY | (102 | )% | (85 | )% | (65 | )% | (4 | )% | (16 | )% | 13 | % | ||||||||||||
| Adjusted EBITDA - Margin | (126 | )% | (107 | )% | (86 | )% | (56 | )% | (94 | )% | (64 | )% | ||||||||||||
| Adjusted EBITDA - TTM | $ | (554,252 | ) | $ | (643,121 | ) | $ | (713,418 | ) | $ | (720,056 | ) | $ | (749,680 | ) | $ | (724,722 | ) | ||||||
(1) Total revenue for geographic reporting is apportioned to each region based on our determination of the geographic location in which advertising impressions are delivered, as this approximates revenue based on user activity. This allocation is consistent with how we determine ARPU.
|
SNAP INC. SUPPLEMENTAL FINANCIAL INFORMATION AND BUSINESS METRICS (continued) (Dollars in thousands, except as noted below, unaudited) |
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| Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | Q1 2018 | Q2 2018 | |||||||||||||||||||
| Other | ||||||||||||||||||||||||
| DAU (in millions) | 166 | 173 | 178 | 187 | 191 | 188 | ||||||||||||||||||
| DAU - YoY | 36 | % | 21 | % | 17 | % | 18 | % | 15 | % | 8 | % | ||||||||||||
| DAU by region (in millions) | ||||||||||||||||||||||||
| North America | 71 | 75 | 77 | 80 | 81 | 80 | ||||||||||||||||||
| North America - YoY | 32 | % | 22 | % | 18 | % | 18 | % | 14 | % | 7 | % | ||||||||||||
| Europe | 55 | 57 | 57 | 60 | 62 | 61 | ||||||||||||||||||
| Europe - YoY | 41 | % | 24 | % | 17 | % | 17 | % | 13 | % | 7 | % | ||||||||||||
| Rest of World | 40 | 42 | 44 | 47 | 48 | 47 | ||||||||||||||||||
| Rest of World - YoY | 38 | % | 16 | % | 14 | % | 21 | % | 18 | % | 12 | % | ||||||||||||
| ARPU | $ | 0.90 | $ | 1.05 | $ | 1.17 | $ | 1.53 | $ | 1.21 | $ | 1.40 | ||||||||||||
| ARPU - YoY | 183 | % | 109 | % | 39 | % | 46 | % | 34 | % | 34 | % | ||||||||||||
| ARPU by region | ||||||||||||||||||||||||
| North America | $ | 1.81 | $ | 1.97 | $ | 2.17 | $ | 2.75 | $ | 2.10 | $ | 2.21 | ||||||||||||
| North America - YoY | 172 | % | 85 | % | 24 | % | 28 | % | 16 | % | 12 | % | ||||||||||||
| Europe | $ | 0.24 | $ | 0.39 | $ | 0.48 | $ | 0.66 | $ | 0.53 | $ | 0.66 | ||||||||||||
| Europe - YoY | 245 | % | 186 | % | 98 | % | 133 | % | 120 | % | 70 | % | ||||||||||||
| Rest of World | $ | 0.19 | $ | 0.29 | $ | 0.30 | $ | 0.56 | $ | 0.58 | $ | 0.96 | ||||||||||||
| Rest of World - YoY | NM | NM | NM | 284 | % | 198 | % | 233 | % | |||||||||||||||
| Employees (full-time; excludes part-time, contractors, and temporary personnel) | 2,360 | 2,607 | 2,958 | 3,069 | 2,989 | 2,879 | ||||||||||||||||||
| Employees - YoY | 201 | % | 146 | % | 109 | % | 65 | % | 27 | % | 10 | % | ||||||||||||
| Depreciation and amortization expense | ||||||||||||||||||||||||
| Cost of revenue | $ | 1,669 | $ | 2,970 | $ | 5,404 | $ | 5,179 | $ | 5,202 | 5,610 | |||||||||||||
| Research and development | 5,755 | 5,983 | 6,401 | 6,937 | 8,791 | 9,489 | ||||||||||||||||||
| Sales and marketing | 2,600 | 1,589 | 2,820 | 3,441 | 3,569 | 3,991 | ||||||||||||||||||
| General and administrative | 2,426 | 2,043 | 2,842 | 3,229 | 3,991 | 3,424 | ||||||||||||||||||
| Total | $ | 12,450 | $ | 12,585 | $ | 17,467 | $ | 18,786 | $ | 21,553 | $ | 22,514 | ||||||||||||
| Depreciation and amortization expense - YoY | 147 | % | 110 | % | 135 | % | 77 | % | 73 | % | 79 | % | ||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||
| Cost of revenue | $ | 19,708 | $ | 2,223 | $ | 1,951 | $ | 2,189 | $ | 276 | 1,467 | |||||||||||||
| Research and development | 718,080 | 163,848 | 143,303 | 129,199 | 77,815 | 92,303 | ||||||||||||||||||
| Sales and marketing | 159,726 | 20,558 | 27,254 | 28,936 | 16,185 | 21,996 | ||||||||||||||||||
| General and administrative | 1,094,607 | 58,399 | 49,194 | 20,720 | 38,982 | 40,605 | ||||||||||||||||||
| Total | $ | 1,992,121 | $ | 245,028 | $ | 221,702 | $ | 181,044 | $ | 133,258 | $ | 156,371 | ||||||||||||
| Stock-based compensation expense - YoY | NM | NM | NM | NM | (93 | )% | (36 | )% | ||||||||||||||||
