Snap Inc. Announces Third Quarter 2024 Financial Results

Third quarter revenue increased 15% year-over-year to $1,373 million

Daily Active Users increased 9% year-over-year to 443 million

Net loss improved 58% year-over-year to $153 million

Adjusted EBITDA improved 229% year-over-year to $132 million

Snap Inc. (NYSE:SNAP) today announced financial results for the quarter ended September 30, 2024.

"I'm proud of the team's progress this quarter, delivering strong community growth and deepening engagement while driving improved financial performance," said Evan Spiegel, CEO. "Our investments in AI and AR are powering new creative experiences for our community and driving innovation across our advertising platform, underpinning our long-term growth opportunity."

Snap Inc. also announced today its board of directors has authorized a stock repurchase program of up to $500 million of its Class A common stock. Repurchases of the Class A common stock may be made from time to time, either through open market transactions (including through Rule 10b5-1 trading plans) or through privately negotiated transactions in accordance with applicable securities laws. The timing and actual number of shares repurchased will depend on a variety of factors, including stock price, trading volume, market and economic conditions, and other general business considerations. Repurchases under the program have been authorized for 12 months but the program may be initiated, modified, suspended, or terminated at any time during such period.

The goal of the program is to utilize the company's strong balance sheet to opportunistically offset a portion of the dilution related to the issuance of restricted stock units to employees as part of the overall compensation program designed to foster an ownership culture.

Repurchases under this program will be funded from existing cash and cash equivalents. As of September 30, 2024, Snap had $3.2 billion in cash, cash equivalents, and marketable securities.

Q3 2024 Financial Summary

• Revenue was $1,373 million, compared to $1,189 million in the prior year, an increase of 15% year-over-year.
• Net loss was $153 million, compared to $368 million in the prior year.
• Adjusted EBITDA was $132 million, compared to $40 million in the prior year.
• Operating cash flow was $116 million, compared to $13 million in the prior year.
• Free Cash Flow was $72 million, compared to $(61) million in the prior year.

Q3 2024 Summary & Key Highlights

We deepened engagement with our community:

• DAUs were 443 million in Q3 2024, an increase of 37 million, or 9% year-over-year.
• Total time spent watching content increased 25% year-over-year.
• Spotlight reached more than 500 million monthly active users on average in Q3, an increase of 21% year-over-year.
• Over a billion Snaps were shared publicly on Snapchat every month in Q3 from our community, creators, and media partners.
• We announced an expanded strategic partnership with Google Cloud to power additional generative AI experiences within My AI, our AI-powered chatbot.
• We introduced new AI-enabled features to spark conversations, make great Snaps, and discover new things, like bringing AI to Memories and improving My AI's ability to problem solve.
• We launched new safety tools and resources designed to help educators and school administrators understand how their students use Snapchat, the key protections available to them, and resources to assist in their efforts to create safe and supportive environments for students.

We are focused on accelerating and diversifying our revenue growth:

• Snapchat+ reached 12 million subscribers in Q3, more than doubling year-over-year.
• Ongoing momentum with our direct response products and growth in small- and medium-size businesses contributed to total active advertisers more than doubling year-over-year in Q3.
• We are in the early stages of experimenting with two new ad formats, Sponsored Snaps and Promoted Places, to help businesses reach Snapchatters in engaging ways across our differentiated service.
• We launched First Lens Unlimited, which offers advertisers the first impression of the day in the first slot of the Lens Carousel, allowing them to reach our community at greater scale.
• We launched State-specific First Story, which allows US advertisers to target First Story takeover campaigns to individual states or to reach the entire country with different creative for each state, as selected by the advertiser.

We invested in our augmented reality platform:

• We introduced the fifth generation of Spectacles, our new see-through, standalone AR glasses that enable developers to use Lenses and experience the world together with friends, powered by Snap OS.
• Snap OS is our brand new and groundbreaking operating system with a natural interface that uses hands and voice, with no controller required. The Snap Spatial Engine understands the world around you so that Lenses appear realistically in three dimensions.
• More than 375,000 AR creators, developers, and teams from nearly every country in the world have built over 4 million Lenses.
• Over 150 million Spotlight videos have been created this year featuring Lenses made by our talented community of Lens Creators.
• Over 225 million Snapchatters engaged with more than 25 custom Olympic-related AR experiences globally during the Paris 2024 Games.
• We're rolling out a slate of new GenAI Suite features in Lens Studio that make it faster and easier to bring your creativity to life, including Animation Blending, Body Morph, and Icon Generation.
• We're making AR creation simpler with Easy Lens, a new tool that makes it possible to build Lenses in a matter of minutes, just by typing into a text prompt.

Q4 2024 Outlook

Snap Inc. will discuss its Q4 2024 outlook during its Q3 2024 Earnings Call (details below) and in its investor letter available at investor.snap.com.

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 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 and logged-in Snapchat user who visits Snapchat through our applications or websites 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 and logged-in Snapchat user who visits Snapchat through our applications or websites at least once during the 30-day period ending on the calendar month-end. We calculate average Monthly Active Users for a particular quarter by calculating the average of the MAUs as of each calendar month-end in that quarter.

Note: For adjustments and additional information regarding the non-GAAP financial measures and other items discussed, please see "Non-GAAP Financial Measures," "Reconciliation of GAAP to Non-GAAP Financial Measures," and "Supplemental Financial Information and Business Metrics."

About Snap Inc.

Snap Inc. is a technology company. We believe the camera presents the greatest opportunity to improve the way people live and communicate. We contribute to human progress by empowering people to express themselves, live in the moment, learn about the world, and have fun together. For more information, visit snap.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this press release, including statements regarding guidance, our future results of operations or financial condition, future stock repurchase programs or stock dividends, business strategy and plans, user growth and engagement, product initiatives, objectives of management for future operations, and advertiser and partner offerings, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "going to," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will," or "would" or the negative of these words or other similar terms or expressions. We caution you that the foregoing may not include all of the forward-looking statements made in this press release.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this press release primarily on our current expectations and projections about future events and trends, including our financial outlook, macroeconomic uncertainty, and geo-political events and 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 events and 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.