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Snap announces $1 billion private offering due 2026

SANTA MONICA, Calif.–(BUSINESS WIRE) — Snap Inc. announced today that it intends to offer, subject to market conditions and other factors, $1.0 billion principal amount of convertible senior notes due 2026 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, or the Securities Act. Snap also intends to grant the initial purchasers of the notes an option to purchase up to an additional $150.0 million principal amount of notes.

The notes will be general unsecured obligations of Snap and will accrue interest payable semiannually in arrears.

The notes will mature on August 1, 2026, unless repurchased, redeemed, or converted in accordance with their terms prior to the maturity date. The notes will be convertible at the option of the holders prior to the close of business on the business day immediately preceding May 1, 2026 only on the satisfaction of certain conditions and during certain periods. After that, the notes will be convertible at the option of the holders at any time until the close of business on the business day immediately preceding the maturity date. On conversion, Snap will elect to settle the notes in cash, shares of Snap’s Class A common stock, or a combination of cash and shares of Snap’s Class A common stock. The interest rate, initial conversion rate, and other terms of the notes will be determined at the time of pricing of the offering.

Snap intends to use the net proceeds from the offering for general corporate purposes, including working capital, operating expenses, capital expenditures, and to pay the cost of the capped call transactions described below. Snap may also use a portion of the net proceeds to acquire complementary businesses, products, services, or technologies or for repurchases of Snap’s common stock, although it has no commitments for any material acquisitions or stock repurchases at this time.

The notes and any shares of Snap Class A common stock issuable on conversion of the notes have not been registered under the Securities Act or any state securities laws. Unless a subsequent sale is registered under the Securities Act, the notes and shares of Snap Class A common stock issuable on conversion of the notes may only be offered or sold in the United States in a transaction that is exempt from or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.

In connection with the pricing of the notes, Snap plans to enter into capped call transactions with one or more of the initial purchasers of the notes or their respective affiliates or other financial institutions, collectively, the capped call counterparties. The capped call transactions will cover, subject to customary anti-dilution adjustments, the number of shares of Snap Class A common stock that will initially underlie the notes, assuming the initial purchasers do not exercise their option to purchase additional notes. The capped call transactions are expected generally to reduce potential dilution to holders of Snap’s Class A common stock on any conversion of notes or offset any cash payments Snap is required to make in excess of the principal amount of any such converted notes, as the case may be, with such reduction or offset subject to a cap. If the initial purchasers of the notes exercise their option to purchase additional notes, Snap plans to enter into additional capped call transactions with the capped call counterparties.

In connection with establishing their initial hedges of the capped call transactions, the capped call counterparties or their respective affiliates may purchase shares of Snap Class A common stock or enter into various derivative transactions with respect to Snap Class A common stock concurrently with, or shortly after, the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of Snap Class A common stock or the notes at that time.

In addition, the capped call counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to Snap Class A common stock or purchasing or selling Snap Class A common stock in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so during any observation period related to a conversion of notes or following any repurchase of notes by Snap on any fundamental change repurchase date or otherwise). This activity could also cause or avoid an increase or decrease in the market price of Snap Class A common stock or the notes, which could affect noteholders’ ability to convert the notes and, to the extent the activity occurs during any observation period related to a conversion of notes, it could affect the amount and value of the consideration that noteholders will receive on conversion of such notes.

This press release is not an offer to sell and is not soliciting an offer to buy any securities, nor will it constitute an offer, solicitation, or sale of the securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

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.

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