Snap announces fourth quarter and full year 2018 financial results
Fourth quarter revenue increased 36% to a record $390 million
Full year revenue increased 43% to $1.2 billion
Daily Active Users were flat sequentially at 186 million
Financial Highlights
- Operating cash flow improved by $50 million to $(126) million in Q4 2018, compared to the prior year.
- Free Cash Flow improved by $49 million to $(149) million in Q4 2018, compared to the prior year.
- Common shares outstanding plus shares underlying stock-based awards totaled 1,507 million at December 31, 2018, compared with 1,453 million one year ago.
- Revenue increased 36% to a record $390 million in Q4 2018, compared to the prior year.
- Operating loss improved $166 million to $(195) million in Q4 2018, compared to the prior year.
- Net loss improved $158 million to $(192) million in Q4 2018, compared to the prior year.
- Adjusted EBITDA loss improved $109 million to $(50) million in Q4 2018, compared to the prior year.
“In 2018, we focused on building a foundation to scale the business over the long-term by driving sustainable product innovation, scaling our advertising platform, and hiring the leadership team that will help us achieve our future goals,” said Evan Spiegel, CEO. “We ended the year with user engagement stabilizing and have started rolling out the new version of our Android application to a small percentage of our community. We are substantially closer to achieving profitability, as we have maintained a relatively flat cost structure across the past five quarters while growing full-year revenue 43 percent year-over-year.”
|
Three Months Ended December 31, |
Percent | Year Ended December 31, | Percent | |||||||||||||||||||
| 2017 | 2018 | Change | 2017 | 2018 | Change | |||||||||||||||||
| (Unaudited) | (dollars and shares in thousands, except per share amounts) | |||||||||||||||||||||
| Cash used in operating activities | $ | (176,083 | ) | $ | (126,054 | ) | (28 | )% | $ | (734,667 | ) | $ | (689,924 | ) | (6 | )% | ||||||
| Free Cash Flow | $ | (197,295 | ) | $ | (148,795 | ) | 25 | % | $ | (819,185 | ) | $ | (810,166 | ) | 1 | % | ||||||
| Common shares outstanding plus shares underlying stock-based awards | 1,453,004 | 1,506,623 | 4 | % | 1,453,004 | 1,506,623 | 4 | % | ||||||||||||||
| Operating loss | $ | (360,964 | ) | $ | (194,707 | ) | (46 | )% | $ | (3,485,576 | ) | $ | (1,268,450 | ) | (64 | )% | ||||||
| Revenue | $ | 285,693 | $ | 389,822 | 36 | % | $ | 824,949 | $ | 1,180,446 | 43 | % | ||||||||||
| Net loss | $ | (349,977 | ) | $ | (191,668 | ) | (45 | )% | $ | (3,445,066 | ) | $ | (1,255,911 | ) | (64 | )% | ||||||
| Adjusted EBITDA | $ | (158,922 | ) | $ | (50,363 | ) | 68 | % | $ | (720,056 | ) | $ | (575,637 | ) | 20 | % | ||||||
| Diluted net loss per share attributable to common stockholders | $ | (0.28 | ) | $ | (0.14 | ) | (48 | )% | $ | (2.95 | ) | $ | (0.97 | ) | (67 | )% | ||||||
| Non-GAAP diluted net loss per share | $ | (0.13 | ) | $ | (0.04 | ) | (65 | )% | $ | (0.61 | ) | $ | (0.47 | ) | (23 | )% | ||||||
Q4 2018 Summary & Key Highlights
We ended the year stabilizing Daily Active Users and enhancing engagement across key metrics:
- DAUs were 186 million in Q4 2018, compared to 187 million in Q4 2017 and 186 million in Q3 2018.
- In Q4 2018, our iOS DAU increased both quarter-over-quarter and year-over-year, and average time spent on iOS grew faster during Q4 2018 than during Q4 2017.
- We reached over 70% of the total 13- to 34-year-old U.S. population with premium mobile video ads on a monthly basis.
- On average, over 70% of users played with or viewed a Lens every day. Users played with or viewed Lenses 700 million times on New Year’s Eve, up nearly 40% year-over-year.
Our commitment to providing high-quality, made-for-mobile video experiences across the Snapchat platform is yielding positive results:
- 30% more people are now watching Publisher Stories and Shows every day compared to last year, and each person is consuming more of these Stories per day on average.
- In Q4 2018, more than 60% of ESPN’s “SportsCenter” audience tuned in three or more times per week.
- “Dead Girls Detective Agency,” a new Snap Original Show produced by our joint venture with NBCUniversal, reached more than 14 million unique viewers, and over 40% of the users that completed the first episode went on to watch the entire season.
- Bitmoji Stories, a new cartoon starring Snapchatters and their friends, reached over 40 million viewers in December.
- NBC News announced that two thirds of the 25 to 35 million Snapchatters watching its Stay Tuned show represented a net new audience for them.
We strengthened our international content offerings:
- We increased the breadth and depth of our content across international markets including France, Germany, Ireland, Norway, the UK, India, and the Middle East.
- We saw success with localized partners such as Filter Copy in India and Layalina in the Middle East to reach audiences drawn to local, culturally relevant content.
We drove continued product innovation:
- We began to roll out our new Android application and early test results are promising, especially on less performant devices, including a 20% reduction in the average time it takes to open Snapchat.
- We expanded our augmented reality platform and launched Snap Camera, which lets people use their favorite Lenses when creating or streaming video on desktop and laptop computers.
- By the end of 2018, over 300,000 Lenses had been created by our community through Lens Studio, and those Lenses were viewed over 35 billion times.
- We launched Lens Challenges, where users can participate in challenges in Lens Explorer by creating a Snap with a Lens that is themed to a particular song, dance, holiday, or event.
- We introduced Friendship Profiles, a collection of images, videos, messages, links, and more that users and friends have saved in Chat. Friendship Profiles make it easy to find favorite Memories and the important things that are saved over time in one place.
We created new products which drove greater monetization:
- Commercials, our 6-second non-skippable video ad, continued to perform well. The majority was transacted via our Premium Content Targeting tool, a part of our Self-Serve Platform for large brands and agencies.
- Collection Ads, which enable a business to showcase four products in a single Snap, drove over twice the return on ad spend versus our comparable formats in Q4 2018.
- We launched Product Catalogs, which offer a simple, scalable way for eCommerce businesses to use their websites to create Snap Ads.
- The Snap Pixel continued to see growth with over 600 million purchase events in Q4 2018 up from 230 million in Q3 2018.
- We made improvements to machine learning models for app installs and lower-funnel bidding events, which contributed to higher always-on revenue, showing that our commitment to performance advertisers is paying off.
We brought together an experienced leadership team to lead us through the next important chapter of Snap:
- We welcomed several talented and experienced leaders from some of the world’s leading tech and media companies, including Jared Grusd, our Chief Strategy Officer, and Jeremi Gorman, our Chief Business Officer. Julie Henderson will be joining us shortly as our Chief Communications Officer.
Financial Guidance
The following forward-looking statements reflect our expectations for the first quarter of 2019 as of February 5, 2019, 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.”
Q1 2019 Outlook
- Revenue is expected to be between $285 million and $310 million, or grow between 24% and 34% compared to Q1 2018.
- Adjusted EBITDA is expected to be between $(165) million and $(140) million, compared to $(218) million in Q1 2018.
Definitions
Free Cash Flow is defined as net cash provided by (used in) operating activities, reduced by purchases of property and equipment.
Common shares outstanding plus shares underlying stock-based awards includes common shares outstanding, restricted stock units, restricted stock awards, and outstanding stock options.
Adjusted EBITDA is defined as net income (loss), excluding interest income; interest expense; other income (expense) net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense and related payroll tax expense; and certain other non-cash or non-recurring items impacting net income (loss) from time to time.
A Daily Active User (DAU) is defined as a registered Snapchat user who opens the Snapchat application at least once during a defined 24-hour period. We calculate average DAUs for a particular quarter by adding the number of DAUs on each day of that quarter and dividing that sum by the number of days in that quarter.
Average revenue per user (ARPU) is defined as quarterly revenue divided by the average DAUs.
A Monthly Active User (MAU) is defined as a registered Snapchat user who opens the Snapchat application at least once during the 30-day period ending on the calendar month-end. We calculate average Monthly Active Users for a particular quarter by calculating the average of the MAUs as of each calendar month-end in that quarter.
Note: For adjustments and additional information regarding the non-GAAP financial measures and other items discussed, please see “Non-GAAP Financial Measures,” “Reconciliation of GAAP to Non-GAAP Financial Measures,” and “Supplemental Financial Information and Business Metrics.”
About Snap Inc.
Snap Inc. is a camera company. We believe that reinventing the camera represents our greatest opportunity to improve the way people live and communicate. We contribute to human progress by empowering people to express themselves, live in the moment, learn about the world, and have fun together. For more information, visit snap.com.
| SNAP INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
|
(in thousands, unaudited) |
||||||||||||||||
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
| 2017 | 2018 | 2017 | 2018 | |||||||||||||
| Cash flows from operating activities | ||||||||||||||||
| Net loss | $ | (349,977 | ) | $ | (191,668 | ) | $ | (3,445,066 | ) | $ | (1,255,911 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
| Depreciation and amortization | 18,786 | 22,682 | 61,288 | 91,648 | ||||||||||||
| Stock-based compensation | 181,044 | 121,772 | 2,639,895 | 538,211 | ||||||||||||
| Deferred income taxes | (3,093 | ) | (512 | ) | (17,490 | ) | (383 | ) | ||||||||
| Excess inventory reserve and related asset impairment | — | — | 21,997 | — | ||||||||||||
| Lease exit charges | — | (235 | ) | — | 33,033 | |||||||||||
| Other | (2,642 | ) | (224 | ) | (6,356 | ) | (903 | ) | ||||||||
| Change in operating assets and liabilities, net of effect of acquisitions: | ||||||||||||||||
| Accounts receivable, net of allowance | (79,844 | ) | (93,443 | ) | (104,357 | ) | (77,506 | ) | ||||||||
| Prepaid expenses and other current assets | 9,182 | 4,653 | (39,783 | ) | 1,594 | |||||||||||
| Other assets | 3,774 | 1,471 | (4,771 | ) | 21,785 | |||||||||||
| Accounts payable | 45,593 | 11,106 | 49,696 | (33,532 | ) | |||||||||||
| Accrued expenses and other current liabilities | (2,461 | ) | 339 | 100,988 | (14,325 | ) | ||||||||||
| Other liabilities | 3,555 | (1,995 | ) | 9,292 | 6,365 | |||||||||||
| Net cash used in operating activities | (176,083 | ) | (126,054 | ) | (734,667 | ) | (689,924 | ) | ||||||||
| Cash flows from investing activities | ||||||||||||||||
| Purchases of property and equipment | (21,212 | ) | (22,741 | ) | (84,518 | ) | (120,242 | ) | ||||||||
| Sales of property and equipment | — | 11,276 | — | 11,276 | ||||||||||||
| Purchases of intangible assets | (82 | ) | — | (8,107 | ) | (2,565 | ) | |||||||||
| Non-marketable investments | (2,500 | ) | (1,235 | ) | (10,030 | ) | (22,495 | ) | ||||||||
| Cash paid for acquisitions, net of cash acquired | (33,604 | ) | (815 | ) | (386,011 | ) | (815 | ) | ||||||||
| Purchases of marketable securities | (449,861 | ) | (335,451 | ) | (3,862,637 | ) | (1,653,918 | ) | ||||||||
| Sales of marketable securities | 69,979 | — | 511,068 | 45,007 | ||||||||||||
| Maturities of marketable securities | 651,898 | 511,404 | 2,483,225 | 2,438,206 | ||||||||||||
| Net cash provided by (used in) investing activities | 214,618 | 162,438 | (1,357,010 | ) | 694,454 | |||||||||||
| Cash flows from financing activities | ||||||||||||||||
| Proceeds from the exercise of stock options | 4,524 | 123 | 11,379 | 47,988 | ||||||||||||
| Stock repurchases from employees for tax withholdings | (26,922 | ) | — | (394,156 | ) | (551 | ) | |||||||||
| 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 | — | — | (9,672 | ) | — | |||||||||||
| Net cash provided by (used in) financing activities | (22,398 | ) | 123 | 2,265,348 | 47,437 | |||||||||||
| Change in cash, cash equivalents, and restricted cash | 16,137 | 36,507 | 173,671 | 51,967 | ||||||||||||
| Cash, cash equivalents, and restricted cash, beginning of period | 320,870 | 352,467 | 163,336 | 337,007 | ||||||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 337,007 | $ | 388,974 | $ | 337,007 | $ | 388,974 | ||||||||
| Supplemental disclosures | ||||||||||||||||
| Cash paid for income taxes | $ | 789 | $ | 443 | $ | 6,226 | $ | 3,598 | ||||||||
| Supplemental disclosures of non-cash activities | ||||||||||||||||
| Assumed equity awards in acquisitions | $ | — | $ | — | $ | 3,911 | $ | — | ||||||||
| Purchase consideration liabilities related to acquisitions | $ | 4,714 | $ | — | $ | 16,486 | $ | — | ||||||||
| Recognition of leased facility asset and lease financing obligation | $ | 344 | $ | 443 | $ | 1,451 | $ | 1,735 | ||||||||
| Net change in accounts payable and accrued expenses and other current liabilities related to property and equipment additions | $ | 17,294 | $ | (2,074 | ) | $ | 13,139 | $ | (7,764 | ) | ||||||
| SNAP INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
|
(in thousands, except per share amounts, unaudited) |
||||||||||||||||
|
Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||||||
| 2017 | 2018 | 2017 | 2018 | |||||||||||||
| Revenue | $ | 285,693 | $ | 389,822 | $ | 824,949 | $ | 1,180,446 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of revenue | 191,246 | 212,948 | 717,462 | 798,865 | ||||||||||||
| Research and development | 233,838 | 164,443 | 1,534,863 | 772,185 | ||||||||||||
| Sales and marketing | 110,458 | 99,474 | 522,605 | 400,824 | ||||||||||||
| General and administrative | 111,115 | 107,664 | 1,535,595 | 477,022 | ||||||||||||
| Total costs and expenses | 646,657 | 584,529 | 4,310,525 | 2,448,896 | ||||||||||||
| Operating loss | (360,964 | ) | (194,707 | ) | (3,485,576 | ) | (1,268,450 | ) | ||||||||
| Interest income | 6,070 | 7,513 | 21,096 | 27,228 | ||||||||||||
| Interest expense | (876 | ) | (1,111 | ) | (3,456 | ) | (3,894 | ) | ||||||||
| Other income (expense), net | 2,553 | (3,715 | ) | 4,528 | (8,248 | ) | ||||||||||
| Loss before income taxes | (353,217 | ) | (192,020 | ) | (3,463,408 | ) | (1,253,364 | ) | ||||||||
| Income tax benefit (expense) | 3,240 | 352 | 18,342 | (2,547 | ) | |||||||||||
| Net loss | $ | (349,977 | ) | $ | (191,668 | ) | $ | (3,445,066 | ) | $ | (1,255,911 | ) | ||||
| Net loss per share attributable to Class A, Class B, and Class C common stockholders: | ||||||||||||||||
| Basic | $ | (0.28 | ) | $ | (0.14 | ) | $ | (2.95 | ) | $ | (0.97 | ) | ||||
| Diluted | $ | (0.28 | ) | $ | (0.14 | ) | $ | (2.95 | ) | $ | (0.97 | ) | ||||
| Weighted average shares used in computation of net loss per share: | ||||||||||||||||
| Basic | 1,247,017 | 1,324,858 | 1,166,085 | 1,300,568 | ||||||||||||
| Diluted | 1,247,017 | 1,324,858 | 1,166,085 | 1,300,568 | ||||||||||||
| SNAP INC. | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
|
(in thousands, except par value) |
||||||||||||
|
December 31, 2017 |
September 30, 2018 |
December 31, 2018 |
||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | $ | 334,063 | $ | 350,398 | $ | 387,149 | ||||||
| Marketable securities | 1,708,976 | 1,064,009 | 891,914 | |||||||||
| Accounts receivable, net of allowance | 279,473 | 261,833 | 354,965 | |||||||||
| Prepaid expenses and other current assets | 44,282 | 48,887 | 41,900 | |||||||||
| Total current assets | 2,366,794 | 1,725,127 | 1,675,928 | |||||||||
| Property and equipment, net | 166,762 | 216,609 | 212,560 | |||||||||
| Intangible assets, net | 166,473 | 136,473 | 126,054 | |||||||||
| Goodwill | 639,882 | 634,186 | 632,370 | |||||||||
| Other assets | 81,655 | 71,381 | 67,194 | |||||||||
| Total assets | $ | 3,421,566 | $ | 2,783,776 | $ | 2,714,106 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable | $ | 71,194 | $ | 20,175 | $ | 30,876 | ||||||
| Accrued expenses and other current liabilities | 275,062 | 265,345 | 261,815 | |||||||||
| Total current liabilities | 346,256 | 285,520 | 292,691 | |||||||||
| Other liabilities | 82,983 | 114,164 | 110,416 | |||||||||
| Total liabilities | 429,239 | 399,684 | 403,107 | |||||||||
| Commitments and contingencies | ||||||||||||
| Stockholders’ equity | ||||||||||||
| Class A non-voting common stock, $0.00001 par value. 3,000,000 shares authorized, 883,022, 976,066, and 999,304 shares issued and outstanding at December 31, 2017, September 30, 2018, and December 31, 2018, respectively. | 9 | 10 | 10 | |||||||||
| Class B voting common stock, $0.00001 par value. 700,000 shares authorized, 122,564, 93,660, and 93,845 shares issued and outstanding at December 31, 2017, September 30, 2018, and December 31, 2018, respectively. | 1 | 1 | 1 | |||||||||
| Class C voting common stock, $0.00001 par value. 260,888 shares authorized, 216,616, 221,491, and 224,611 shares issued and outstanding at December 31, 2017, September 30, 2018, and December 31, 2018, respectively | 2 | 2 | 2 | |||||||||
| Additional paid-in capital | 7,634,825 | 8,098,519 | 8,220,417 | |||||||||
| Accumulated other comprehensive income | 14,157 | 6,470 | 3,147 | |||||||||
| Accumulated deficit | (4,656,667 | ) | (5,720,910 | ) | (5,912,578 | ) | ||||||
| Total stockholders’ equity | 2,992,327 | 2,384,092 | 2,310,999 | |||||||||
| Total liabilities and stockholders’ equity | $ | 3,421,566 | $ | 2,783,776 | $ | 2,714,106 | ||||||
| SNAP INC. | ||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
|
(in thousands, unaudited) |
||||||||||||||||
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
| 2017 | 2018 | 2017 | 2018 | |||||||||||||
| Free Cash Flow reconciliation: | ||||||||||||||||
| Net cash used in operating activities | $ | (176,083 | ) | $ | (126,054 | ) | $ | (734,667 | ) | $ | (689,924 | ) | ||||
| Less: | ||||||||||||||||
| Purchases of property and equipment | (21,212 | ) | (22,741 | ) | (84,518 | ) | (120,242 | ) | ||||||||
| Free Cash Flow | $ | (197,295 | ) | $ | (148,795 | ) | $ | (819,185 | ) | $ | (810,166 | ) | ||||
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
| 2017 | 2018 | 2017 |
2018 |
|||||||||||||
| Adjusted EBITDA reconciliation: | ||||||||||||||||
| Net loss | $ | (349,977 | ) | $ | (191,668 | ) | $ | (3,445,066 | ) | $ | (1,255,911 | ) | ||||
| Add (deduct): | — | |||||||||||||||
| Interest income | (6,070 | ) | (7,513 | ) | (21,096 | ) | (27,228 | ) | ||||||||
| Interest expense | 876 | 1,111 | 3,456 | 3,894 | ||||||||||||
| Other (income) expense, net | (2,553 | ) | 3,715 | (4,528 | ) | 8,248 | ||||||||||
| Income tax (benefit) expense | (3,240 | ) | (352 | ) | (18,342 | ) | 2,547 | |||||||||
| Depreciation and amortization | 18,786 | 22,682 | 61,288 | 91,648 | ||||||||||||
| Stock-based compensation expense | 181,044 | 121,772 | 2,639,895 | 538,211 | ||||||||||||
| Payroll tax expense related to stock-based compensation | 2,212 | 2,015 | 24,470 | 21,927 | ||||||||||||
| Spectacles inventory-related charges(1) | — | — | 39,867 | — | ||||||||||||
| Reduction in force charges(2) | — | — | — | 9,884 | ||||||||||||
| Lease exit charges(3) | — | (2,125 | ) | — | 31,143 | |||||||||||
| Adjusted EBITDA | $ | (158,922 | ) | $ | (50,363 | ) | $ | (720,056 | ) | $ | (575,637 | ) | ||||
| (1) | Spectacles inventory-related charges in the third quarter of 2017 were primarily related to excess inventory reserves and inventory purchase commitment cancellation charges. These charges are non-recurring and not reflective of underlying trends in our business. | |
| (2) | Reduction in force charges in the first quarter of 2018 were related to a reduction in force plan 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. | |
| (3) | We exited 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. In the three months and year ended December 31, 2018, we recorded lease exit charges of $(0.2) million and $33.0 million, respectively. The charges primarily included the present value of our remaining lease obligation on the cease use dates that occurred during the quarter, net of estimated sublease income. As of December 31, 2018, we have exited all properties associated with this event. Changes to our estimated sublease income, including actual contracted sublease income, may result in incremental lease exit charge activity in the period determined. Additionally, we recognized a gain on the sale of buildings sold as a result of moving to our centralized corporate office, which is included in lease exit charges above for the three months and year ended December 31, 2018. These charges are non-recurring and not reflective of underlying trends in our business. | |
| SNAP INC. | ||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued) | ||||||||||||||||
|
(in thousands, except per share amounts, unaudited) |
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Total depreciation and amortization expense by function: |
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|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
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| 2017 | 2018 | 2017 | 2018 | |||||||||||||
| Depreciation and amortization expense: | ||||||||||||||||
| Cost of revenue | $ | 5,179 | $ | 9,888 | $ | 15,222 | $ | 26,282 | ||||||||
| Research and development | 6,937 | 4,547 | 25,076 | 33,001 | ||||||||||||
| Sales and marketing | 3,441 | 3,475 | 10,450 | 15,089 | ||||||||||||
| General and administrative | 3,229 | 4,772 | 10,540 | 17,276 | ||||||||||||
| Total | $ | 18,786 | $ | 22,682 | $ | 61,288 | $ | 91,648 | ||||||||
|
Total stock-based compensation expense by function: |
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|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
| 2017 | 2018 | 2017 | 2018 | |||||||||||||
| Stock-based compensation expense: | ||||||||||||||||
| Cost of revenue | $ | 2,189 | $ | 1,283 | $ | 26,071 | $ | 4,393 | ||||||||
| Research and development | 129,199 | 75,086 | 1,154,430 | 340,533 | ||||||||||||
| Sales and marketing | 28,936 | 20,795 | 236,474 | 84,059 | ||||||||||||
| General and administrative | 20,720 | 24,608 | 1,222,920 | 109,226 | ||||||||||||
| Total | $ | 181,044 | $ | 121,772 | $ | 2,639,895 | $ | 538,211 | ||||||||
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
| 2017 | 2018 | 2017 | 2018 | |||||||||||||
| Non-GAAP net loss reconciliation: | ||||||||||||||||
| Net loss | $ | (349,977 | ) | $ | (191,668 | ) | $ | (3,445,066 | ) | $ | (1,255,911 | ) | ||||
| Amortization of intangible assets | 10,607 | 10,441 | 31,454 | 42,629 | ||||||||||||
| Stock-based compensation expense | 181,044 | 121,772 | 2,639,895 | 538,211 | ||||||||||||
| Payroll tax expense related to stock-based compensation | 2,212 | 2,015 | 24,470 | 21,927 | ||||||||||||
| Spectacles inventory-related charges | — | — | 39,867 | — | ||||||||||||
| Reduction in force charges | — | — | — | 9,884 | ||||||||||||
| Lease exit charges | — | (2,125 | ) | — | 31,143 | |||||||||||
| Income tax adjustments | 60 | 84 | (2,253 | ) | (288 | ) | ||||||||||
| Non-GAAP net loss | $ | (156,054 | ) | $ | (59,481 | ) | $ | (711,633 | ) | $ | (612,405 | ) | ||||
| Weighted-average common shares – Diluted | 1,247,017 | 1,324,858 | 1,166,085 | 1,300,568 | ||||||||||||
| Non-GAAP diluted net loss per share reconciliation: | ||||||||||||||||
| Diluted net loss per share | $ | (0.28 | ) | $ | (0.14 | ) | $ | (2.95 | ) | $ | (0.97 | ) | ||||
| Non-GAAP adjustment to net loss | 0.15 | 0.10 | $ | 2.34 | $ | 0.50 | ||||||||||
| Non-GAAP diluted net loss per share | $ | (0.13 | ) | $ | (0.04 | ) | $ | (0.61 | ) | $ | (0.47 | ) | ||||
| SNAP INC. | ||||||||||||||||||||||||
| SUPPLEMENTAL FINANCIAL INFORMATION AND BUSINESS METRICS | ||||||||||||||||||||||||
|
(dollars and shares in thousands, except as noted below, unaudited) |
||||||||||||||||||||||||
| Q3 2017 | Q4 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | |||||||||||||||||||
| Cash Flows and Shares | ||||||||||||||||||||||||
| Net cash used in operating activities | $ | (194,013 | ) | $ | (176,083 | ) | $ | (231,981 | ) | $ | (199,346 | ) | $ | (132,543 | ) | $ | (126,054 | ) | ||||||
| Net cash used in operating activities – YoY (year-over-year) | 11 | % | (5 | )% | (50 | )% | 5 | % | 32 | % | 28 | % | ||||||||||||
| Net cash used in operating activities – TTM (trailing twelve months) | $ | (726,312 | ) | $ | (734,667 | ) | $ | (811,651 | ) | $ | (801,423 | ) | $ | (739,953 | ) | $ | (689,924 | ) | ||||||
| Purchases of property and equipment | $ | (25,948 | ) | $ | (21,212 | ) | $ | (36,315 | ) | $ | (34,901 | ) | $ | (26,285 | ) | $ | (22,741 | ) | ||||||
| Purchases of property and equipment – YoY | 51 | % | 4 | % | 102 | % | 80 | % | 1 | % | 7 | % | ||||||||||||
| Purchases of property and equipment – TTM | $ | (83,682 | ) | $ | (84,518 | ) | $ | (102,840 | ) | $ | (118,376 | ) | $ | (118,713 | ) | $ | (120,242 | ) | ||||||
| Free Cash Flow | $ | (219,961 | ) | $ | (197,295 | ) | $ | (268,296 | ) | $ | (234,247 | ) | $ | (158,828 | ) | $ | (148,795 | ) | ||||||
| Free Cash Flow – YoY | 6 | % | (5 | )% | (55 | )% | (2 | )% | 28 | % | 25 | % | ||||||||||||
| Free Cash Flow – TTM | $ | (809,994 | ) | $ | (819,185 | ) | $ | (914,491 | ) | $ | (919,799 | ) | $ | (858,666 | ) | $ | (810,166 | ) | ||||||
| Common shares outstanding | 1,201,736 | 1,222,202 | 1,254,439 | 1,273,163 | 1,291,217 | 1,317,760 | ||||||||||||||||||
| Common shares outstanding – YoY | NM | NM | 6 | % | 8 | % | 7 | % | 8 | % | ||||||||||||||
| Shares underlying stock-based awards | 239,564 | 230,802 | 202,175 | 205,595 | 184,802 | 188,863 | ||||||||||||||||||
| Shares underlying stock-based awards – YoY | NM | NM | (20 | )% | (19 | )% | (23 | )% | (18 | )% | ||||||||||||||
| Total common shares outstanding plus shares underlying stock-based awards | 1,441,300 | 1,453,004 | 1,456,613 | 1,478,758 | 1,476,019 | 1,506,623 | ||||||||||||||||||
| Total common shares outstanding plus shares underlying stock-based awards – YoY | NM | NM | 2 | % | 3 | % | 2 | % | 4 | % | ||||||||||||||
| Results of Operations | ||||||||||||||||||||||||
| Revenue | $ | 207,937 | $ | 285,693 | $ | 230,666 | $ | 262,263 | $ | 297,695 | $ | 389,822 | ||||||||||||
| Revenue – YoY | 62 | % | 72 | % | 54 | % | 44 | % | 43 | % | 36 | % | ||||||||||||
| Revenue – TTM | $ | 704,938 | $ | 824,949 | $ | 905,967 | $ | 986,559 | $ | 1,076,317 | $ | 1,180,446 | ||||||||||||
| Revenue by region(1) | ||||||||||||||||||||||||
| North America | $ | 167,306 | $ | 219,394 | $ | 170,488 | $ | 177,410 | $ | 207,477 | $ | 268,858 | ||||||||||||
| North America – YoY | 46 | % | 51 | % | 32 | % | 20 | % | 24 | % | 23 | % | ||||||||||||
| North America – TTM | $ | 589,018 | $ | 663,057 | $ | 704,827 | $ | 734,599 | $ | 774,769 | $ | 824,233 | ||||||||||||
| Europe | $ | 27,262 | $ | 39,976 | $ | 32,721 | $ | 40,241 | $ | 50,478 | $ | 62,470 | ||||||||||||
| Europe – YoY | 131 | % | 173 | % | 150 | % | 82 | % | 85 | % | 56 | % | ||||||||||||
| Europe – TTM | $ | 77,081 | $ | 102,392 | $ | 122,011 | $ | 140,200 | $ | 163,416 | $ | 185,910 | ||||||||||||
| Rest of World | $ | 13,368 | $ | 26,323 | $ | 27,458 | $ | 44,612 | $ | 39,740 | $ | 58,495 | ||||||||||||
| Rest of World – YoY | NM | NM | 251 | % | 272 | % | 197 | % | 122 | % | ||||||||||||||
| Rest of World – TTM | $ | 38,839 | $ | 59,501 | $ | 79,130 | $ | 111,761 | $ | 138,133 | $ | 170,305 | ||||||||||||
| Operating loss | $ | (461,827 | ) | $ | (360,964 | ) | $ | (392,530 | ) | $ | (357,842 | ) | $ | (323,371 | ) | $ | (194,707 | ) | ||||||
| Operating loss – YoY | (253 | )% | (113 | )% | 82 | % | 20 | % | 30 | % | 46 | % | ||||||||||||
| Operating loss – Margin | (222 | )% | (126 | )% | (170 | )% | (136 | )% | (109 | )% | (50 | )% | ||||||||||||
| Operating loss – TTM | $ | (3,294,349 | ) | $ | (3,485,576 | ) | $ | (1,664,339 | ) | $ | (1,573,163 | ) | $ | (1,434,707 | ) | $ | (1,268,450 | ) | ||||||
| Net loss | $ | (443,159 | ) | $ | (349,977 | ) | $ | (385,785 | ) | $ | (353,310 | ) | $ | (325,148 | ) | $ | (191,668 | ) | ||||||
| Net loss – YoY | 257 | % | 106 | % | (83 | )% | (20 | )% | (27 | )% | (45 | )% | ||||||||||||
| Net loss – TTM | $ | (3,265,034 | ) | $ | (3,445,066 | ) | $ | (1,622,014 | ) | $ | (1,532,231 | ) | $ | (1,414,220 | ) | $ | (1,255,911 | ) | ||||||
| Adjusted EBITDA | $ | (178,901 | ) | $ | (158,922 | ) | $ | (217,867 | ) | $ | (169,032 | ) | $ | (138,377 | ) | (50,363 | ) | |||||||
| Adjusted EBITDA – YoY | (65 | )% | (4 | )% | (16 | )% | 13 | % | 23 | % | 68 | % | ||||||||||||
| Adjusted EBITDA – Margin | (86 | )% | (56 | )% | (94 | )% | (64 | )% | (46 | )% | (13 | )% | ||||||||||||
| Adjusted EBITDA – TTM | $ | (713,418 | ) | $ | (720,056 | ) | $ | (749,680 | ) | $ | (724,722 | ) | $ | (684,198 | ) | $ | (575,637 | ) | ||||||
| (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 and shares in thousands, except as noted below, unaudited) |
||||||||||||||||||||||||
| Q3 2017 | Q4 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | |||||||||||||||||||
| Other | ||||||||||||||||||||||||
| DAU (in millions) | 178 | 187 | 191 | 188 | 186 | 186 | ||||||||||||||||||
| DAU – YoY | 17 | % | 18 | % | 15 | % | 8 | % | 5 | % | (0 | )% | ||||||||||||
| DAU by region (in millions) | ||||||||||||||||||||||||
| North America | 77 | 80 | 81 | 80 | 79 | 79 | ||||||||||||||||||
| North America – YoY | 18 | % | 18 | % | 14 | % | 7 | % | 3 | % | (1 | )% | ||||||||||||
| Europe | 57 | 60 | 62 | 61 | 59 | 60 | ||||||||||||||||||
| Europe – YoY | 17 | % | 17 | % | 13 | % | 7 | % | 4 | % | (1 | )% | ||||||||||||
| Rest of World | 44 | 47 | 48 | 47 | 47 | 47 | ||||||||||||||||||
| Rest of World – YoY | 14 | % | 21 | % | 18 | % | 12 | % | 8 | % | 1 | % | ||||||||||||
| ARPU | $ | 1.17 | $ | 1.53 | $ | 1.21 | $ | 1.40 | $ | 1.60 | $ | 2.09 | ||||||||||||
| ARPU – YoY | 39 | % | 46 | % | 34 | % | 34 | % | 37 | % | 37 | % | ||||||||||||
| ARPU by region | ||||||||||||||||||||||||
| North America | $ | 2.17 | $ | 2.75 | $ | 2.10 | $ | 2.21 | $ | 2.62 | $ | 3.38 | ||||||||||||
| North America – YoY | 24 | % | 28 | % | 16 | % | 12 | % | 20 | % | 23 | % | ||||||||||||
| Europe | $ | 0.48 | $ | 0.66 | $ | 0.53 | $ | 0.66 | $ | 0.85 | $ | 1.04 | ||||||||||||
| Europe – YoY | 98 | % | 133 | % | 120 | % | 70 | % | 78 | % | 57 | % | ||||||||||||
| Rest of World | $ | 0.30 | $ | 0.56 | $ | 0.58 | $ | 0.96 | $ | 0.84 | $ | 1.24 | ||||||||||||
| Rest of World – YoY | NM | 284 | % | 198 | % | 233 | % | 175 | % | 120 | % | |||||||||||||
| Employees (full-time; excludes part-time, contractors, and temporary personnel) | 2,958 | 3,069 | 2,989 | 2,879 | 2,903 | 2,884 | ||||||||||||||||||
| Employees – YoY | 109 | % | 65 | % | 27 | % | 10 | % | (2 | )% | (6 | )% | ||||||||||||
| Depreciation and amortization expense | ||||||||||||||||||||||||
| Cost of revenue | $ | 5,404 | $ | 5,179 | $ | 5,202 | $ | 5,610 | $ | 5,582 | $ | 9,888 | ||||||||||||
| Research and development | 6,401 | 6,937 | 8,791 | 9,489 | 10,174 | 4,547 | ||||||||||||||||||
| Sales and marketing | 2,820 | 3,441 | 3,569 | 3,991 | 4,054 | 3,475 | ||||||||||||||||||
| General and administrative | 2,842 | 3,229 | 3,991 | 3,424 | 5,088 | 4,772 | ||||||||||||||||||
| Total | $ | 17,467 | $ | 18,786 | $ | 21,553 | $ | 22,514 | $ | 24,898 | $ | 22,682 | ||||||||||||
| Depreciation and amortization expense – YoY | 135 | % | 77 | % | 73 | % | 79 | % | 43 | % | 21 | % | ||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||
| Cost of revenue | $ | 1,951 | $ | 2,189 | $ | 276 | $ | 1,467 | $ | 1,368 | $ | 1,283 | ||||||||||||
| Research and development | 143,303 | 129,199 | 77,815 | 92,303 | 95,329 | 75,086 | ||||||||||||||||||
| Sales and marketing | 27,254 | 28,936 | 16,185 | 21,996 | 25,082 | 20,795 | ||||||||||||||||||
| General and administrative | 49,194 | 20,720 | 38,982 | 40,605 | 5,030 | 24,608 | ||||||||||||||||||
| Total | $ | 221,702 | $ | 181,044 | $ | 133,258 | $ | 156,371 | $ | 126,809 | $ | 121,772 | ||||||||||||
| Stock-based compensation expense – YoY | NM | NM | (93 | )% | (36 | )% | (43 | )% | (33 | )% | ||||||||||||||