Snap Inc. reports fourth quarter and full year 2017 results

GaryPageau

VENICE, Calif.–(BUSINESS WIRE)– Snap Inc. (NYSE: SNAP) today announced financial results for the quarter and full year ended December 31, 2017.

Fourth Quarter and Full Year 2017 Financial Highlights:

Three Months Ended

December 31,

 Percent Year Ended

December 31,

 Percent
2017 2016 Change 2017 2016 Change
(dollars in thousands) (dollars in thousands)
(Unaudited) (NM = Not Meaningful) (NM = Not Meaningful)
Revenue $ 285,693 $ 165,682 72 % $ 824,949 $ 404,482 104 %
Net loss(1) $ (349,977 ) $ (169,945 ) 106 % $ (3,445,066 ) $ (514,643 ) NM
Adjusted EBITDA(2) $ (158,922 ) $ (152,284 ) 4 % $ (720,056 ) $ (459,243 ) 57 %
Other Financial Highlights
Cash, cash equivalents, and marketable securities $ 2,043,039 $ 987,368
Cash used in operating activities $ (176,083 ) $ (167,728 ) $ (734,667 ) $ (611,245 )
Free Cash Flow(3) $ (197,295 ) $ (188,104 ) $ (819,185 ) $ (677,686 )
Capital expenditures $ (21,212 ) $ (20,376 ) $ (84,518 ) $ (66,441 )

(1)

Net loss for the year ended December 31, 2017 includes $2.6 billion of stock-based compensation expense, primarily due to the recognition of expense related to RSUs with a performance condition satisfied on the effectiveness of the registration statement for our initial public offering in March 2017.

(2)

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, as described below.

(3)

Free Cash Flow is defined as net cash used in operating activities, reduced by purchases of property and equipment.

Note: For adjustments and additional information regarding the non-GAAP financial measures discussed, please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below.

Operational Highlights

  • Daily Active Users (DAU)(1) increased 8.9 million or 5% sequentially to 187 million, representing the highest net adds since Q3 2016. DAUs increased 28.8 million or 18% year-over-year.
  • Revenue was $285.7 million in Q4 2017, up 72% year-over-year and 37% sequentially, driven by auction traction and seasonality. Full year revenue was $824.9 million, up 104% year-over-year.
  • Average revenue per user (ARPU)(2) was $1.53 in Q4 2017, up 46% year-over-year and 31% sequentially. Cost of revenue per user (CoRPU)(3) was $1.02 in Q4 2017, up 5% year-over-year and down 14% sequentially.
  • Adjusted EBITDA loss was $(158.9) million in Q4 2017, an increase of 4% year-over-year and an improvement of 11% sequentially. Full year Adjusted EBITDA was $(720.1) million and was $(459.2) million in 2016.
  • Cash and marketable securities were $2.0 billion at December 31, 2017. Cash management reduced Q4 2017 cash burn to $255 million, down 49% sequentially. Capital expenditures remained modest in Q4 2017, given our capital light business model, at $21.2 million compared to $20.4 millionin Q4 2016 and $25.9 million in Q3 2017. Full year capital expenditures were $84.5 million, less than $0.50 per DAU.

(1)

We define a Daily Active User, or DAU, as a registered Snapchat user who opens the Snapchat application at least once during a defined 24-hour period. We measure average Daily Active Users for a particular quarter by calculating the average Daily Active Users for that quarter.

(2)

We define average revenue per user, or ARPU, as quarterly revenue divided by the average Daily Active Users.

(3)

We define cost of revenue per user, or CoRPU, as quarterly cost of revenue divided by the average Daily Active Users.