Snap Inc. Announces Third Quarter 2020 Financial Results

Rhea-AI Summary

Snap Inc. (SNAP) reported significant financial improvements for Q3 2020. Revenue surged by 52% to $679 million, while net loss decreased to $(200) million. Operating cash flow improved by $21 million year-over-year, becoming $(55) million. Daily Active Users (DAUs) rose 18% year-over-year, reaching 249 million. The company did not provide revenue or Adjusted EBITDA guidance for Q4 2020 due to COVID-19 uncertainties. Adjusted EBITDA for Q3 was $56 million, a notable turnaround from $(42 million) in Q3 2019.

Positive

• Revenue increased by 52% to $679 million.
• Net loss decreased by 12% compared to Q3 2019.
• Adjusted EBITDA improved to $56 million from $(42 million) year-over-year.
• Daily Active Users grew by 18% to 249 million.

Negative

• Cash used in operating activities still negative at $(55) million.
• Free Cash Flow remained negative at $(70) million.

SANTA MONICA, Calif.--(BUSINESS WIRE)--Snap Inc. (NYSE: SNAP) today announced financial results for the quarter ended September 30, 2020.

Financial Highlights

• Operating cash flow improved by $21 million to $(55) million in Q3 2020, compared to the prior year.
• Free Cash Flow improved by $15 million to $(70) million in Q3 2020, compared to the prior year.
• Common shares outstanding plus shares underlying stock-based awards totaled 1,624 million at September 30, 2020, compared to 1,565 million one year ago.
• Revenue increased 52% to $679 million in Q3 2020, compared to the prior year.
• Net loss was $(200) million in Q3 2020, compared to $(227) million in the prior year.
• Adjusted EBITDA was $56 million in Q3 2020, compared to $(42) million in the prior year.

“Our focus on delivering value for our community and advertising partners is yielding positive results during this challenging time. We’re excited about the growth of our business in Q3 as we continue to make long-term investments in our future,” said Evan Spiegel, CEO. “The adoption of augmented reality is happening faster than we had previously anticipated, and we are working together as a team to execute on the many opportunities in front of us.”

	Three Months Ended September 30,								Percent			Nine Months Ended September 30,								Percent
	2020				2019				Change			2020				2019				Change
(Unaudited)	(in thousands, except per share amounts)
Cash used in operating activities	$	(54,828	)		$	(76,149	)		(28	)%		$	(115,099	)		$	(238,116	)		(52	)%
Free Cash Flow	$	(69,555	)		$	(84,087	)		17	%		$	(156,484	)		$	(265,501	)		41	%
Common shares outstanding plus shares underlying stock-based awards		1,623,630				1,565,208			4	%			1,623,630				1,565,208			4	%
Operating loss	$	(167,864	)		$	(228,853	)		(27	)%		$	(764,836	)		$	(849,732	)		(10	)%
Revenue	$	678,668			$	446,199			52	%		$	1,595,304			$	1,154,646			38	%
Net loss	$	(199,853	)		$	(227,375	)		(12	)%		$	(831,740	)		$	(792,956	)		5	%
Adjusted EBITDA	$	56,361			$	(42,375	)		233	%		$	(120,446	)		$	(244,537	)		51	%
Diluted net loss per share attributable to common stockholders	$	(0.14	)		$	(0.16	)		(16	)%		$	(0.58	)		$	(0.58	)		(1	)%
Non-GAAP diluted net income (loss) per share	$	0.01			$	(0.04	)		120	%		$	(0.16	)		$	(0.20	)		(20	)%

Q3 2020 Summary & Key Highlights

Daily Active Users grew by 18% year-over-year and we saw increased engagement across key metrics:

• DAUs were 249 million in Q3 2020, an increase of 39 million or 18% year-over-year.
• DAUs increased sequentially and year-over-year on each of iOS and Android platforms.
• The average number of Snaps created every day grew 25% year-over-year.

We continue to invest in our Discover platform as a destination for content that entertains and informs:

• Total daily time spent by Snapchatters watching Shows increased by over 50% year-over-year in Q3 2020.
• The daily average number of Snapchatters in India watching Discover content increased by nearly 50% sequentially in Q3 2020.
• More than 40% of the US Gen Z population watched sports Discover content on Snapchat last month.
• SportsCenter viewership on Snapchat increased by 80% from July to September.
• We launched a new unscripted series called “The Solution Committee” in which Jaden Smith seeks out the help of young activists and celebrity friends to explore racial and social justice issues.
• Our “VS The World” docuseries franchise launched its second season, featuring Conor McGregor, and reached over 14 million viewers.
• We launched a new unscripted series called “Coach Kev” in which Kevin Hart inspires Snapchatters to live their best lives through bursts of inspiration, positivity, and wisdom.

We continue to invest in our camera and augmented reality platforms:

• As of the end of Q3 2020, over 1.5 million Lenses have been created by our community through Lens Studio.
• The ‘Raise Your Voice’ Lens generated over 70 million impressions and over 48,000 hours of playtime, demonstrating the power of AR as a format in honoring the legacy of important movements, such as the March on Washington in 1963.
• Our ‘Anime Style’ Lens powered by real time machine learning was engaged with 3 billion times in its first week.
• We added 2D body tracking technology in Lens Studio, allowing Lens creators to make AR experiences for the full human body.
• We released Lens Favorites, a new feature that allows Snapchatters to pin their favorite Lenses for future use, to our Android users.
• We launched our first Local Lens experience called City Painter, allowing Snapchatters to virtually paint the shared digital space on Carnaby Street in London.

We strengthened our ad platform and products while engaging with advertisers:

• We partnered with Champs Sports, Clearly, Essie, Hoka One One, Kohl’s, Levi’s, Jordan Brand, and Sally Hansen to launch augmented reality-powered virtual try-on experiences.
• We launched ‘Meet the Snapchat Generation,’ our first-ever global business-to-business marketing campaign highlighting Snapchat’s unique audience.
• We launched Platform Burst, which allows advertisers to purchase ad inventory across different formats to reach a significant portion of their target audience over a few days.
• We launched a Snap Select gaming bundle, which is the first commercial bundle tailored to a specific category and has led to impactful partnerships with advertisers.

We continue to innovate to better serve our large and engaged community:

• We introduced Creator Profiles to our community, providing Creators with a permanent profile to host their photo, video, and Lenses content, Story replies, and data analytics insights.
• We launched Sounds on Snapchat, empowering Snapchatters to express themselves by adding licensed music from emerging and established artists to their Snaps, including music companies like Warner Music Group, Universal Music Publishing, The NMPA, and Merlin.
• We helped over 1 million Snapchatters with voter registration for the upcoming 2020 U.S. General Election through our ‘Register to Vote’ Mini, developed in partnership with Democracy Works.
• Our Bitmoji team launched its first-ever branded customizable Mix and Match collection, in partnership with Ralph Lauren, and millions of users globally have dressed their Bitmoji in Ralph Lauren since launch.
• Snapchatters can now dress their Bitmoji avatars in a new collection of 19 different digital apparel and sneakers from Nike’s Jordan brand, including the new Air Jordan XXXV.
• Our Headspace Mini, developed in partnership with Headspace, was used by 5 million users in its first month after launch and we released two new meditations in honor of World Mental Health Day.

Financial Guidance

Given the uncertainties related to the ongoing COVID-19 pandemic and the rapidly shifting macro conditions, we are not providing revenue or Adjusted EBITDA guidance for the fourth quarter of 2020.

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.

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.

Addressable reach is defined as the approximate number of Snapchat users that an ad could reach over a 28-day period in a given locality. When we calculate the percentage of a demographic group that can be reached, we do so by dividing addressable reach by relevant census figures. Addressable reach and age data are subject to limitations. For more information, see Snap’s SEC filings and businesshelp.snapchat.com.

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.

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, business strategy and plans, user growth and engagement, product initiatives, and objectives of management for future operations, and the impact of COVID-19 on our business and the economy as a whole, 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 the ongoing COVID-19 pandemic 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 lack of profitability to date; our ability to generate and sustain positive cash flow; our ability to attract and retain users, publishers, and advertisers; competition and new market entrants; managing our international expansion and 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 and key personnel; our ability to repay outstanding debt; and future acquisitions or investments, as well as risks, uncertainties, and other factors described in “Risk Factors” and elsewhere in our most recent quarterly report on Form 10-Q for the quarter ended June 30, 2020 filed with the SEC, 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 September 30, 2020 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 the COVID-19 pandemic, 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 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 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 September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
Cash flows from operating activities
Net loss	$	(199,853	)		$	(227,375	)		$	(831,740	)		$	(792,956	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		21,804				20,646				63,933				66,625
Stock-based compensation		192,080				161,228				550,300				519,358
Deferred income taxes		(1,186	)			170				(3,698	)			195
Gain on divestiture		—				—				—				(39,883	)
Amortization of debt discount and issuance costs		24,503				6,412				56,478				6,412
Other		7,252				(1,245	)			15,369				(4,561	)
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net of allowance		(151,856	)			(62,855	)			(43,310	)			(30,736	)
Prepaid expenses and other current assets		(10,608	)			(490	)			(19,352	)			(4,980	)
Operating lease right-of-use assets		10,054				35,633				28,307				57,254
Other assets		3,390				2,139				2,343				4,540
Accounts payable		3,435				4,220				11,448				28,319
Accrued expenses and other current liabilities		61,595				23,243				94,368				16,655
Operating lease liabilities		(15,760	)			(36,008	)			(40,739	)			(63,259	)
Other liabilities		322				(1,867	)			1,194				(1,099	)
Net cash used in operating activities		(54,828	)			(76,149	)			(115,099	)			(238,116	)
Cash flows from investing activities
Purchases of property and equipment		(14,727	)			(7,938	)			(41,385	)			(27,385	)
Proceeds from divestiture, net		—				—				—				73,796
Non-marketable investments		(3,500	)			(1,050	)			(95,341	)			(3,750	)
Cash paid for acquisitions, net of cash acquired		(33,508	)			—				(53,712	)			—
Purchases of marketable securities		(1,148,344	)			(1,115,358	)			(2,576,892	)			(1,924,398	)
Sales of marketable securities		155,899				24,948				373,857				102,437
Maturities of marketable securities		668,930				411,079				1,898,176				1,193,739
Other		—				—				(500	)			1,029
Net cash used in investing activities		(375,250	)			(688,319	)			(495,797	)			(584,532	)
Cash flows from financing activities
Proceeds from issuance of convertible notes, net of issuance costs		—				1,251,848				988,582				1,251,848
Purchase of capped calls		—				(102,086	)			(100,000	)			(102,086	)
Proceeds from the exercise of stock options		2,434				7,788				26,041				14,726
Net cash provided by financing activities		2,434				1,157,550				914,623				1,164,488
Change in cash, cash equivalents, and restricted cash		(427,644	)			393,082				303,727				341,840
Cash, cash equivalents, and restricted cash, beginning of period		1,252,631				337,732				521,260				388,974
Cash, cash equivalents, and restricted cash, end of period	$	824,987			$	730,814			$	824,987			$	730,814
Supplemental disclosures
Cash paid for income taxes, net	$	1,309			$	643			$	2,679			$	564
Cash paid for interest	$	5,113			$	380				10,378				1,176

SNAP INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts, unaudited)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
Revenue	$	678,668			$	446,199			$	1,595,304			$	1,154,646
Costs and expenses:
Cost of revenue		293,095				223,140				796,959				642,399
Research and development		283,639				211,599				783,115				663,983
Sales and marketing		143,511				123,240				397,834				332,626
General and administrative		126,287				117,073				382,232				365,370
Total costs and expenses		846,532				675,052				2,360,140				2,004,378
Operating loss		(167,864	)			(228,853	)			(764,836	)			(849,732	)
Interest income		2,801				10,317				16,158				25,579
Interest expense		(28,212	)			(8,654	)			(68,052	)			(10,219	)
Other income (expense), net		(5,669	)			(1,481	)			(14,483	)			41,477
Loss before income taxes		(198,944	)			(228,671	)			(831,213	)			(792,895	)
Income tax benefit (expense)		(909	)			1,296				(527	)			(61	)
Net loss	$	(199,853	)		$	(227,375	)		$	(831,740	)		$	(792,956	)
Net loss per share attributable to Class A, Class B, and Class C common stockholders:
Basic	$	(0.14	)		$	(0.16	)		$	(0.58	)		$	(0.58	)
Diluted	$	(0.14	)		$	(0.16	)		$	(0.58	)		$	(0.58	)
Weighted average shares used in computation of net loss per share:
Basic		1,466,420				1,393,358				1,446,040				1,364,327
Diluted		1,466,420				1,393,358				1,446,040				1,364,327

SNAP INC. CONSOLIDATED BALANCE SHEETS (in thousands, except par value)
	September 30, 2020				December 31, 2019
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	824,070			$	520,317
Marketable securities		1,900,935				1,592,488
Accounts receivable, net of allowance		529,872				492,194
Prepaid expenses and other current assets		60,837				38,987
Total current assets		3,315,714				2,643,986
Property and equipment, net		175,199				173,667
Operating lease right-of-use assets		269,141				275,447
Intangible assets, net		91,796				92,121
Goodwill		816,113				761,153
Other assets		149,811				65,550
Total assets	$	4,817,774			$	4,011,924
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	61,978			$	46,886
Operating lease liabilities		40,994				42,179
Accrued expenses and other current liabilities		507,134				410,610
Total current liabilities		610,106				499,675
Convertible senior notes, net		1,650,246				891,776
Operating lease liabilities, noncurrent		287,105				303,178
Other liabilities		71,546				57,382
Total liabilities		2,619,003				1,752,011
Commitments and contingencies
Stockholders’ equity
Class A non-voting common stock, $0.00001 par value. 3,000,000 shares authorized, 1,160,127 shares issued and outstanding at December 31, 2019, and 3,000,000 shares authorized, 1,229,446 shares issued and outstanding at September 30, 2020.		12				12
Class B voting common stock, $0.00001 par value. 700,000 shares authorized, 24,522 shares issued and outstanding at December 31, 2019, and 700,000 shares authorized, 23,643 shares issued and outstanding at September 30, 2020.		—				—
Class C voting common stock, $0.00001 par value. 260,888 shares authorized, 231,147 shares issued and outstanding at December 31, 2019, and 260,888 shares authorized, 231,627 shares issued and outstanding at September 30, 2020.		2				2
Additional paid-in capital		9,968,707				9,205,256
Accumulated other comprehensive income (loss)		8,499				573
Accumulated deficit		(7,778,449	)			(6,945,930	)
Total stockholders’ equity		2,198,771				2,259,913
Total liabilities and stockholders’ equity	$	4,817,774			$	4,011,924

SNAP INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, unaudited)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
Free Cash Flow reconciliation:
Net cash used in operating activities	$	(54,828	)		$	(76,149	)		$	(115,099	)		$	(238,116	)
Less:
Purchases of property and equipment		(14,727	)			(7,938	)			(41,385	)			(27,385	)
Free Cash Flow	$	(69,555	)		$	(84,087	)		$	(156,484	)		$	(265,501	)

	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
Adjusted EBITDA reconciliation:
Net loss	$	(199,853	)		$	(227,375	)		$	(831,740	)		$	(792,956	)
Add (deduct):
Interest income		(2,801	)			(10,317	)			(16,158	)			(25,579	)
Interest expense		28,212				8,654				68,052				10,219
Other (income) expense, net		5,669				1,481				14,483				(41,477	)
Income tax (benefit) expense		909				(1,296	)			527				61
Depreciation and amortization		21,804				20,646				63,933				66,625
Stock-based compensation expense		192,080				161,228				550,300				519,358
Payroll tax expense related to stock-based compensation		10,341				4,604				30,157				19,212
Adjusted EBITDA	$	56,361			$	(42,375	)		$	(120,446	)		$	(244,537	)

Total depreciation and amortization expense by function:
	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
Depreciation and amortization expense:
Cost of revenue	$	5,615			$	4,580			$	16,672			$	16,368
Research and development		9,526				8,632				26,904				24,470
Sales and marketing		3,233				3,109				9,780				10,169
General and administrative		3,430				4,325				10,577				15,618
Total	$	21,804			$	20,646			$	63,933			$	66,625

Total stock-based compensation expense by function:
	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
Stock-based compensation expense:
Cost of revenue	$	2,623			$	1,332			$	6,471			$	4,967
Research and development		132,003				108,176				377,836				353,028
Sales and marketing		27,393				23,333				79,306				67,567
General and administrative		30,061				28,387				86,687				93,796
Total	$	192,080			$	161,228			$	550,300			$	519,358

SNAP INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued) (in thousands, except per share amounts, unaudited)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
Non-GAAP net income (loss) reconciliation:
Net loss	$	(199,853	)		$	(227,375	)		$	(831,740	)		$	(792,956	)
Amortization of intangible assets		8,422				6,915				23,780				26,331
Stock-based compensation expense		192,080				161,228				550,300				519,358
Payroll tax expense related to stock-based compensation		10,341				4,604				30,157				19,212
Gain on divestiture		—				—				—				(39,883	)
Income tax adjustments		388				200				415				462
Non-GAAP net loss	$	11,378			$	(54,428	)		$	(227,088	)		$	(267,476	)
Weighted-average common shares - Diluted		1,466,420				1,393,358				1,446,040				1,364,327
Non-GAAP diluted net income (loss) per share reconciliation:
Diluted net loss per share	$	(0.14	)		$	(0.16	)		$	(0.58	)		$	(0.58	)
Non-GAAP adjustment to net loss		0.15				0.12				0.42				0.38
Non-GAAP diluted net income (loss) per share	$	0.01			$	(0.04	)		$	(0.16	)		$	(0.20	)

SNAP INC. SUPPLEMENTAL FINANCIAL INFORMATION AND BUSINESS METRICS (dollars and shares in thousands, except per user amounts below, unaudited)
	Q2 2019				Q3 2019				Q4 2019				Q1 2020				Q2 2020				Q3 2020
Cash Flows and Shares
Net cash provided by (used in) operating activities	$	(95,789	)		$	(76,149	)		$	(66,842	)		$	6,283			$	(66,554	)		$	(54,828	)
Net cash provided by (used in) operating activities - YoY (year-over-year)		52	%			43	%			(47	)%			109	%			31	%			28	%
Net cash provided by (used in) operating activities - TTM (trailing twelve months)	$	(420,564	)		$	(364,170	)		$	(304,958	)		$	(232,497	)		$	(203,262	)		$	(181,941	)
Purchases of property and equipment	$	(7,633	)		$	(7,938	)		$	(9,093	)		$	(10,891	)		$	(15,767	)		$	(14,727	)
Purchases of property and equipment - YoY		(78	)%			(70	)%			(60	)%			(8	)%			107	%			86	%
Purchases of property and equipment - TTM	$	(68,473	)		$	(50,126	)		$	(36,478	)		$	(35,555	)		$	(43,689	)		$	(50,478	)
Free Cash Flow	$	(103,422	)		$	(84,087	)		$	(75,935	)		$	(4,608	)		$	(82,321	)		$	(69,555	)
Free Cash Flow - YoY		56	%			47	%			49	%			94	%			20	%			17	%
Free Cash Flow - TTM	$	(489,037	)		$	(414,296	)		$	(341,436	)		$	(268,052	)		$	(246,951	)		$	(232,419	)
Common shares outstanding		1,372,149				1,389,395				1,415,796				1,439,589				1,463,620				1,484,716
Common shares outstanding - YoY		8	%			8	%			7	%			8	%			7	%			7	%
Shares underlying stock-based awards		180,585				175,813				160,239				149,004				152,526				138,914
Shares underlying stock-based awards - YoY		(12	)%			(5	)%			(15	)%			(29	)%			(16	)%			(21	)%
Total common shares outstanding plus shares underlying stock-based awards		1,552,734				1,565,208				1,576,035				1,588,593				1,616,146				1,623,630
Total common shares outstanding plus shares underlying stock-based awards - YoY		5	%			6	%			5	%			3	%			4	%			4	%
Results of Operations
Revenue	$	388,021			$	446,199			$	560,889			$	462,477			$	454,158			$	678,668
Revenue - YoY		48	%			50	%			44	%			44	%			17	%			52	%
Revenue - TTM	$	1,395,964			$	1,544,468			$	1,715,535			$	1,857,586			$	1,923,723			$	2,156,192
Revenue by region(1)
North America	$	260,017			$	316,028			$	382,029			$	315,650			$	306,740			$	492,928
North America - YoY		47	%			52	%			42	%			40	%			18	%			56	%
North America - TTM	$	962,057			$	1,070,608			$	1,183,779			$	1,273,724			$	1,320,447			$	1,497,347
Europe	$	60,633			$	68,553			$	91,873			$	76,498			$	78,635			$	102,480
Europe - YoY		51	%			36	%			47	%			61	%			30	%			49	%
Europe - TTM	$	221,029			$	239,104			$	268,507			$	297,557			$	315,559			$	349,486
Rest of World	$	67,374			$	61,618			$	86,987			$	70,329			$	68,783			$	83,260
Rest of World - YoY		51	%			55	%			49	%			49	%			2	%			35	%
Rest of World - TTM	$	212,882			$	234,760			$	263,252			$	286,308			$	287,717			$	309,359
Operating loss	$	(304,818	)		$	(228,853	)		$	(253,596	)		$	(286,364	)		$	(310,608	)		$	(167,864	)
Operating loss - YoY		(15	)%			(29	)%			30	%			(9	)%			2	%			(27	)%
Operating loss - Margin		(79	)%			(51	)%			(45	)%			(62	)%			(68	)%			(25	)%
Operating loss - TTM	$	(1,138,957	)		$	(1,044,439	)		$	(1,103,328	)		$	(1,073,631	)		$	(1,079,421	)		$	(1,018,432	)
Net loss	$	(255,174	)		$	(227,375	)		$	(240,704	)		$	(305,936	)		$	(325,951	)		$	(199,853	)
Net loss - YoY		(28	)%			(30	)%			26	%			(1	)%			28	%			(12	)%
Net loss - TTM	$	(1,082,397	)		$	(984,624	)		$	(1,033,660	)		$	(1,029,189	)		$	(1,099,966	)		$	(1,072,444	)
Adjusted EBITDA	$	(78,713	)		$	(42,375	)		$	42,307			$	(81,237	)		$	(95,570	)		$	56,361
Adjusted EBITDA - YoY		53	%			69	%			184	%			34	%			(21	)%			233	%
Adjusted EBITDA - Margin(2)		(20	)%			(9	)%			8	%			(18	)%			(21	)%			8	%
Adjusted EBITDA - TTM	$	(390,902	)		$	(294,900	)		$	(202,230	)		$	(160,018	)		$	(176,875	)		$	(78,139	)

(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.
(2)		We define Adjusted EBITDA margin as Adjusted EBITDA divided by GAAP revenue.

SNAP INC. SUPPLEMENTAL FINANCIAL INFORMATION AND BUSINESS METRICS (continued) (dollars and shares in thousands, except per user amounts below, unaudited)
	Q2 2019				Q3 2019				Q4 2019				Q1 2020				Q2 2020				Q3 2020
Other
DAU (in millions)		203				210				218				229				238				249
DAU - YoY		8	%			13	%			17	%			20	%			17	%			18	%
DAU by region (in millions)
North America		83				84				86				88				90				90
North America - YoY		3	%			6	%			9	%			10	%			9	%			7	%
Europe		64				65				67				70				71				72
Europe - YoY		5	%			9	%			12	%			14	%			12	%			10	%
Rest of World		56				61				64				71				77				87
Rest of World - YoY		21	%			28	%			36	%			45	%			37	%			43	%
ARPU	$	1.91			$	2.12			$	2.58			$	2.02			$	1.91			$	2.73
ARPU - YoY		37	%			33	%			23	%			20	%			—				28	%
ARPU by region
North America	$	3.14			$	3.75			$	4.42			$	3.57			$	3.40			$	5.49
North America - YoY		42	%			43	%			31	%			27	%			8	%			46	%
Europe	$	0.95			$	1.05			$	1.37			$	1.09			$	1.10			$	1.43
Europe - YoY		43	%			24	%			31	%			41	%			16	%			36	%
Rest of World	$	1.20			$	1.01			$	1.35			$	1.00			$	0.89			$	0.95
Rest of World - YoY		25	%			21	%			9	%			3	%			(26	)%			(6	)%
Employees (full-time; excludes part-time, contractors, and temporary personnel)		2,734				2,908				3,195				3,427				3,550				3,713
Employees - YoY		(5	)%			0	%			11	%			22	%			30	%			28	%
Depreciation and amortization expense
Cost of revenue	$	5,642			$	4,580			$	4,903			$	5,525			$	5,532			$	5,615
Research and development		7,188				8,632				8,738				8,915				8,463				9,526
Sales and marketing		3,045				3,109				3,087				3,166				3,381				3,233
General and administrative		6,785				4,325				3,892				3,598				3,549				3,430
Total	$	22,660			$	20,646			$	20,620			$	21,204			$	20,925			$	21,804
Depreciation and amortization expense - YoY		1	%			(17	)%			(9	)%			(9	)%			(8	)%			6	%
Stock-based compensation expense
Cost of revenue	$	1,786			$	1,332			$	1,398			$	1,782			$	2,066			$	2,623
Research and development		132,610				108,176				111,611				118,317				127,516				132,003
Sales and marketing		26,474				23,333				25,788				24,806				27,107				27,393
General and administrative		34,704				28,387				27,858				27,144				29,482				30,061
Total	$	195,574			$	161,228			$	166,655			$	172,049			$	186,171			$	192,080
Stock-based compensation expense - YoY		25	%			27	%			37	%			6	%			(5	)%			19	%