Daily Active Users increased 15% year-over-year to 383 million
First quarter revenue was $989 million
Operating cash flow was $151 million and Free Cash Flow was $103 million
SANTA MONICA, Calif.–(BUSINESS WIRE)–Snap Inc. (NYSE: SNAP) today announced financial results for the quarter ended March 31, 2023.
“Our community continues to grow, reaching 383 million daily active users in Q1, and we are working to deepen engagement with our content platform while building innovative new features and services like My AI,” said Evan Spiegel, CEO. “We are working to accelerate our revenue growth and we are using this opportunity to make significant improvements to our advertising platform to help drive increased return on investment for our advertising partners.”
Q1 2023 Financial Summary
|
|
Three Months Ended |
|
Percent Change |
|||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
||
|
|
|
|
|
|
|
|||||
|
(Unaudited) |
(in thousands, except per share amounts) |
|
|
|||||||
|
Revenue |
$ |
988,608 |
|
|
$ |
1,062,727 |
|
|
(7 |
)% |
|
Operating loss |
$ |
(365,264 |
) |
|
$ |
(271,527 |
) |
|
(35 |
)% |
|
Net loss |
$ |
(328,674 |
) |
|
$ |
(359,624 |
) |
|
9 |
% |
|
Adjusted EBITDA(1) |
$ |
813 |
|
|
$ |
64,468 |
|
|
(99 |
)% |
|
Net cash provided by (used in) operating activities |
$ |
151,102 |
|
|
$ |
127,459 |
|
|
19 |
% |
|
Free Cash Flow(2) |
$ |
103,472 |
|
|
$ |
106,284 |
|
|
(3 |
)% |
|
Diluted net loss per share attributable to common stockholders |
$ |
(0.21 |
) |
|
$ |
(0.22 |
) |
|
5 |
% |
|
Non-GAAP diluted net income (loss) per share(3) |
$ |
0.01 |
|
|
$ |
(0.02 |
) |
|
163 |
% |
|
(1) |
See page 10 for reconciliation of net loss to Adjusted EBITDA. |
|
|
(2) |
See page 10 for reconciliation of net cash provided by (used in) operating activities to Free Cash Flow. |
|
|
(3) |
See page 11 for reconciliation of diluted net loss per share to non-GAAP diluted net income (loss) per share. |
Q1 2023 Summary & Key Highlights
We grew and deepened our engagement with our community:
We are focused on expanding and diversifying our revenue growth:
We invested in our augmented reality platform:
Financial Guidance
We are not providing formal guidance for revenue or adjusted EBITDA for the second quarter of 2023.
Conference Call Information
Snap Inc. will host a conference call to discuss the results at 2:30 p.m. Pacific / 5:30 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 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 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, our 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, geo-political conflicts, and the persisting effects of the 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 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 outstanding debt; 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 Snap Inc.’s 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 conflicts, the persisting effects of the COVID-19 pandemic, 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 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 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 non-cash or non-recurring 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.
|
SNAP INC. |
|||||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
|
(in thousands, unaudited) |
|||||||
|
|
Three Months Ended March 31, |
||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
Cash flows from operating activities |
|
|
|
||||
|
Net loss |
$ |
(328,674 |
) |
|
$ |
(359,624 |
) |
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
||||
|
Depreciation and amortization |
|
35,220 |
|
|
|
38,100 |
|
|
Stock-based compensation |
|
314,931 |
|
|
|
275,444 |
|
|
Amortization of debt issuance costs |
|
1,836 |
|
|
|
1,413 |
|
|
Losses (gains) on debt and equity securities, net |
|
(10,833 |
) |
|
|
79,127 |
|
|
Other |
|
(10,396 |
) |
|
|
1,125 |
|
|
Change in operating assets and liabilities, net of effect of acquisitions: |
|
|
|
||||
|
Accounts receivable, net of allowance |
|
288,373 |
|
|
|
126,027 |
|
|
Prepaid expenses and other current assets |
|
(13,204 |
) |
|
|
(27,178 |
) |
|
Operating lease right-of-use assets |
|
17,658 |
|
|
|
16,984 |
|
|
Other assets |
|
850 |
|
|
|
(308 |
) |
|
Accounts payable |
|
(36,972 |
) |
|
|
54,980 |
|
|
Accrued expenses and other current liabilities |
|
(90,191 |
) |
|
|
(62,828 |
) |
|
Operating lease liabilities |
|
(18,550 |
) |
|
|
(17,816 |
) |
|
Other liabilities |
|
1,054 |
|
|
|
2,013 |
|
|
Net cash provided by (used in) operating activities |
|
151,102 |
|
|
|
127,459 |
|
|
Cash flows from investing activities |
|
|
|
||||
|
Purchases of property and equipment |
|
(47,630 |
) |
|
|
(21,175 |
) |
|
Purchases of strategic investments |
|
(4,480 |
) |
|
|
(150 |
) |
|
Cash paid for acquisitions, net of cash acquired |
|
— |
|
|
|
(788 |
) |
|
Purchases of marketable securities |
|
(874,053 |
) |
|
|
(1,342,381 |
) |
|
Sales of marketable securities |
|
5,351 |
|
|
|
9,777 |
|
|
Maturities of marketable securities |
|
924,323 |
|
|
|
342,545 |
|
|
Other |
|
2,327 |
|
|
|
(5,493 |
) |
|
Net cash provided by (used in) investing activities |
|
5,838 |
|
|
|
(1,017,665 |
) |
|
Cash flows from financing activities |
|
|
|
||||
|
Proceeds from issuance of convertible notes, net of issuance costs |
|
— |
|
|
|
1,483,500 |
|
|
Purchase of capped calls |
|
— |
|
|
|
(177,000 |
) |
|
Proceeds from the exercise of stock options |
|
29 |
|
|
|
2,266 |
|
|
Deferred payments for acquisitions |
|
(2,028 |
) |
|
|
— |
|
|
Net cash provided by (used in) financing activities |
|
(1,999 |
) |
|
|
1,308,766 |
|
|
Change in cash, cash equivalents, and restricted cash |
|
154,941 |
|
|
|
418,560 |
|
|
Cash, cash equivalents, and restricted cash, beginning of period |
|
1,423,776 |
|
|
|
1,994,723 |
|
|
Cash, cash equivalents, and restricted cash, end of period |
$ |
1,578,717 |
|
|
$ |
2,413,283 |
|
|
Supplemental disclosures |
|
|
|
||||
|
Cash paid for income taxes, net |
$ |
17,003 |
|
|
$ |
2,636 |
|
|
Cash paid for interest |
$ |
4,421 |
|
|
$ |
3,454 |
|
|
SNAP INC. |
|||||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
|
(in thousands, except per share amounts, unaudited) |
|||||||
|
|
Three Months Ended March 31, |
||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
Revenue |
$ |
988,608 |
|
|
$ |
1,062,727 |
|
|
Costs and expenses: |
|
|
|
||||
|
Cost of revenue |
|
439,986 |
|
|
|
420,897 |
|
|
Research and development |
|
455,112 |
|
|
|
455,563 |
|
|
Sales and marketing |
|
268,433 |
|
|
|
241,886 |
|
|
General and administrative |
|
190,341 |
|
|
|
215,908 |
|
|
Total costs and expenses |
|
1,353,872 |
|
|
|
1,334,254 |
|
|
Operating loss |
|
(365,264 |
) |
|
|
(271,527 |
) |
|
Interest income |
|
37,948 |
|
|
|
3,123 |
|
|
Interest expense |
|
(5,885 |
) |
|
|
(5,173 |
) |
|
Other income (expense), net |
|
11,372 |
|
|
|
(77,537 |
) |
|
Loss before income taxes |
|
(321,829 |
) |
|
|
(351,114 |
) |
|
Income tax benefit (expense) |
|
(6,845 |
) |
|
|
(8,510 |
) |
|
Net loss |
$ |
(328,674 |
) |
|
$ |
(359,624 |
) |
|
Net loss per share attributable to Class A, Class B, and Class C common stockholders: |
|
|
|
||||
|
Basic |
$ |
(0.21 |
) |
|
$ |
(0.22 |
) |
|
Diluted |
$ |
(0.21 |
) |
|
$ |
(0.22 |
) |
|
Weighted average shares used in computation of net loss per share: |
|
|
|
||||
|
Basic |
|
1,581,370 |
|
|
|
1,619,113 |
|
|
Diluted |
|
1,581,370 |
|
|
|
1,619,113 |
|
|
SNAP INC. |
|||||||
|
CONSOLIDATED BALANCE SHEETS |
|||||||
|
(in thousands, except par value, unaudited) |
|||||||
|
|
March 31, |
|
December 31, |
||||
|
Assets |
|
|
|
||||
|
Current assets |
|
|
|
||||
|
Cash and cash equivalents |
$ |
1,578,528 |
|
|
$ |
1,423,121 |
|
|
Marketable securities |
|
2,524,904 |
|
|
|
2,516,003 |
|
|
Accounts receivable, net of allowance |
|
892,511 |
|
|
|
1,183,092 |
|
|
Prepaid expenses and other current assets |
|
146,973 |
|
|
|
134,431 |
|
|
Total current assets |
|
5,142,916 |
|
|
|
5,256,647 |
|
|
Property and equipment, net |
|
303,022 |
|
|
|
271,777 |
|
|
Operating lease right-of-use assets |
|
355,062 |
|
|
|
370,952 |
|
|
Intangible assets, net |
|
186,724 |
|
|
|
204,480 |
|
|
Goodwill |
|
1,649,097 |
|
|
|
1,646,120 |
|
|
Other assets |
|
251,569 |
|
|
|
279,562 |
|
|
Total assets |
$ |
7,888,390 |
|
|
$ |
8,029,538 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
||||
|
Current liabilities |
|
|
|
||||
|
Accounts payable |
$ |
141,800 |
|
|
$ |
181,774 |
|
|
Operating lease liabilities |
|
50,787 |
|
|
|
46,485 |
|
|
Accrued expenses and other current liabilities |
|
898,897 |
|
|
|
987,340 |
|
|
Total current liabilities |
|
1,091,484 |
|
|
|
1,215,599 |
|
|
Convertible senior notes, net |
|
3,744,237 |
|
|
|
3,742,520 |
|
|
Operating lease liabilities, noncurrent |
|
368,526 |
|
|
|
386,271 |
|
|
Other liabilities |
|
105,703 |
|
|
|
104,450 |
|
|
Total liabilities |
|
5,309,950 |
|
|
|
5,448,840 |
|
|
Commitments and contingencies |
|
|
|
||||
|
Stockholders’ equity |
|
|
|
||||
|
Class A non-voting common stock, $0.00001 par value. 3,000,000 shares authorized, 1,391,998 shares issued, 1,341,056 shares outstanding at March 31, 2023 and 3,000,000 shares authorized, 1,371,242 shares issued, 1,319,930 shares outstanding at December 31, 2022. |
|
13 |
|
|
|
13 |
|
|
Class B voting common stock, $0.00001 par value. 700,000 shares authorized, 22,522 shares issued and outstanding at March 31, 2023 and 700,000 shares authorized, 22,529 shares issued and outstanding at December 31, 2022. |
|
— |
|
|
|
— |
|
|
Class C voting common stock, $0.00001 par value. 260,888 shares authorized, 231,627 shares issued and outstanding at March 31, 2023 and 260,888 shares authorized, 231,627 shares issued and outstanding at December 31, 2022. |
|
2 |
|
|
|
2 |
|
|
Treasury stock, at cost. 50,942 and 51,312 shares of Class A non-voting common stock at March 31, 2023 and December 31, 2022, respectively. |
|
(496,906 |
) |
|
|
(500,514 |
) |
|
Additional paid-in capital |
|
13,620,326 |
|
|
|
13,309,828 |
|
|
Accumulated deficit |
|
(10,543,331 |
) |
|
|
(10,214,657 |
) |
|
Accumulated other comprehensive income (loss) |
|
(1,664 |
) |
|
|
(13,974 |
) |
|
Total stockholders’ equity |
|
2,578,440 |
|
|
|
2,580,698 |
|
|
Total liabilities and stockholders’ equity |
$ |
7,888,390 |
|
|
$ |
8,029,538 |
|
|
SNAP INC. |
|||||||
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
|||||||
|
(in thousands, unaudited) |
|||||||
|
|
Three Months Ended March 31, |
||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
Free Cash Flow reconciliation: |
|
|
|
||||
|
Net cash provided by (used in) operating activities |
$ |
151,102 |
|
|
$ |
127,459 |
|
|
Less: |
|
|
|
||||
|
Purchases of property and equipment |
|
(47,630 |
) |
|
|
(21,175 |
) |
|
Free Cash Flow |
$ |
103,472 |
|
|
$ |
106,284 |
|
|
|
Three Months Ended March 31, |
||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
Adjusted EBITDA reconciliation: |
|
|
|
||||
|
Net loss |
$ |
(328,674 |
) |
|
$ |
(359,624 |
) |
|
Add (deduct): |
|
|
|
||||
|
Interest income |
|
(37,948 |
) |
|
|
(3,123 |
) |
|
Interest expense |
|
5,885 |
|
|
|
5,173 |
|
|
Other (income) expense, net |
|
(11,372 |
) |
|
|
77,537 |
|
|
Income tax (benefit) expense |
|
6,845 |
|
|
|
8,510 |
|
|
Depreciation and amortization |
|
35,220 |
|
|
|
38,100 |
|
|
Stock-based compensation expense |
|
314,931 |
|
|
|
275,444 |
|
|
Payroll and other tax expense related to stock-based compensation |
|
15,926 |
|
|
|
22,451 |
|
|
Adjusted EBITDA |
$ |
813 |
|
|
$ |
64,468 |
|
Contacts
Investors and Analysts:
ir@snap.com
Press:
press@snap.com
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