Snap Inc (SNAP) SEC Filing 10-K Annual report for the fiscal year ending Sunday, December 31, 2017

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Exhibit 99.1

Snap Inc. Reports Fourth Quarter and Full Year 2017 Results

VENICE, Calif. – February 6, 2018 – 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 million in 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.

 


The following information was filed by Snap Inc on Tuesday, February 6, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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  • snap_10k_2018-02-22_31_36
    Revenue - Product
    Sales and marketing expenses consist primarily of personnel-related costs, including salaries, benefits, commissions, and stock-based compensation expense for our employees engaged in sales and sales support, business development, media, marketing, corporate partnerships, communications, and customer service functions.
  • snap_10k_2018-02-22_101_292
    MA - Other
    Net cash used in investing activities was $1.0 billion for the year ended December 31, 2016, an increase of $920.4 million compared to the prior period, primarily due to the use of $1.6 billion for the purchase of marketable securities and $104.0 million for business acquisitions, partially offset by cash provided by the sales and maturities of marketable securities of $728.6 million.
  • snap_10k_2018-02-22_87_126
    Other - Other
    Other than as noted below, there are no known material subsequent events that could have a material impact on our cash or liquidity.
  • snap_10k_2018-02-22_100_291
    MA - Other
    Net cash used in investing activities was $1.3 billion for the year ended December 31, 2017, an increase of $325.4 million compared to the same period in 2016, primarily due to the use of $3.9 billion for the purchase of marketable securities and cash paid for acquisitions of $386.0 million, partially offset by cash provided by the sales and maturities of marketable securities of $3.0 billion.
  • snap_10k_2018-02-22_73_115
    Financial - Expense
    The increase in net loss and Adjusted EBITDA loss was primarily a result of an increase in cost of revenue and operating expenses, which more than offset revenue growth during the period.
  • snap_10k_2018-02-22_31_37
    Revenue - Product
    Sales and marketing expenses also include costs incurred for indirect advertising, market research, tradeshows, branding, marketing, promotional expense, and public relations, as well as facilities and other supporting overhead costs, including depreciation and amortization.
  • snap_10k_2018-02-22_87_123
    Other - Other
    Cash, cash equivalents, and marketable securities were $2.0 billion as of December 31, 2017, primarily consisting of cash on deposit with banks and highly liquid investments in U.S. government and agency securities.
  • snap_10k_2018-02-22_7_242
    Financial - Expense
    Total costs and expenses were $4.3 billion, an increase of 84% year-over-year, excluding stock-based compensation expense and related payroll tax expense.
  • snap_10k_2018-02-22_72_110
    Financial - Expense
    The remaining increase in net loss and the increase in Adjusted EBITDA was driven by an increase in cost of revenue and operating expenses, which more than offset revenue growth during the period.
  • snap_10k_2018-02-22_88_129
    Revenue - Product
    Our future capital requirements will depend on many factors including our growth rate, headcount, sales and marketing activities, research and development efforts, the introduction of new features, products, and acquisitions, and continued user engagement.
  • snap_10k_2018-02-22_37_46
    Revenue - Product
    Additionally, we believe that Adjusted EBITDA 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.
  • snap_10k_2018-02-22_125_214
    Financial - Expense
    As of December 31, 2017, we have approximately $620.0 million of unrecognized stock-based compensation expense related to Pre-2017 RSUs to be recognized over a weighted-average period of approximately 2.5 years.
  • snap_10k_2018-02-22_5_240
    Revenue - Product
    Average revenue per user, or ARPU, was $1.53 in the fourth quarter of 2017, compared to $1.05 in the fourth quarter of 2016, an increase of 46% year-over-year.
  • snap_10k_2018-02-22_30_33
    Financial - Expense
    Research and development expenses consist primarily of personnel-related costs, including salaries, benefits, and stock-based compensation expense for our engineers and other employees engaged in the research and development of our products.
  • snap_10k_2018-02-22_32_38
    Financial - Expense
    General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits, and stock-based compensation expense for our executives, finance, legal, information technology, human resources, and other administrative teams, including facilities and supporting overhead costs, and depreciation and amortization.
  • snap_10k_2018-02-22_57_76
    Revenue - Product
    The increase was primarily due to an increase in sales and marketing headcount of approximately 340%.
  • snap_10k_2018-02-22_98_137
    Other - Other
    Net cash used in operating activities increased $123.4 million in the year ended December 31, 2017 compared to the same period in 2016.
  • snap_10k_2018-02-22_99_140
    Other - Other
    Net cash used in operating activities increased $304.6 million in the year ended December 31, 2016 compared to the same period in 2015.
  • snap_10k_2018-02-22_65_95
    Financial - Expense
    The increase in expense was primarily a result of an increase in our share of losses on equity method investments and an increase in foreign currency transaction losses, partially offset by gains on sales of marketable securities.
  • snap_10k_2018-02-22_35_258
    Financial - Income
    Other income expense, net consists of realized gains and losses on sales of marketable securities, our portion of equity method investment income and losses, and foreign currency transaction gains and losses.
  • snap_10k_2018-02-22_6_241
    Revenue - Product
    Revenue was $824.9 million, an increase of 104% year-over-year.
  • snap_10k_2018-02-22_49_56
    Revenue - Product
    Revenue grew between the periods primarily due to an increase in the number of advertisements delivered.
  • snap_10k_2018-02-22_58_78
    Financial - Expense
    General and administrative expenses for the year ended December 31, 2017 increased $1.4 billion compared to the same period in 2016.
  • snap_10k_2018-02-22_59_82
    Financial - Expense
    General and administrative expenses for the year ended December 31, 2016 increased $16.6 million, or 11%, compared to the same period in 2015.
  • snap_10k_2018-02-22_48_54
    Revenue - Product
    The increase in both Snap-sold revenue and partner-sold revenue was due to an increase in the number of advertisements delivered, and for partner-sold revenue, the number of partners.
  • snap_10k_2018-02-22_47_49
    Revenue - Product
    The increase in revenue was primarily due to an increase in the number of advertisements delivered.
  • snap_10k_2018-02-22_99_141
    Revenue - Product
    Net cash used in operating activities was $611.2 million for the year ended December 31, 2016, resulting primarily from net loss, adjusted for non-cash items, and an increase in accounts receivable of $118.4 million related to an increase in advertising revenue.
  • snap_10k_2018-02-22_54_65
    Financial - Expense
    Research and development expenses for the year ended December 31, 2017 increased $1.4 billion compared to the same period in 2016.
  • snap_10k_2018-02-22_55_69
    Financial - Expense
    Research and development expenses for the year ended December 31, 2016 increased $101.4 million, or 123%, compared to the same period in 2015.
  • snap_10k_2018-02-22_49_58
    Revenue - Product
    ARPU increased due to the growth in revenue as a result of the number of advertisements delivered, which outpaced DAU growth during the period.
  • snap_10k_2018-02-22_47_52
    Revenue - Product
    ARPU increased due to the growth in revenue as a result of the number of advertisements delivered, which outpaced DAU growth during the period.
  • snap_10k_2018-02-22_73_116
    Financial - Expense
    The increase in cost of revenue was primarily related to higher hosting costs and revenue share payments to our partners for the year ended December 31, 2016.
  • snap_10k_2018-02-22_21_15
    Revenue - Product
    In the year ended December 31, 2017, we recorded revenue of $824.9 million compared to revenue of $404.5 million for the year ended December 31, 2016, a 104% year-over-year increase.
  • snap_10k_2018-02-22_47_50
    Revenue - Product
    The number of advertisements delivered increased between the periods primarily due to an increase in advertisers and demand across our product offerings, our growing sales efforts, and increased user engagement as measured by an 18% increase in DAUs.
  • snap_10k_2018-02-22_87_125
    Financial - Expense
    Our primary uses of cash include operating costs such as personnel-related expenses and the hosting costs of the Snapchat application, acquisitions and investments, and facility-related capital spending.
  • snap_10k_2018-02-22_44_265
    Other - Other
    See Selected Financial Data Non-GAAP Financial Measures of this Annual Report on Form 10-K for more information and for a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP.
  • snap_10k_2018-02-22_49_57
    Revenue - Product
    The number of advertisements delivered increased between the periods primarily due to increased advertiser demand across our product offerings, our growing sales team, and increased user engagement as measured by a 48% increase in DAUs.
  • snap_10k_2018-02-22_118_181
    Revenue - Product
    Revenue related to agreements based on the number of impressions delivered is recognized when the advertisement is displayed.
  • snap_10k_2018-02-22_59_83
    Financial - Expense
    The increase was primarily due to increased personnel costs from an increase in general and administrative headcount of approximately 220%, partially offset by $43.6 million of stock-based compensation from the accelerated vesting of modified stock-based compensation awards for certain former employees in 2015.
  • snap_10k_2018-02-22_29_32
    Financial - Expense
    In addition, cost of revenue includes inventory costs for Spectacles and facilities and other supporting overhead costs, including depreciation and amortization.
  • snap_10k_2018-02-22_69_103
    Other - Other
    Changes include, but are not limited to, a corporate tax rate decrease to 21% effective for tax years beginning after December 31, 2017.
  • snap_10k_2018-02-22_47_48
    Revenue - Product
    Revenue for the year ended December 31, 2017 increased $420.5 million compared to the same period in 2016.
  • snap_10k_2018-02-22_49_55
    Revenue - Product
    Revenue for the year ended December 31, 2016 increased $345.8 million compared to the same period in 2015.
  • snap_10k_2018-02-22_54_67
    Other - Other
    The increase was also driven by an increase in research and development headcount of approximately 84%.
  • snap_10k_2018-02-22_30_34
    Financial - Expense
    In addition, research and development expenses include facilities and other supporting overhead costs, including depreciation and amortization.
  • snap_10k_2018-02-22_126_217
    Financial - Shares / Equity
    The CEO award represented 3.0% of all outstanding shares on the closing of the IPO, including shares sold by us in the IPO and vested stock options and RSUs on the closing of the IPO, net of shares withheld to satisfy tax withholding obligations.
  • snap_10k_2018-02-22_47_51
    Revenue - Product
    Additionally, there was incremental spend in advertisements sold through our advertising API which launched in November 2016, allowing advertisers access to additional inventory at a lower price than our direct sales channels.
  • snap_10k_2018-02-22_108_156
    Financial - Cash Flow
    Should any of these estimates and assumptions change or prove to be incorrect, it could have a material impact on our results of operations, financial position, and cash flows.
  • snap_10k_2018-02-22_123_205
    Other - Other
    The performance condition related to these awards was satisfied on the effectiveness of the registration statement for our IPO, which occurred in March 2017.

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  • Form Type: Annual
  • Number of times amended: 0
  • Accession Number: 0001564590-18-002721
  • Submitted to the SEC: Wednesday, February 21, 2018 5:44:44 PM EST
  • Accepted by the SEC: Thursday, February 22, 2018
  • Fiscal Year ending: December 2017
  • Industry: Computer Programming Data Processing