Snap : Q4 2022 Earnings Slides

Q4 2022 Earnings Slides

January 31, 2023

Forward-Looking Statements & Non-GAAP Financial Measures

This presentation contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this presentation, including statements regarding guidance, our future results of operations or financial condition, 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 presentation.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this presentation on our current expectations and projections about future events and trends, including our financial outlook, macroeconomic uncertainty, geo-political conflicts, and 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, uncertainties, and other factors, including those described in the sections titled "Risk Factors" and elsewhere in our most recent periodic report filed with the SEC, which is available on the SEC's website at www.sec.gov. Additional information will be made available in our periodic report that will be filed with the SEC for the period covered by this presentation and other filings that we make from time to time with the SEC.

In addition, the forward-looking statements in this presentation relate only to events as of the date on which the statements are made and are based on information available to us as of the date of this presentation. We undertake no obligation to update any forward-looking statements made in this presentation to reflect events or circumstances after the date of this presentation or to reflect new information or the occurrence of unanticipated events, including future developments related to geo-political conflicts, the COVID-19 pandemic, and macroeconomic conditions, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, dispositions, joint ventures, restructurings, legal settlements or investments.

This presentation includes certain non-GAAP financial measures. 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. A reconciliation of GAAP to non-GAAP measures is provided in the Appendix of this presentation.

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Fourth Quarter Financial Summary

Revenue

Operating

Performance

• Revenue was $1,300 million in Q4 2022, compared to $1,298 million in Q4 2021. On a constant currency basis1 to account for changes in foreign exchange rates, the estimated growth was 2% year-over-year.
• Average revenue per user was $3.47 in Q4 2022, compared to $4.06 in Q4 2021.
• Operating margin was (22)% in Q4 2022, compared to (2)% in Q4 2021.
• Adjusted gross margin2 was 64% in Q4 2022, compared to 66% in Q4 2021.
• Net loss was $288 million in Q4 2022, including restructuring charges of $34 million, compared to net income of $23 million in Q4 2021.
• Adjusted EBITDA3 was $233 million in Q4 2022, compared to $327 million in Q4 2021.
• Adjusted EBITDA margin3 was 18% in Q4 2022, compared to 25% in Q4 2021.

Cash

• Operating cash flow was $125 million in Q4 2022, compared to $186 million in Q4 2021.
• Free Cash Flow3 was $78 million in Q4 2022, compared to $161 million in Q4 2021.
• Cash, cash equivalents, and marketable securities were $3.9 billion as of December 31, 2022.

1Constant currency revenue is a non-GAAP measure, which we define as GAAP revenue in the current period translated using the prior period average monthly exchange rates for revenue transactions in currencies other than the U.S. dollar. The constant currency revenue percentage change is determined using current period constant currency revenue and prior period GAAP revenue.

2Adjusted gross margin is a non-GAAP measure, which we define as GAAP revenue less adjusted cost of revenue divided by GAAP revenue. Adjusted cost of revenue is a non-GAAP measure and excludes stock-based compensation expense, payroll and other tax expense related to stock-based compensation, depreciation and amortization, and certain other non-cash or non-recurring items impacting net income (loss) from time to time.

3Adjusted EBITDA margin is a non-GAAP measure, which we define as Adjusted EBITDA divided by GAAP revenue. See Appendix for non-GAAP measures of Adjusted EBITDA and Free Cash Flow, including reconciliations of net loss to Adjusted EBITDA and net cash provided by (used in) operating activities to Free Cash Flow.

Quarterly information is unaudited.3 Numbers throughout presentation may not foot due to rounding.

Q4 2022 REVENUE WAS $1.3 BILLION; ON A CONSTANT CURRENCY BASIS1, ESTIMATED GROWTH OF 2% YoY

FREE CASH FLOW WAS $78 MILLION IN Q4 2022

Business Highlights

We grew and deepened our engagement with our community:

• DAUs were 375 million in Q4 2022, an increase of 56 million, or 17% year-over-year.
• DAUs increased sequentially and year-over-year in each of North America, Europe, and Rest of World.
• Total time spent watching Spotlight content grew over 100% year-over-year.
• 17 content partners reached over 50 million global viewers each in Q4 2022.
• Through our broadcast partnerships with beIN SPORTS in Qatar and France, ITV in the UK, MediaPro in Spain, and Bell in Canada, among others, over 60 million Snapchatters watched World Cup Stories content on Snapchat and over 285 million Snapchatters engaged with World Cup AR.
• We renewed our partnerships with UFC and the Washington Post in the US. Internationally, we expanded our partnership with Groupe M6 in France and signed new agreements with BBC Studios in the UK, G+J Medien (RTL) in Germany, and Totem Global in Australia.

We are focused on expanding and diversifying our revenue growth:

• In Q4, our subscription service Snapchat+ reached over 2.0 million paying subscribers. Snapchat+ offers exclusive, experimental, and pre-release features, and in Q4 we launched new features such as Custom Story Expiration and Custom Notification Sounds, providing subscribers with over 12 exclusive features.
• We've improved the accessibility of Conversions API (CAPI) by enabling access through four new third-party partners, closing the year with 12 total, making CAPI more accessible to all advertisers on our platform.
• We've accelerated our commerce integrations through the launch of our partnership with BigCommerce, enabling tens of thousands of merchants to seamlessly sync catalogs and run Dynamic Ads.
• We've partnered with Smartly.io to unlock growth and drive performance through real time automation. Through Smartly.io's creative and campaign management tools, brands can tap into their automated ads by scaling thousands of targeted versions.
• Thousands of brands continued investing in their organic presence on Snapchat via Public Profiles for Businesses to build deeper connections, and grow their audience and organic engagements.

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Business Highlights (Continued)

We invested in our augmented reality platform:

• Over 300,000 AR creators and developers have built more than 3 million AR Lenses.
• In our latest Lens Studio release, we unveiled several new features including garment, earring, and wrist wear try-on.
• We powered more than 161 million product trials by over 35 million Snapchatters for Walmart, leveraging Catalog-Powered Shopping Lenses at-scale.
• We launched a new Camera Kit integration with H&M enabling an AR try-on experience of their collection of immersive AR fashion, co-designed by H&M and the Institute of Digital Fashion.
• Luxottica Sunglass Hut drove over 14 million try-ons through Catalog-powered Shopping Lenses.
• In celebration of the film Avatar: The Way of Water, we teamed up with Disney to create an augmented reality Lens that turns any Snapchatter into a Na'vi. This is the first ever sponsored AR Lens integration into the SoFi Stadium infinity screen surprising and delighting attendees.
• In partnership with New Balance, we created a Holiday Gifting Concierge Lens to offer Snapchatters gifting inspiration using augmented reality and speech recognition via voiceML.
• We announced a first-of-its-kind Bitmoji Drop in partnership with adidas that allows Snapchatters to use Snap Tokens to claim an exclusive adidas track jacket. Snapchatters viewed the Bitmoji Drop banner over 280 million times.

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