Snap Inc [SNAP] Filings

10-Q 1 snap-20240630.htm 10-Q snap-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

______________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to________

Commission File Number: 001-38017

______________________________________

SNAP INC.

(Exact name of registrant as specified in its charter)

______________________________________


Delaware			45-5452795
(State or other jurisdiction of incorporation or organizations)			(I.R.S. Employer Identification Number)

3000 31st Street

Santa Monica, California 90405

(Address of principal executive offices, including zip code)

(310) 399-3339

(Registrant's telephone, including area code)

______________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.00001 per share	SNAP	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (Exchange Act) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


☒	Large accelerated filer	☐	Accelerated filer
☐	Non-accelerated filer	☐	Smaller reporting company
☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.


Class			Number of Shares Outstanding
Class A common stock, $0.00001 par value			1,405,334,384 shares outstanding as of July 30, 2024
Class B common stock, $0.00001 par value			22,523,290 shares outstanding as of July 30, 2024
Class C common stock, $0.00001 par value			231,626,943 shares outstanding as of July 30, 2024

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TABLE OF CONTENTS


		Page
Note Regarding Forward-Looking Statements		3
Note Regarding User Metrics and Other Data		5

	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	6
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Operations	7
	Consolidated Statements of Comprehensive Income (Loss)	8
	Consolidated Balance Sheets	9
	Consolidated Statements of Stockholders’ Equity	10
	Notes to Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	43

	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	87
Item 3.	Defaults Upon Senior Securities	87
Item 4.	Mine Safety Disclosures	87
Item 5.	Other Information	87
Item 6.	Exhibits	88
Signatures		90

Snap Inc., “Snapchat,” and our other registered and common-law trade names, trademarks, and service marks appearing in this Quarterly Report on Form 10-Q are the property of Snap Inc. or our subsidiaries.

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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 report, 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 report.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends, including our financial outlook, macroeconomic uncertainty, and geo-political conflicts, 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 described in “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, including among other things:

•our financial performance, including our revenues, cost of revenues, operating expenses, and our ability to attain and sustain profitability;

•our ability to generate and sustain positive cash flow;

•our ability to attract and retain users and partners;

•our ability to attract and retain advertisers;

•our ability to compete effectively with existing competitors and new market entrants;

•our ability to effectively manage our growth and future expenses;

•our ability to comply with modified or new laws, regulations, and executive actions applying to our business;

•our ability to maintain, protect, and enhance our intellectual property;

•our ability to successfully expand in our existing market segments and penetrate new market segments;

•our ability to attract and retain qualified team members and key personnel;

•our ability to repay or refinance outstanding debt, or to access additional financing;

•future acquisitions of or investments in complementary companies, products, services, or technologies; and

•the potential adverse impact of climate change, natural disasters, health epidemics, macroeconomic conditions, and war or other armed conflict on our business, operations, and the markets and communities in which we and our partners, advertisers, and users operate.

Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. And while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this

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report to reflect events or circumstances after the date of this report or to reflect new information or the occurrence of unanticipated events, including future developments related to geo-political conflicts 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.

Investors and others should note that we may announce material business and financial information to our investors using our websites (including investor.snap.com), filings with the U.S. Securities and Exchange Commission, or SEC, webcasts, press releases, investor letters, and conference calls. We use these mediums, including Snapchat and our website, to communicate with our members and the public about our company, our products, and other issues. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our websites.

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NOTE REGARDING USER METRICS AND OTHER DATA

We define a Daily Active User, or DAU, as a registered and logged-in Snapchat user who visits Snapchat through our applications or websites 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. DAUs are broken out by geography because markets have different characteristics. We define average revenue per user, or ARPU, as quarterly revenue divided by the average DAUs. For purposes of calculating ARPU, revenue by user geography 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 differs from our components of revenue disclosure in the notes to our consolidated financial statements, where revenue is based on the billing address of the advertising customer. For information concerning these metrics as measured by us, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Unless otherwise stated, statistical information regarding our users and their activities is determined by calculating the daily average of the selected activity for the most recently completed quarter included in this report.

While these metrics are determined based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring how our products are used across large populations globally. For example, there may be individuals who attempt to create accounts for malicious purposes, including at scale, even though we forbid that in our Terms of Service and Community Guidelines. We implement measures in our user registration process and through other technical measures to prevent, detect, and suppress that behavior, although we have not determined the number of such accounts.

Changes in our products, infrastructure, mobile operating systems, or metric tracking system, or the introduction of new products, may impact our ability to accurately determine active users or other metrics and we may not determine such inaccuracies promptly. We also believe that we don’t capture all data regarding each of our active users. Technical issues may result in data not being recorded from every user’s application. For example, because some Snapchat features can be used without internet connectivity, we may not count a DAU because we don’t receive timely notice that a user has opened the Snapchat application. This undercounting may increase as we grow in Rest of World markets where users may have poor connectivity. We do not adjust our reported metrics to reflect this underreporting. We believe that we have adequate controls to collect user metrics, however, there is no uniform industry standard. We continually seek to identify these technical issues and improve both our accuracy and precision, including ensuring that our investors and others can understand the factors impacting our business, but these technical issues and new issues may continue in the future, including if there continues to be no uniform industry standard.

Some of our demographic data may be incomplete or inaccurate. For example, because users self-report their dates of birth, our age-demographic data may differ from our users’ actual ages. And because users who signed up for Snapchat before June 2013 were not asked to supply their date of birth, we may exclude those users from our age demographics or estimate their ages based on a sample of the self-reported ages that we do have. If our active users provide us with incorrect or incomplete information regarding their age or other attributes, then our estimates may prove inaccurate and fail to meet investor expectations.

We count a DAU only when a user visits Snapchat through our applications or websites and only once per user per day. We believe this methodology more accurately measures our user engagement. We have multiple pipelines of user data that we use to determine whether a user has visited Snapchat through our applications or websites during a particular day, and becoming a DAU. This provides redundancy in the event one pipeline of data were to become unavailable for technical reasons, and also gives us redundant data to help measure how users interact with our application.

If we fail to maintain an effective analytics platform, our metrics calculations may be inaccurate. We regularly review, have adjusted in the past, and are likely in the future to adjust our processes for calculating our internal metrics to improve their accuracy. As a result of such adjustments, our DAUs or other metrics may not be comparable to those in prior periods. Our measures of DAUs may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology or data used.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Snap Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cash flows from operating activities
Net loss	$	(248,620)	$	(377,308)	$	(553,710)	$	(705,982)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	37,930		39,688		79,643		74,908
Stock-based compensation	259,311		317,943		523,063		632,874
Amortization of debt issuance costs	2,208		1,839		3,950		3,675

Losses (gains) on debt and equity securities, net	2,662		(4,434)		11,630		(15,267)

Other	10,583		(16,307)		(6,029)		(26,703)
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net of allowance	(36,916)		(103,629)		125,291		184,744
Prepaid expenses and other current assets	(34,526)		(1,098)		(48,155)		(14,302)
Operating lease right-of-use assets	14,929		17,817		28,504		35,475
Other assets	(955)		(1,275)		(6,097)		(425)
Accounts payable	(61,556)		8,426		(95,645)		(28,546)
Accrued expenses and other current liabilities	45,821		52,981		27,440		(37,210)
Operating lease liabilities	(13,940)		(17,792)		(27,870)		(36,342)
Other liabilities	1,692		1,213		4,960		2,267
Net cash provided by (used in) operating activities	(21,377)		(81,936)		66,975		69,166
Cash flows from investing activities
Purchases of property and equipment	(52,062)		(36,943)		(102,510)		(84,573)
Purchases of strategic investments	(2,000)		(3,290)		(2,000)		(7,770)
Sales of strategic investments	1,006		—		1,015		—
Cash paid for acquisitions, net of cash acquired	—		(50,254)		—		(50,254)
Purchases of marketable securities	(774,852)		(631,218)		(1,240,524)		(1,505,271)
Sales of marketable securities	166,557		85,922		166,557		91,273
Maturities of marketable securities	447,153		611,835		832,081		1,536,158
Other	(100)		(2,451)		(100)		(124)
Net cash provided by (used in) investing activities	(214,298)		(26,399)		(345,481)		(20,561)
Cash flows from financing activities
Proceeds from issuance of convertible notes, net of issuance costs	740,350		—		740,350		—
Purchase of capped calls	(68,850)		—		(68,850)		—
Proceeds from termination of capped calls	62,683		—		62,683		—
Proceeds from the exercise of stock options	2,425		382		2,494		411
Repurchases of Class A non-voting common stock	(75,955)		—		(311,069)		—
Deferred payments for acquisitions	(3,695)		(242,088)		(3,695)		(244,116)
Repurchases of convertible notes	(418,336)		—		(859,042)		—
Other	(1,799)		—		(1,799)		—
Net cash provided by (used in) financing activities	236,823		(241,706)		(438,928)		(243,705)
Change in cash, cash equivalents, and restricted cash	1,148		(350,041)		(717,434)		(195,100)
Cash, cash equivalents, and restricted cash, beginning of period	1,063,880		1,578,717		1,782,462		1,423,776
Cash, cash equivalents, and restricted cash, end of period	$	1,065,028	$	1,228,676	$	1,065,028	$	1,228,676

See Notes to Consolidated Financial Statements.

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Snap Inc.

Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue	$	1,236,768	$	1,067,669	$	2,431,541	$	2,056,277
Costs and expenses:
Cost of revenue	588,921		496,874		1,163,670		936,860
Research and development	406,196		477,663		855,955		932,775
Sales and marketing	266,320		280,597		542,354		549,030
General and administrative	229,306		216,874		456,769		407,215
Total costs and expenses	1,490,743		1,472,008		3,018,748		2,825,880
Operating loss	(253,975)		(404,339)		(587,207)		(769,603)
Interest income	36,462		43,144		76,360		81,092
Interest expense	(5,113)		(5,343)		(9,856)		(11,228)
Other income (expense), net	(20,792)		1,323		(20,873)		12,695
Loss before income taxes	(243,418)		(365,215)		(541,576)		(687,044)
Income tax benefit (expense)	(5,202)		(12,093)		(12,134)		(18,938)
Net loss	$	(248,620)	$	(377,308)	$	(553,710)	$	(705,982)
Net loss per share attributable to Class A, Class B, and Class C common stockholders (Note 3):
Basic	$	(0.15)	$	(0.24)	$	(0.34)	$	(0.44)
Diluted	$	(0.15)	$	(0.24)	$	(0.34)	$	(0.44)
Weighted average shares used in computation of net loss per share:
Basic	1,644,736		1,603,172		1,646,064		1,592,365
Diluted	1,644,736		1,603,172		1,646,064		1,592,365

See Notes to Consolidated Financial Statements.

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Snap Inc.

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net loss	$	(248,620)	$	(377,308)	$	(553,710)	$	(705,982)
Other comprehensive income (loss), net of tax
Unrealized gain (loss) on marketable securities, net of tax	137		(15,579)		(3,467)		(6,184)
Foreign currency translation	1,885		1,082		(892)		3,997
Total other comprehensive income (loss), net of tax	2,022		(14,497)		(4,359)		(2,187)
Total comprehensive loss	$	(246,598)	$	(391,805)	$	(558,069)	$	(708,169)

See Notes to Consolidated Financial Statements.

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Snap Inc.

Consolidated Balance Sheets

(in thousands, except par value)


	June 30, 2024		December 31, 2023
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	1,060,551	$	1,780,400
Marketable securities	2,020,723		1,763,680
Accounts receivable, net of allowance	1,141,849		1,278,176
Prepaid expenses and other current assets	198,074		153,587
Total current assets	4,421,197		4,975,843
Property and equipment, net	444,485		410,326
Operating lease right-of-use assets	521,101		516,862
Intangible assets, net	112,808		146,303
Goodwill	1,691,317		1,691,827
Other assets	229,131		226,597
Total assets	$	7,420,039	$	7,967,758
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	179,586	$	278,961
Operating lease liabilities	21,279		49,321
Accrued expenses and other current liabilities	875,119		805,836
Convertible senior notes, net	36,170		—
Total current liabilities	1,112,154		1,134,118
Long-term convertible senior notes, net	3,602,563		3,749,400
Operating lease liabilities, noncurrent	579,896		546,279
Other liabilities	58,704		123,849
Total liabilities	5,353,317		5,553,646
Commitments and contingencies (Note 8)
Stockholders’ equity
Class A non-voting common stock, $0.00001 par value. 3,000,000 shares authorized, 1,447,952 shares issued, 1,399,665 shares outstanding at June 30, 2024, and 3,000,000 shares authorized, 1,440,541 shares issued, 1,391,341 shares outstanding at December 31, 2023.	14		14
Class B voting common stock, $0.00001 par value. 700,000 shares authorized, 22,528 shares issued and outstanding at June 30, 2024 and December 31, 2023.	—		—
Class C voting common stock, $0.00001 par value. 260,888 shares authorized, 231,627 shares issued and outstanding at June 30, 2024 and December 31, 2023.	2		2
Treasury stock, at cost. 48,287 and 49,200 shares of Class A non-voting common stock at June 30, 2024 and December 31, 2023, respectively.	(470,999)		(479,903)
Additional paid-in capital	15,126,248		14,613,404
Accumulated deficit	(12,591,315)		(11,726,536)
Accumulated other comprehensive income (loss)	2,772		7,131
Total stockholders’ equity	2,066,722		2,414,112
Total liabilities and stockholders’ equity	$	7,420,039	$	7,967,758

See Notes to Consolidated Financial Statements.

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Snap Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Class A non-voting common stock
Balance, beginning of period	1,388,965	$	14	1,341,056	$	13	1,391,341	$	14	1,319,930	$	13
Shares issued in connection with exercise of stock options under stock-based compensation plans	179	—		361	—		184	—		364	—

Issuance of Class A non-voting common stock for vesting of restricted stock units and restricted stock awards, net	16,875	—		19,741	1		35,107	—		40,486	1

Conversion of Class B voting common stock to Class A non-voting common stock	5	—		344	—		5	—		352	—
Repurchases of Class A non-voting common stock	(6,865)	—		—	—		(27,885)	—		—	—
Reissuances of Class A non-voting common stock for vesting of restricted stock units	506	—		451	—		913	—		821	—
Balance, end of period	1,399,665	14		1,361,953	14		1,399,665	14		1,361,953	14
Class B voting common stock
Balance, beginning of period	22,528	—		22,522	—		22,528	—		22,529	—
Shares issued in connection with exercise of stock options under stock-based compensation plans	5	—		361	—		5	—		362	—
Conversion of Class B voting common stock to Class A non-voting common stock	(5)	—		(344)	—		(5)	—		(352)	—
Balance, end of period	22,528	—		22,539	—		22,528	—		22,539	—
Class C voting common stock
Balance, beginning of period	231,627	2		231,627	2		231,627	2		231,627	2

Balance, end of period	231,627	2		231,627	2		231,627	2		231,627	2
Treasury stock
Balance, beginning of period	48,793	(475,939)		50,942	(496,906)		49,200	(479,903)		51,312	(500,514)
Repurchases of Class A non-voting common stock	6,865	(75,955)		—	—		27,885	(311,069)		—	—
Retirement of Class A non-voting common stock	(6,865)	75,955		—	—		(27,885)	311,069		—	—
Reissuances of Class A non-voting common stock for vesting of restricted stock units	(506)	4,940		(451)	4,406		(913)	8,904		(821)	8,014
Balance, end of period	48,287	(470,999)		50,491	(492,500)		48,287	(470,999)		50,491	(492,500)
Additional paid-in capital
Balance, beginning of period	—	14,873,261		—	13,620,326		—	14,613,404		—	13,309,828
Stock-based compensation expense	—	259,311		—	317,942		—	523,063		—	632,019
Shares issued in connection with exercise of stock options under stock-based compensation plans	—	2,426		—	382		—	2,494		—	411



Purchase of capped calls	—	(68,850)		—	—		—	(68,850)		—	—
Termination of capped calls	—	62,683		—	—		—	62,683		—	—
Reissuances of Class A non-voting common stock for vesting of restricted stock units	—	(4,940)		—	(4,406)		—	(8,904)		—	(8,014)
Other	—	2,357		—	—		—	2,358		—	—
Balance, end of period	—	15,126,248		—	13,934,244		—	15,126,248		—	13,934,244
Accumulated deficit
Balance, beginning of period	—	(12,266,740)		—	(10,543,331)		—	(11,726,536)		—	(10,214,657)

Net loss	—	(248,620)		—	(377,308)		—	(553,710)		—	(705,982)
Retirement of Class A non-voting common stock	—	(75,955)		—	—		—	(311,069)		—	—
Balance, end of period	—	(12,591,315)		—	(10,920,639)		—	(12,591,315)		—	(10,920,639)
Accumulated other comprehensive income (loss)
Balance, beginning of period	—	750		—	(1,664)		—	7,131		—	(13,974)
Other comprehensive income (loss), net of tax	—	2,022		—	(14,497)		—	(4,359)		—	(2,187)
Balance, end of period	—	2,772		—	(16,161)		—	2,772		—	(16,161)
Total stockholders’ equity	1,702,107	$	2,066,722	1,666,610	$	2,504,960	1,702,107	$	2,066,722	1,666,610	$	2,504,960

See Notes to Consolidated Financial Statements.

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Snap Inc.

Notes to Consolidated Financial Statements

1. Description of Business and Summary of Significant Accounting Policies

Snap Inc. is a technology company.

Snap Inc. (“we,” “our,” or “us”), a Delaware corporation, is headquartered in Santa Monica, California. Our flagship product, Snapchat, is a visual messaging application that was created to help people communicate through short videos and images called “Snaps.”

Basis of Presentation

The accompanying unaudited consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Our consolidated financial statements include the accounts of Snap Inc. and our wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Our fiscal year ends on December 31. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) in February 2024 (the “Annual Report”).

In our opinion, the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of our financial position, results of operations, and cash flows. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024.

There have been no changes to our significant accounting policies described in our Annual Report that have had a material impact on our consolidated financial statements and related notes.

Use of Estimates

The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Management’s estimates are based on historical information available as of the date of the consolidated financial statements and various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from those estimates.

Key estimates relate primarily to determining the fair value of assets and liabilities assumed in business combinations, evaluation of contingencies, uncertain tax positions, and the fair value of strategic investments. On an ongoing basis, management evaluates our estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities.

Future Stock Split to be Effected in the Form of a Stock Dividend

In July 2022, our board of directors determined that it was advisable and in our best interest to approve a stock split to be effected in the form of a special dividend of one share of Class A common stock on each outstanding share of our common stock at a future date (the “Future Stock Split”). In connection with the Future Stock Split, we entered into certain agreements (the “Co-Founder Agreements”) with Evan Spiegel and Robert Murphy, our co-founders, and certain of their respective affiliates requiring them, among other things, to convert shares of Class B common stock and Class C common stock into Class A common stock under certain circumstances. In February 2024, the conditions for the declaration of such dividends were modified and the Co-Founder Agreements were amended to reflect such modifications. As modified, the Future Stock Split will not be declared and paid until the first business day following the date on which (i) the average of the volume weighted average price (the “VWAP”) per share of Class A common stock equals or exceeds $40 per share for 90 consecutive trading days (the “90-Day VWAP”) and (ii) the ratio of the 90-Day VWAP to $8.70 equals or exceeds the ratio of the average closing price of the S&P 500 Total Return index for the same 90 trading days for which the 90-Day VWAP was calculated to 8,862.85. If this does not occur by July 21, 2032, the Future Stock Split will not be declared and paid, and the Co-Founder Agreements will terminate.

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No adjustments have been made to share or per share amounts for Class A common stock in the accompanying consolidated financial statements for the effects of the Future Stock Split as these triggering conditions have not been met.

2. Revenue

We determine revenue recognition by first identifying the contract or contracts with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract, and recognizing revenue when, or as, we satisfy a performance obligation.

Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to receive in exchange for those goods or services. We determine collectability by performing ongoing credit evaluations and monitoring customer accounts receivable balances. Sales tax, including value added tax, is excluded from reported revenue.

We generate substantially all of our revenues by offering various advertising products on Snapchat, which include Snap Ads and AR Ads, referred to as advertising revenue. AR Ads include Sponsored Lenses, which allow users to interact with an advertiser’s brand by enabling branded augmented reality experiences.

The substantial majority of advertising revenue is generated from the display of advertisements on Snapchat through contractual agreements that are either based on the number of advertising impressions delivered or on a fixed fee basis over a period of time. Revenue related to agreements based on the number of impressions delivered is recognized when the advertisement is served. Revenue related to fixed fee arrangements is recognized ratably over the service period, typically less than 30 days in duration, and such arrangements do not contain minimum impression guarantees.

In arrangements where another party is involved in providing specified services to a customer, we evaluate whether we are the principal or agent. In this evaluation, we consider if we obtain control of the specified goods or services before they are transferred to the customer, as well as other indicators such as the party primarily responsible for fulfillment, inventory risk, and discretion in establishing price. For advertising revenue arrangements where we are not the principal, we recognize revenue on a net basis. For the periods presented, revenue for arrangements where we are the agent was not material.

We also generate revenue from subscriptions and sales of hardware products. Sales of hardware products are reported net of allowances for returns. For the periods presented, all such revenue was not material.

The following table represents our revenue disaggregated by geography based on the billing address of the customer:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands)
North America (1) (2)	$	741,588	$	671,071	$	1,474,976	$	1,303,631
Europe (3)	235,186		179,234		435,278		334,849
Rest of world	259,994		217,364		521,287		417,797
Total revenue	$	1,236,768	$	1,067,669	$	2,431,541	$	2,056,277

(1)North America includes Mexico, the Caribbean, and Central America.

(2)United States revenue was $715.4 million and $1,426.2 million for the three and six months ended June 30, 2024, respectively, and $649.8 million and $1,262.2 million for the three and six months ended June 30, 2023, respectively.

(3)Europe includes Russia and Turkey. Effective March 2022, we halted advertising sales to Russian and Belarusian entities.

Deferred revenue related to advertising and subscriptions, included in accrued expenses and other current liabilities on our consolidated balance sheets, was $108.5 million and $93.7 million as of June 30, 2024 and December 31, 2023, respectively. We expect a substantial majority of our deferred revenue to be realized in less than one year.

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3. Net Loss per Share

We compute net loss per share using the two-class method required for multiple classes of common stock. We have three classes of authorized common stock for which voting rights differ by class.

Basic net loss per share is computed by dividing net loss attributable to each class of stockholders by the weighted-average number of shares of stock outstanding during the period, adjusted for restricted stock awards (“RSAs”) for which the risk of forfeiture has not yet lapsed.

For the calculation of diluted net loss per share, net loss per share attributable to common stockholders for basic net loss per share is adjusted by the effect of dilutive securities, including awards under our equity compensation plans. Diluted net loss per share attributable to common stockholders is computed by dividing the resulting net loss attributable to common stockholders by the weighted-average number of fully diluted common shares outstanding. We use the if‑converted method for calculating any potential dilutive effect of the convertible senior notes due in 2025, 2026, 2027, 2028, and 2030 (collectively, the “Convertible Notes”) on diluted net loss per share. The Convertible Notes would have a dilutive impact on net income per share when the average market price of Class A common stock for a given period exceeds the respective conversion price of the Convertible Notes. For the periods presented, our potentially dilutive shares relating to stock options, restricted stock units (“RSUs”), RSAs, and Convertible Notes were not included in the computation of diluted net loss per share as the effect of including these shares in the calculation would have been anti-dilutive.

The numerators and denominators of the basic and diluted net loss per share computations for our common stock are calculated as follows:


	Three Months Ended June 30,												Six Months Ended June 30,
	2024						2023						2024						2023
	(in thousands, except per share data)
	Class A		Class B		Class C		Class A		Class B		Class C		Class A		Class B		Class C		Class A		Class B		Class C
Numerator:
Net loss	$	(210,201)	$	(3,405)	$	(35,014)	$	(317,491)	$	(5,303)	$	(54,514)	$	(468,216)	$	(7,578)	$	(77,916)	$	(593,302)	$	(9,987)	$	(102,693)
Net loss attributable to common stockholders	$	(210,201)	$	(3,405)	$	(35,014)	$	(317,491)	$	(5,303)	$	(54,514)	$	(468,216)	$	(7,578)	$	(77,916)	$	(593,302)	$	(9,987)	$	(102,693)
Denominator:
Basic shares:
Weighted-average common shares - Basic	1,390,581		22,528		231,627		1,349,012		22,533		231,627		1,391,909		22,528		231,627		1,338,211		22,527		231,627
Diluted shares:
Weighted-average common shares - Diluted	1,390,581		22,528		231,627		1,349,012		22,533		231,627		1,391,909		22,528		231,627		1,338,211		22,527		231,627
Net loss per share attributable to common stockholders:
Basic	$	(0.15)	$	(0.15)	$	(0.15)	$	(0.24)	$	(0.24)	$	(0.24)	$	(0.34)	$	(0.34)	$	(0.34)	$	(0.44)	$	(0.44)	$	(0.44)
Diluted	$	(0.15)	$	(0.15)	$	(0.15)	$	(0.24)	$	(0.24)	$	(0.24)	$	(0.34)	$	(0.34)	$	(0.34)	$	(0.44)	$	(0.44)	$	(0.44)

The following potentially dilutive shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:


	Three and Six Months Ended June 30,
	2024	2023
	(in thousands)
Stock options	1,395	2,387
Unvested RSUs and RSAs	143,442	148,390
Convertible Notes (if-converted)	85,945	89,379

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4. Stockholders’ Equity

We maintain three share-based employee compensation plans: the 2017 Equity Incentive Plan (the “2017 Plan”), the 2014 Equity Incentive Plan (the “2014 Plan”), and the 2012 Equity Incentive Plan (the “2012 Plan,” and collectively with the 2017 Plan and the 2014 Plan, the “Stock Plans”). The 2017 Plan serves as the successor to the 2014 Plan and 2012 Plan and provides for the grant of incentive stock options to employees, including employees of any parent or subsidiary, and for the grant of nonstatutory stock options, stock appreciation rights, RSAs, RSUs, performance stock awards, performance cash awards, and other forms of stock awards to employees, directors, and consultants, including employees and consultants of our affiliates.

Restricted Stock Units and Restricted Stock Awards

The following table summarizes the RSU and RSA activity for the six months ended June 30, 2024:


	Number of Class A Shares	Weighted- Average Grant Date Fair Value
	(in thousands, except per share data)
Unvested at December 31, 2023	157,130	$	12.82
Granted	46,303	$	14.90
Vested	(36,345)	$	15.34
Forfeited	(23,646)	$	12.14
Unvested at June 30, 2024	143,442	$	12.97

All RSUs and RSAs vest on the satisfaction of a service-based condition. Total unrecognized compensation cost related to outstanding RSUs and RSAs was $1.5 billion as of June 30, 2024 and is expected to be recognized over a weighted-average period of 2.0 years. The service condition for RSUs and RSAs is generally satisfied in equal monthly or quarterly installments over three to four years.

Stock Options

The following table summarizes the stock option award activity under the Stock Plans for the six months ended June 30, 2024:


	Number of Class A Shares	Number of Class B Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (1)
	(in thousands, except per share data)
Outstanding at December 31, 2023	1,692	5	$	14.90	4.41	$	5,225
Granted	—	—	$	—	—	$	—
Exercised	(184)	(5)	$	13.19	—	$	—
Forfeited	(113)	—	$	12.48	—	$	—
Outstanding at June 30, 2024	1,395	—	$	15.33	2.61	$	3,597

(1)The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the closing market price of our Class A common stock as of June 30, 2024 and December 31, 2023.

As of June 30, 2024, there was no unrecognized compensation cost related to stock options granted under the Stock Plans.

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Stock-Based Compensation Expense

Total stock-based compensation expense by function was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands)
Cost of revenue	$	1,260	$	2,365	$	3,075	$	4,250
Research and development	171,465		217,565		345,984		437,415
Sales and marketing	52,208		57,597		106,864		112,536
General and administrative	34,378		40,416		67,140		78,673
Total	$	259,311	$	317,943	$	523,063	$	632,874

Stock Repurchases

In October 2023, our board of directors authorized a stock repurchase program of up to $500.0 million of our Class A common stock. We completed this program in April 2024. For the six months ended June 30, 2024, we repurchased and retired 27.9 million shares of our Class A common stock for an aggregate of $311.1 million, including costs associated with the repurchases.

5. Business Acquisitions

2023 Acquisitions

For the year ended December 31, 2023, aggregate purchase consideration for business acquisitions was $73.1 million, which primarily consisted of $56.3 million in cash and $12.6 million recorded in other liabilities on our consolidated balance sheet. Of the aggregate purchase consideration, $42.8 million was allocated to goodwill and the remainder primarily to identifiable intangible assets. The acquired assets are expected to enhance our existing platform, technology, and workforce. The goodwill amount represents synergies related to our existing platform expected to be realized from the business acquisitions and assembled workforce. The associated goodwill and intangible assets are not deductible for tax purposes.

6. Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the six months ended June 30, 2024 were as follows:


	Goodwill
	(in thousands)
Balance as of December 31, 2023	$	1,691,827
Goodwill acquired	—
Foreign currency translation	(510)
Balance as of June 30, 2024	$	1,691,317

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Intangible assets consisted of the following:


	As of June 30, 2024
	Weighted- Average Remaining Useful Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net
	(in thousands, except years)
Domain names	2.5	$	745	$	(580)	$	165

Technology	2.6	315,333		(220,870)		94,463

Patents	8.7	39,373		(21,193)		18,180
Other	—	6,000		(6,000)		—
Total intangible assets		$	361,451	$	(248,643)	$	112,808


	As of December 31, 2023
	Weighted- Average Remaining Useful Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net
	(in thousands, except years)
Domain names	3.0	$	745	$	(546)	$	199

Technology	2.8	323,313		(197,608)		125,705

Patents	8.8	39,373		(19,099)		20,274
Other	—	6,000		(5,875)		125
Total intangible assets		$	369,431	$	(223,128)	$	146,303

Amortization of intangible assets was $15.0 million and $33.6 million for the three and six months ended June 30, 2024, respectively, and $18.4 million and $36.2 million for the three and six months ended June 30, 2023, respectively.

As of June 30, 2024, the estimated intangible asset amortization expense for the next five years and thereafter is as follows:


	Estimated Amortization
	(in thousands)
Remainder of 2024	$	26,446
2025	41,513
2026	20,299
2027	12,124
2028	4,343
Thereafter	8,083
Total	$	112,808

7. Debt

Convertible Notes

2030 Notes

In May 2024, we entered into a purchase agreement with certain counterparties for the sale of an aggregate of $750.0 million principal amount of convertible senior notes due in 2030 (the “2030 Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The 2030 Notes consisted of a $650.0 million initial placement and an over-allotment option that provided the initial purchasers of the 2030 Notes with the option to purchase an additional $100.0 million aggregate principal amount of the

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2030 Notes, which was fully exercised. The 2030 Notes were issued pursuant to an indenture dated May 13, 2024. The net proceeds from the issuance of the 2030 Notes were $671.5 million, net of debt issuance costs and cash used to purchase the capped call transactions (“2030 Capped Call Transactions”) discussed below. The debt issuance costs are amortized to interest expense using the effective interest rate method.

The 2030 Notes are unsecured and unsubordinated obligations. Interest is payable in cash semi-annually in arrears beginning on November 1, 2024 at a rate of 0.50% per year. The 2030 Notes mature on May 1, 2030 unless repurchased, redeemed, or converted in accordance with their terms prior to such date.

The 2030 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election, at an initial conversion rate of 45.0846 shares of Class A common stock per $1,000 principal amount of 2030 Notes, which is equivalent to an initial conversion price of approximately $22.18 per share of our Class A common stock. The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2030 Notes.

We may redeem for cash all or any portion of the 2030 Notes, at our option, on or after May 5, 2027 if (i) the 2030 Notes are “freely tradable” (as defined in the applicable indenture) and any accrued and unpaid additional interest has been paid as of the date we send the related redemption notice and (ii) the last reported sale price of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days at a redemption price equal to 100% of the principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid interest, if any.

Holders of the 2030 Notes may convert all or a portion of their 2030 Notes at their option prior to February 1, 2030, in multiples of $1,000 principal amounts, only under the following circumstances:

•if the last reported sale price of our Class A common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to 130% of the applicable conversion price of the 2030 Notes on each such trading day;

•during the five consecutive business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of the 2030 Notes for each day of that ten consecutive trading day period was less than 98% of the product of the last reported sale price of our Class A common stock and the applicable conversion rate of the 2030 Notes on such trading day;

•on a notice of redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, in which case we may be required to increase the conversion rate for the 2030 Notes so surrendered for conversion in connection with such redemption notice; or

•on the occurrence of specified corporate events.

On or after February 1, 2030, the 2030 Notes are convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

Holders of the 2030 Notes who convert the 2030 Notes in connection with a make-whole fundamental change, as defined in the indenture governing the 2030 Notes, or in connection with a redemption are entitled to an increase in the conversion rate. Additionally, in the event of a fundamental change, holders of the 2030 Notes may require us to repurchase all or a portion of the 2030 Notes at a price equal to 100% of the principal amount of 2030 Notes, plus any accrued and unpaid interest, if any.

We accounted for the issuance of the 2030 Notes as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives.

2028 Notes

In February 2022, we entered into a purchase agreement for the sale of an aggregate of $1.50 billion principal amount of convertible senior notes due in 2028 (the “2028 Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The net proceeds from the issuance of the 2028 Notes were $1.31 billion, net of debt issuance costs and cash used to purchase the capped call transactions (the “2028 Capped Call Transactions”) discussed below. The debt issuance costs are amortized to interest expense using the effective interest rate method.

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The 2028 Notes are unsecured and unsubordinated obligations. Interest is payable in cash semi-annually in arrears beginning on September 1, 2022 at a rate of 0.125% per year. The 2028 Notes mature on March 1, 2028 unless repurchased, redeemed, or converted in accordance with their terms prior to such date.

The 2028 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election, at an initial conversion rate of 17.7494 shares of Class A common stock per $1,000 principal amount of 2028 Notes, which is equivalent to an initial conversion price of approximately $56.34 per share of our Class A common stock. We may redeem for cash all or any portion of the 2028 Notes, at our option, on or after March 5, 2025 based on certain circumstances.

2027 Notes

In April 2021, we entered into a purchase agreement for the sale of an aggregate of $1.15 billion principal amount of convertible senior notes due in 2027 (the “2027 Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The net proceeds from the issuance of the 2027 Notes were $1.05 billion, net of debt issuance costs and cash used to purchase the capped call transactions (the “2027 Capped Call Transactions”) discussed below. The debt issuance costs are amortized to interest expense using the effective interest rate method.

The 2027 Notes are unsecured and unsubordinated obligations which do not bear regular interest and for which the principal balance will not accrete. The 2027 Notes will mature on May 1, 2027 unless repurchased, redeemed, or converted in accordance with their terms prior to such date.

The 2027 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election, at an initial conversion rate of 11.2042 shares of Class A common stock per $1,000 principal amount of 2027 Notes, which is equivalent to an initial conversion price of approximately $89.25 per share of our Class A common stock. We may redeem for cash all or portions of the 2027 Notes, at our option, on or after May 5, 2024 based on certain circumstances.

2025 Notes

In April 2020, we entered into a purchase agreement for the sale of an aggregate of $1.0 billion principal amount of convertible senior notes due in 2025 (the “2025 Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The net proceeds from the issuance of the 2025 Notes were $888.6 million, net of debt issuance costs and cash used to purchase the capped call transactions (the “2025 Capped Call Transactions”) discussed below. The debt issuance costs are amortized to interest expense using the effective interest rate method.

The 2025 Notes are unsecured and unsubordinated obligations. Interest is payable in cash semi-annually in arrears beginning on November 1, 2020 at a rate of 0.25% per year. The 2025 Notes mature on May 1, 2025 unless repurchased, redeemed, or converted in accordance with their terms prior to such date.

The 2025 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election, at an initial conversion rate of 46.1233 shares of Class A common stock per $1,000 principal amount of 2025 Notes, which is equivalent to an initial conversion price of approximately $21.68 per share of our Class A common stock. We may redeem for cash all or portions of the 2025 Notes, at our option, on or after May 6, 2023 based on certain circumstances.

2026 Notes

In August 2019, we entered into a purchase agreement for the sale of an aggregate of $1.265 billion principal amount of convertible senior notes due in 2026 (the “2026 Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The net proceeds from the issuance of the 2026 Notes were $1.15 billion, net of debt issuance costs and cash used to purchase the capped call transactions (the “2026 Capped Call Transactions”) discussed below. The debt issuance costs are amortized to interest expense using the effective interest rate method.

The 2026 Notes are unsecured and unsubordinated obligations. Interest is payable in cash semi-annually in arrears beginning on February 1, 2020 at a rate of 0.75% per year. The 2026 Notes mature on August 1, 2026 unless repurchased, redeemed, or converted in accordance with the terms prior to such date.

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The 2026 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election, at an initial conversion rate of 43.8481 shares of Class A common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $22.81 per share of our Class A common stock. We may redeem for cash all or portions of the 2026 Notes, at our option, on or after August 6, 2023 based on certain circumstances.

Note Repurchases

In February 2024, we entered into various privately negotiated repurchase transactions with certain holders of the 2025 Notes and 2026 Notes, pursuant to which we agreed to repurchase $100.0 million in aggregate principal of the 2025 Notes and $351.2 million in aggregate principal of the 2026 Notes for a cash repurchase price of $440.7 million, including associated costs. The February 2024 repurchase transactions resulted in an $8.8 million gain on extinguishment in the first quarter of 2024.

In May 2024, we entered into various privately negotiated repurchase transactions (collectively with the February 2024 repurchase transactions, the “Note Repurchases”) with certain holders of the 2025 Notes and 2026 Notes, pursuant to which we agreed to repurchase $147.9 million in aggregate principal of the 2025 Notes and approximately $237.5 million in aggregate principal of the 2026 Notes for a cash repurchase price of approximately $418.3 million, including associated costs. The May 2024 repurchase transactions were accounted for as both a debt modification and a partial debt extinguishment, resulting in a $15.5 million loss on extinguishment during the second quarter of 2024 and $20.9 million in capitalized debt issuance costs amortized over the term of the 2030 Notes. The capitalized debt issuance costs are primarily related to repurchase premiums and debt issuance costs carried over from the 2025 Notes and 2026 Notes.

Gains and losses on extinguishment are included within other income (expense), net on our consolidated statements of operations and included within Other as an adjustment to reconcile net loss to net cash provided by (used in) operating activities in our consolidated statements of cash flows.

The Convertible Notes consisted of the following:


	As of June 30, 2024						As of December 31, 2023
	Principal		Unamortized Debt Issuance Costs		Net Carrying Amount		Principal		Unamortized Debt Issuance Costs		Net Carrying Amount
	(in thousands)
2025 Notes	$	36,240	$	(70)	$	36,170	$	284,105	$	(871)	$	283,234
2026 Notes	249,754		(819)		248,935		838,482		(3,402)		835,080
2027 Notes	1,150,000		(6,049)		1,143,951		1,150,000		(7,114)		1,142,886
2028 Notes	1,500,000		(10,392)		1,489,608		1,500,000		(11,800)		1,488,200
2030 Notes	750,000		(29,931)		720,069		—		—		—
Total	$	3,685,994	$	(47,261)	$	3,638,733	$	3,772,587	$	(23,187)	$	3,749,400

As of June 30, 2024, the debt issuance costs on the 2025 Notes, 2026 Notes, 2027 Notes, 2028 Notes, and 2030 Notes will be amortized over the remaining period of approximately 0.8 years, 2.1 years, 2.8 years, 3.7 years and 5.8 years, respectively.

The following table summarizes interest expense related to the Convertible Notes for the three and six months ended June 30, 2024:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands)
Contractual interest expense	$	1,703	$	2,218	$	3,540	$	4,437
Amortization of debt issuance costs	2,088		1,720		3,710		3,437
Total interest expense	$	3,791	$	3,938	$	7,250	$	7,874

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As of June 30, 2024, the if-converted value of the Convertible Notes did not exceed the principal amount. The sale price for conversion was not satisfied as of June 30, 2024 for the Convertible Notes, and as a result, the Convertible Notes will not be eligible for optional conversion during the third quarter of 2024. No sinking fund is provided for the Convertible Notes, which means that we are not required to redeem or retire them periodically.

Refer to Note 7 in our consolidated financial statements in the Annual Report for additional details.

Capped Call Transactions

In connection with the pricing of the 2025 Notes, the 2026 Notes, the 2027 Notes, the 2028 Notes, and the 2030 Notes, we entered into the 2025 Capped Call Transactions, the 2026 Capped Call Transactions, the 2027 Capped Call Transactions, the 2028 Capped Call Transactions, and the 2030 Capped Call Transactions (collectively, the “Capped Call Transactions”), respectively, with certain counterparties at a net cost of $100.0 million, $102.1 million, $86.8 million, $177.0 million, and $68.9 million, respectively. The cap price of the 2025 Capped Call Transactions, the 2026 Capped Call Transactions, the 2027 Capped Call Transactions, the 2028 Capped Call Transactions, and the 2030 Capped Call Transactions is initially $32.12, $32.58, $121.02, $93.90, and $33.48 per share of our Class A common stock, respectively. All are subject to certain adjustments under the terms of the Capped Call Transactions. Conditions that cause adjustments to the initial strike price of the Capped Call Transactions mirror conditions that result in corresponding adjustments for the Convertible Notes.

The Capped Call Transactions are intended to reduce potential dilution to holders of our Class A common stock beyond the conversion prices up to the cap prices on any conversion of the Convertible Notes or offset any cash payments we are required to make in excess of the principal amount, as the case may be, with such reduction or offset subject to a cap. The cost of the Capped Call Transactions was recorded as a reduction of our additional paid-in capital in our consolidated balance sheets. The Capped Call Transactions will not be remeasured as long as they continue to meet the conditions for equity classification.

In May 2024, we entered into agreements to terminate all of the 2025 Capped Call Transactions, which resulted in $62.7 million recorded within additional paid-in capital in our consolidated balance sheets.

As of June 30, 2024, the remaining Capped Call Transactions were out-of-the-money.

Credit Facility

In May 2022, we entered into a five-year senior unsecured revolving credit facility (the “Credit Facility”) with certain lenders that allows us to borrow up to $1.05 billion to fund working capital and general corporate-purpose expenditures. Loans bear interest, at our option, at a rate equal to (i) a term secured overnight financing rate (“SOFR”) plus 0.75% or the base rate, if selected by us, for loans made in U.S. dollars, (ii) the Sterling overnight index average plus 0.7826% for loans made in Sterling, or (iii) foreign indices as stated in the credit agreement plus 0.75% for loans made in other permitted foreign currencies. The base rate is defined as the greatest of (i) the Wall Street Journal prime rate, (ii) the greater of the (a) federal funds rate and (b) the overnight bank funding rate, plus 0.50%, and (iii) the applicable SOFR for a period of one month (but not less than zero) plus 1.00. The Credit Facility also contains an annual commitment fee of 0.10% on the daily undrawn balance of the facility. As of June 30, 2024, we had $67.3 million in the form of outstanding standby letters of credit, with no amounts outstanding under the Credit Facility.

8. Commitments and Contingencies

Commitments

We have non-cancelable contractual agreements primarily related to the hosting of our data processing, storage, and other computing services, as well as lease, content and developer partner, and other commitments. We had $2.2 billion in commitments as of June 30, 2024, primarily due within three years. For additional discussion on leases, see Note 9 to our consolidated financial statements.

Contingencies

We record a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We also disclose material contingencies when we believe a loss is not probable but reasonably

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possible. Accounting for contingencies requires us to use judgment related to both the likelihood of a loss and the estimate of the amount or range of loss. Many legal and tax contingencies can take years to be resolved.

Pending Matters

In November 2021, we and certain of our officers and directors were named as defendants in a securities class action lawsuit purportedly brought on behalf of purchasers of our Class A common stock, alleging that we and certain of our officers made false or misleading statements and omissions concerning the impact that Apple’s App Tracking Transparency framework would have on our business. We believe we have meritorious defenses to this lawsuit and continue to defend the lawsuit vigorously. Based on the preliminary nature of the proceedings in this case, the outcome of this matter remains uncertain.

The outcomes of our legal proceedings are inherently unpredictable, subject to significant uncertainties, and could be material to our financial condition, results of operations, and cash flows for a particular period. For the pending matter described above, it is not possible to estimate the reasonably possible loss or range of loss.

We are subject to various other legal proceedings and claims in the ordinary course of business, including certain patent, trademark, privacy, regulatory, and employment matters. Although occasional adverse decisions or settlements may occur, we do not believe that the final disposition of any of our other pending matters will seriously harm our business, financial condition, results of operations, and cash flows.

Indemnifications

In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees, and other parties with respect to certain matters. Indemnification may include losses from our breach of such agreements, services we provide, or third-party intellectual property infringement claims. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments may not be subject to a cap. We have not incurred material costs to defend lawsuits or settle claims related to these indemnifications as of June 30, 2024. We believe the fair value of these liabilities is immaterial and accordingly have no liabilities recorded for these agreements at June 30, 2024.

9. Leases

We have non-cancelable lease agreements for certain of our offices with original lease terms expiring between 2024 and 2042. Total operating lease costs were $25.2 million and $50.7 million for the three and six months ended June 30, 2024, respectively, and $25.6 million and $50.6 million for the three and six months ended June 30, 2023.

The weighted-average remaining lease term (in years) and discount rate related to our operating leases were as follows:


	As of June 30,
	2024		2023
Weighted-average remaining lease term	9.6		6.3
Weighted-average discount rate	6.2	%	4.9	%

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The maturities of our operating lease liabilities as of June 30, 2024 were as follows:


	Operating Leases
	(in thousands)
Remainder of 2024	$	35,038
2025	75,189
2026	90,382
2027	83,177
2028	82,160
Thereafter	461,491
Total lease payments	827,437
Less: Imputed interest	(226,262)
Present value of lease liabilities	$	601,175

As of June 30, 2024, we had additional operating leases that have not yet commenced for facilities with lease obligations of $20.5 million. These operating leases will commence between 2024 and 2026 with lease terms of approximately 6 years to 9 years.

Cash payments included in the measurement of our operating lease liabilities were $28.9 million and $57.1 million for the three and six months ended June 30, 2024, respectively, and $24.2 million and $48.4 million for the three and six months ended June 30, 2023.

Lease liabilities arising from obtaining operating lease right-of-use assets were $24.7 million and $35.5 million for the three and six months ended June 30, 2024, respectively, and $12.5 million and $14.2 million for the three and six months ended June 30, 2023.

10. Strategic Investments

We hold strategic investments primarily in privately held companies, which consist of equity securities, and to a lesser extent, debt securities. These strategic investments are primarily recorded at fair value on a non-recurring basis. The estimation of fair value for these privately held strategic investments requires the use of significant unobservable inputs, such as the issuance of new equity by the company, and as a result, we deem these assets as Level 3 financial instruments within the fair value measurement framework.

The following table summarizes our strategic investments as of June 30, 2024 and December 31, 2023:


	As of June 30, 2024		As of December 31, 2023
	(in thousands)
Initial cost	$	107,218	$	106,368
Cumulative upward adjustments	147,591		147,317
Cumulative downward adjustments, including impairments	(65,306)		(58,357)
Carrying value	$	189,503	$	195,328

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Gains and losses recognized during the periods presented were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands)
Gains (losses) recognized on strategic investments sold during the period, net	$	—	$	—	$	—	$	—
Unrealized gains on strategic investments still held at the reporting date	92		476		274		1,555
Unrealized losses, including impairments, on strategic investments still held at the reporting date	(650)		(329)		(7,099)		(1,304)
Gains (losses) on strategic investments, net	$	(558)	$	147	$	(6,825)	$	251

Gains and losses on all strategic investments are included within other income (expense), net on our consolidated statements of operations and included as an adjustment to reconcile net loss to net cash provided by (used in) operating activities in our consolidated statements of cash flows. Strategic investments are included within other assets on our consolidated balance sheets.

11. Fair Value Measurements

Assets and liabilities measured at fair value are classified into the following categories:

•Level 1: Quoted market prices in active markets for identical assets or liabilities.

•Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

•Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.

We classify our cash equivalents and marketable securities within Level 1 or Level 2 because we use quoted market prices or alternative pricing sources and models utilizing observable market-based inputs to determine their fair value.

The following tables set forth our financial assets that are measured at fair value on a recurring basis, excluding publicly traded equity securities, as of June 30, 2024 and December 31, 2023:


	June 30, 2024
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Total Estimated Fair Value
	(in thousands)
Cash	$	1,060,610	$	—	$	(59)	$	1,060,551
Level 1 securities:
U.S. government securities	1,744,110		57		(5,824)		1,738,343
U.S. government agency securities	27,501		—		(51)		27,450
Level 2 securities:
Corporate debt securities	178,261		6		(300)		177,967
Commercial paper	68,098		—		—		68,098

Total	$	3,078,580	$	63	$	(6,234)	$	3,072,409

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	December 31, 2023
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Total Estimated Fair Value
	(in thousands)
Cash	$	1,780,402	$	—	$	—	$	1,780,402
Level 1 securities:
U.S. government securities	1,295,918		894		(3,919)		1,292,893
U.S. government agency securities	138,420		31		(188)		138,263
Level 2 securities:
Corporate debt securities	234,336		577		(99)		234,814
Commercial paper	65,380		—		—		65,380
Certificates of deposit	18,725		—		—		18,725
Total	$	3,533,181	$	1,502	$	(4,206)	$	3,530,477

Gross unrealized losses on marketable debt securities were not material for the three and six months ended June 30, 2024 and 2023. As of June 30, 2024, we considered any decreases in fair value on our marketable debt securities to be driven by factors other than credit risk, including market risk. As of June 30, 2024, $814.2 million of our total $2.0 billion in marketable debt securities have contractual maturities between one and five years. All other marketable debt securities have contractual maturities less than one year.

We hold investments in publicly traded companies with an aggregate carrying value of $8.9 million and $13.6 million as of June 30, 2024 and December 31, 2023, respectively, recorded as marketable securities. We classify these publicly traded equity securities within Level 1 because we use quoted market prices to determine their fair value. Gains and losses recognized during the periods presented, which are included within other income (expense), net on our consolidated statements of operations, were as follows:


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
	(in thousands)
Gains (losses) recognized on publicly traded equity securities sold during the period, net	$

Snap Inc [SNAP] Filings
10-Q	[2024-08-02]
10-Q	[2024-04-26]
10-K	[2024-02-07]
10-Q	[2023-10-25]
10-Q	[2023-07-26]
10-Q	[2023-04-28]
10-K	[2023-02-01]
10-Q	[2022-10-21]
10-Q	[2022-07-22]
10-Q	[2022-04-22]
10-K	[2022-02-04]
10-Q	[2021-10-22]
10-Q	[2021-07-23]
10-Q	[2021-04-23]
10-K	[2021-02-05]
10-Q	[2020-10-21]
10-Q	[2020-07-22]
10-Q	[2020-04-22]
10-K	[2020-02-05]
10-Q	[2019-10-23]
10-Q	[2019-07-24]
10-Q	[2019-04-24]
10-K	[2019-02-06]
10-Q	[2018-10-26]
10-Q	[2018-08-08]
10-Q	[2018-05-02]
10-K	[2018-02-22]
10-Q	[2017-11-08]
10-Q	[2017-08-11]
10-Q	[2017-05-11]
S-1	[2017-02-02]