Snap : First Quarter 2025 Earnings Slides

Published: 2025-04-29 20:25:55 ET SNAP

Q1 2025 Earnings Slides

April 29, 2025

Revenue

Operating Performance

Cash

Revenue was $1,363 million, compared to $1,195 million in the prior year, an increase of 14%1year-over-year.

Average revenue per user was $2.96, compared to $2.83 in the prior year.

GAAP gross margin was 53%, compared to 52% in the prior year.

Adjusted Gross Margin2was 53%, compared to 52% in the prior year.

Net loss was $140 million, compared to $305 million in the prior year.

Adjusted EBITDA3was $108 million, compared to $46 million in the prior year.

Net loss margin was (10)%, compared to (26)% in the prior year.

Adjusted EBITDA Margin3was 8%, compared to 4% in the prior year.

Operating cash flow was $152 million, compared to $88 million in the prior year.

Free Cash Flow4was $114 million, compared to $38 million in the prior year.

Cash, cash equivalents, and marketable securities were $3.2 billion as of March 31, 2025.

1On a constant currency basis, the impact of foreign exchange rates on revenue was not material at less than 1% in Q1 2025. Constant currency revenue is a non-GAAP measure, see Appendix for further detail.

2Adjusted Gross Margin is a non-GAAP measure. Refer to slide 9 for additional information.

3Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures. Refer to slide 11 for additional information.

4Free Cash Flow is a non-GAAP measure. Refer to slide 13 for additional information. 3

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

Q1 marked an important milestone for Snap, as we reached more than 900 million monthly active users (MAU), on the way to our goal of 1 billion MAU.

Daily active users (DAU) were 460 million in Q1 2025, an increase of 38 million, or 9%, year-over-year.

The total number of Snap Star Spotlight posts grew by over 125% year-over-year in Q1.

The number of views on Spotlight posts less than 24 hours old doubled year-over-year-which contributes to a more engaging, timely, and fresh viewer experience.

My AI DAUs grew more than 55% year-over-year in the U.S. as a result of the multimodal improvements we've rolled out to My AI over the past year.

Total active advertisers grew by 60% year-over-year in Q1.

SKAdNetwork reported app purchases grew more than 30% year-over-year in Q1.

We rolled out improvements to our automated Target Cost (tCPA) bidding strategy, leveraging ML technology to help advertisers achieve more consistent cost-per-action results.

We expanded our Agency Partner Program to agencies of all sizes, providing them with dedicated support, training, and resources to help their clients maximize ROI on Snapchat.

In addition to the Sponsored Snap takeover buys launched last quarter, we began early testing of Sponsored Snaps in our auction in Q1 as we look to expand Sponsored Snaps to additional bidding objectives.

We launched our new brand suitability solutions, giving advertisers even more control when it comes to content adjacency.

Other Revenue, the majority of which is Snapchat+ subscription revenue, increased 75% year-over-year in Q1.

We introduced new advanced AI video Lenses, powered by our in-house generative video model.

Easy Lens, an AI-powered tool that simplifies Lens creation, went into early testing in mid-December and has already been used to create over 10,000 Lenses, generating over 2 billion impressions.

We launched our Music Lyrics feature, combining community-created Lenses with our music library to bring songs to life through visualized lyrics - including "APT." by Bruno Mars and ROSÉ.

In Q1, Lens Studio downloads more than doubled year-over year, and Lens Studio monthly active users reached an all-time high.

We introduced Challenge Tags, a new way Snap AR developers can be rewarded for submitting Lenses using active Challenge Tags, which are judged on their originality, technical excellence, and theme focus.

We introduced a set of platform capabilities that unlock the ability to build Lenses using global positioning system integration, compass heading, and custom locations, which improves location-based experiences.

One of our newest Lenses, Basketball Trainer, brings practice to life in AR with a holographic AR coach and shooting drills that use SnapML to track your score automatically.

Niantic's latest update of Peridot Beyond now enables a multiplayer AR experience with our Connected Lens technology and connects Spectacles with the Peridot mobile game.

Wabisabi Games created an AR Lens that gamifies dog walking by using SnapML to recognize your dog, overlay visual effects, track routes and steps, and reward users with virtual items.

We added the ability to integrate in-game leaderboards into Lenses, released an improved keyboard, and introduced new hand tracking capabilities.

We introduced Spectacles Community Challenges, a new way developers can win cash prizes for submitting new or updating existing Lenses, which are judged on engagement, technical excellence, and Lens quality.

(in millions, unaudited)

GLOBAL

+ 9%

NORTH AMERICA1

- 1%

414

422

432

443

453

460

100

Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25

EUROPE2

+ 3%

REST OF WORLD

+ 16%

218

226

235

244

254

262

Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25

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

2Europe includes Russia and Turkey. 6

Numbers throughout presentation may not foot due to rounding.

(in millions, unaudited)

GLOBAL NORTH AMERICA1

+ 14%

+ 12%

$1,361

$1,195

$1,237

$1,373

$1,557

$1,363

$900

$743

$768

$858

$969

$832

Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25

EUROPE2REST OF WORLD

+ 14%

+ 20%

$238

$196

$230

$249

$287

$224

$223

$256

$239

$266

$301

$308

Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25

Total revenue for geographic reporting is apportioned to each region based on our determination of the geographic location in which advertising impressions are delivered, as this approximates revenue based on user activity. This allocation is consistent with how we determine ARPU.

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

2Europe includes Russia and Turkey. Effective March 2022, we halted advertising sales to Russian and Belarusian entities. 7

Numbers throughout presentation may not foot due to rounding.

(unaudited)

GLOBAL NORTH AMERICA1

+ 5%

+ 13%

$3.29

$2.83

$2.86

$3.10

$3.44

$2.96

$8.96

$7.44

$7.67

$8.54

$9.73

$8.41

Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25

EUROPE2REST OF WORLD

+ 11%

+ 4%

$2.49

$2.04

$2.36

$2.52

$2.89

$2.26

$1.03

$1.13

$1.02

$1.09

$1.19

$1.17

Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25

We define ARPU as quarterly revenue divided by the average Daily Active Users. 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.

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

2Europe includes Russia and Turkey. Effective March 2022, we halted advertising sales to Russian and Belarusian entities. 8

Numbers throughout presentation may not foot due to rounding.

(dollars in millions, unaudited)

ADJUSTED GROSS MARGIN1ADJUSTED COST OF REVENUE1COMPOSITION

$377

$99

$161

$380

$109

$180

+ 1 PPT + 12%

55% 52% 53% 54%

57%

53%

$615

$338

$84

$148

$350

$90

$146

$570 $586

$637

$669

$637

GAAP Gross Margin

Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25

54% 52% 52% 53% 57% 53%

Non-GAAP

Exclusions1

GAAP Cost of Revenue

Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25

$347

$86

$182

$374

$101

$162

$6 $5 $3 $2 $3 $3

$622 $575 $589 $639 $672 $640

1Adjusted 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 items impacting net income (loss) from time to time. In Q1 2024, other items included restructuring charges of $1 million. See Appendix for a reconciliation of GAAP Cost of Revenue to Adjusted Cost of Revenue. 9

Numbers throughout presentation may not foot due to rounding.

(dollars in millions, unaudited)

ADJUSTED OPERATING EXPENSE MARGIN1ADJUSTED OPERATING EXPENSES1COMPOSITION

+ 3 PPT + 7%

61%

$168

$193

$226

$198

$185

$230

$190

$196

$232

57%

52% 52%

56%

55%

$587 $579

$596

$604

$612 $618

Q4'23

Q1'24

Q2'24

Q3'24

Q4'24

Q1'25

27%

20%

27%

34%

41%

33%

GAAP Operating Expense Margin

$176

$198

$205

$184

$206

$179

$213

$212

Non-GAAP

Exclusions1

GAAP Operating Expenses

Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25

$402 $374 $306 $303 $300 $299

$988 $953 $902 $907 $913 $917

1Adjusted Operating Expense Margin is a non-GAAP measure, which we define as GAAP revenue less Adjusted Operating Expenses, divided by GAAP revenue. Adjusted Operating Expenses 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 items impacting net income (loss) from time to time. In Q4 2023, Q1 2024, and Q2 2024, other items included restructuring charges of $22 million, $69 million, and $2 million, respectively. See Appendix for a reconciliation of GAAP Operating Expenses to Adjusted Operating Expenses.

Numbers throughout presentation may not foot due to rounding.

(dollars in millions, unaudited)

NET INCOME (LOSS) ADJUSTED EBITDA1

$(153)

$(140)

$(248)

$(249)

(10)%

(11)%

(20)%

(26)%

(18)%

$159

$132

$108

$46

$55

10%

12%

18%

$276

$(305)

Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25

1Adjusted EBITDA is a non-GAAP measure, which we define as net income (loss), excluding interest income; interest expense; other income (expense), net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense; payroll and other tax expense related to stock-based compensation; and certain other items impacting net income (loss) from time to time. In Q4 2023, Q1 2024, and Q2 2024, other items included restructuring charges of $22 million, $70 million, and $2 million, respectively. See Appendix for a reconciliation of net loss to Adjusted EBITDA.

2Adjusted EBITDA Margin is a non-GAAP measure, which we define as Adjusted EBITDA divided by GAAP revenue. Numbers throughout presentation may not foot due to rounding.

(in millions, except per share data, unaudited)

DILUTED NET INCOME (LOSS) PER SHARE1COMMON SHARES OUTSTANDING PLUS SHARES UNDERLYING STOCK-BASED AWARDS

$0.01

$(0.09)

$(0.08)

$(0.15)

1,687

136

1,691

135

1,803 1,789 1,798 1,805 1,826 1,823

1,643

146

1,672

133

1,654

144

1,645

158

$(0.19)

Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25

Shares repurchased

Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25

18.4 21.0 6.9 - - 27.3

YoY Change 5.7% 3.8% 1.9% 0.6% 1.2% 1.9%

1Diluted net income (loss) per share is calculated using weighted average shares outstanding during the period.

2Shares underlying stock-based awards include restricted stock units, restricted stock awards, and outstanding stock options. 12

Numbers throughout presentation may not foot due to rounding.

(in millions, unaudited)

OPERATING CASH FLOW FREE CASH FLOW1

$231

$182

$165

$152

$116

$88

$111

$114

$72

$38

$(21)

$(73)

Q4'23

Q1'24

Q2'24

Q3'24

Q4'24

Q1'25

Q4'23

Q1'24

Q2'24

Q3'24

Q4'24

Q1'25

Capex $(54) $(50) $(52) $(44) $(48) $(37) YoY Change 41% (63)% 38% 218% 65% 202%

1Free Cash Flow is a non-GAAP measure, which we define as net cash provided by (used in) operating activities, reduced by purchases of property and equipment. See Appendix for a reconciliation of net cash provided by (used in) operating activities to Free Cash Flow. 13

Numbers throughout presentation may not foot due to rounding.

(in millions, unaudited)

CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES OUTSTANDING DEBT

$3,544

$2,911

$3,081 $3,192

$3,376

$3,207

$1,500

$36

$204 $353

$700 $750

Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 2025 2026 2027 2028 2029 2030 2031 2032 2033

Significant financing activities

Note Repurchases

$(441)

$(418)

- - $(1,445)

Stock Repurchases

$(189)

$(235)

$(76)

- - $(257)

Issuance of Notes1

$672

- - $1,473

Other2

$63

- - -

1In Q1 2025, we issued the 2033 Notes. In Q2 2024, we issued the 2030 Convertible Notes and purchased the 2030 Capped Call Transactions.

2In Q2 2024, Other is composed of proceeds from the termination of the 2025 Capped Call Transactions. 14

Numbers throughout presentation may not foot due to rounding.

Appendix

(in thousands, unaudited)

Three Months Ended

December 31, 2023

March 31, 2024

June 30, 2024

September 30, 2024

December 31, 2024

March 31, 2025

Adjusted Cost of Revenue reconciliation

GAAP Cost of Revenue

$ 621,504

$ 574,749

$ 588,921

$ 638,907

671,660

$ 639,579

Stock-based compensation expense

(2,665)

(1,608)

(1,278)

(1,333)

(1,626)

(1,434)

Payroll and other tax expense related to stock-based

compensation

(97)

(86)

(70)

(48)

(36)

(102)

Depreciation and amortization

(3,171)

(2,150)

(1,872)

(965)

(1,123)

(1,420)

Restructuring charges

(260)

(1,050)

(77)

Adjusted Cost of Revenue1

$ 615,311

$ 569,855

$ 585,624

$ 636,561

$ 668,875

$ 636,623

GAAP Gross Margin

54 %

52 %

53 %

57 %

53 %

Adjusted Gross Margin1

55 %

52 %

53 %

54 %

57 %

53 %

Adjusted Operating Expenses reconciliation

GAAP Operating Expenses2

$ 988,496

$ 953,256

$ 901,822

$ 906,877

$ 912,500

$ 917,484

Stock-based compensation expense

Payroll and other tax expense related to stock-based

(330,398)

(253,107)

(257,668)

(258,896)

(256,105)

(245,904)

compensation

(8,609)

(15,884)

(10,063)

(6,045)

(5,536)

(17,116)

Depreciation and amortization

(40,711)

(35,948)

(36,058)

(37,885)

(38,458)

(36,295)

Restructuring charges

(21,951)

(69,058)

(1,866)

Adjusted Operating Expenses3

$ 586,827

$ 579,259

$ 596,167

$ 604,051

$ 612,401

$ 618,169

GAAP Operating Expense Margin2

27 %

20 %

27 %

34 %

41 %

33 %

Adjusted Operating Expense Margin3

57 %

52 %

56 %

61 %

55 %

1Adjusted 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 items impacting net income (loss) from time to time. Adjusted Gross Margin is a non-GAAP measure, which we define as GAAP revenue less Adjusted Cost of Revenue divided by GAAP revenue.

2GAAP Operating Expenses is defined as total costs and expenses, as reported on our consolidated statements of operations, minus GAAP Cost of Revenue. GAAP Operating Expense Margin is defined as GAAP revenue less GAAP Operating Expenses, divided by GAAP revenue.

3Adjusted Operating Expenses 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 items impacting net income (loss) from time to time. Adjusted Operating Expense Margin is

a non-GAAP measure, which we define as GAAP revenue less Adjusted Operating Expenses, divided by GAAP revenue. 1

Numbers throughout presentation may not foot due to rounding.

(in thousands, unaudited)

Three Months Ended

December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025

Adjusted Research and Development Expenses reconciliation

GAAP Research and Development Expenses

$ 483,528

$ 449,759

406,196

412,791

$ 422,937

424,165

Stock-based compensation expense

(220,927)

(170,002)

(171,180)

(172,516)

(165,330)

(156,688)

Payroll and other tax expense related to stock-based

compensation

(5,137)

(11,087)

(6,157)

(3,634)

(3,582)

(12,109)

Depreciation and amortization

(27,557)

(24,397)

(22,909)

(24,798)

(24,351)

(22,987)

Restructuring charges

(4,100)

(39,055)

138

Adjusted Research and Development Expenses1

$ 225,807

$ 205,218

$ 206,088

$ 211,843

$ 229,674

$ 232,381

Adjusted Sales and Marketing Expenses reconciliation

GAAP Sales and Marketing Expenses

$ 275,811

$ 276,034

$ 266,320

$ 273,107

$ 248,214

$ 257,957

Stock-based compensation expense

(70,304)

(50,438)

(52,251)

(53,345)

(56,463)

(54,440)

Payroll and other tax expense related to stock-based

compensation

(2,125)

(3,065)

(2,265)

(1,449)

(1,340)

(2,937)

Depreciation and amortization

(5,129)

(4,577)

(5,084)

(4,953)

(5,333)

(4,823)

Restructuring charges

(5,645)

(19,588)

(457)

Adjusted Sales and Marketing Expenses1

$ 192,608

$ 198,366

$ 206,263

$ 213,360

$ 185,078

$ 195,757

Adjusted General and Administrative Expenses reconciliation

GAAP General and Administrative Expenses

$ 229,157

$ 227,463

$ 229,306

$ 220,979

$ 241,349

$ 235,362

Stock-based compensation expense

(39,167)

(32,667)

(34,237)

(33,035)

(34,312)

(34,776)

Payroll and other tax expense related to stock-based

compensation

(1,347)

(1,732)

(1,641)

(962)

(614)

(2,070)

Depreciation and amortization

(8,025)

(6,974)

(8,065)

(8,134)

(8,774)

(8,485)

Restructuring charges

(12,206)

(10,415)

(1,547)

Adjusted General and Administrative Expenses1

$ 168,412

$ 175,675

$ 183,816

$ 178,848

$ 197,649

$ 190,031

1Adjusted Research and Development Expenses, Adjusted Sales and Marketing Expenses, and Adjusted General and Administrative Expenses are non-GAAP measures. These measures exclude stock-based compensation expense, payroll and other tax expense related to stock-based compensation, depreciation 2

and amortization, and certain other items impacting net income (loss) from time to time.

(in thousands, unaudited)

Three Months Ended

December 31, 2023

March 31, 2024

June 30, 2024

September 30, 2024

December 31, 2024

March 31, 2025

Adjusted EBITDA reconciliation

Net income (loss)

$ (248,247)

$ (305,090)

$ (248,620)

$ (153,247)

9,101

$ (139,587)

Add (deduct):

Interest income

(43,463)

(39,898)

(36,462)

(38,533)

(38,573)

(37,018)

Interest expense

5,275

4,743

5,113

5,883

5,813

23,399

Other (income) expense, net

34,447

20,792

4,355

(8,382)

(49,069)

Income tax (benefit) expense

3,275

6,932

5,202

8,332

5,164

8,429

Depreciation and amortization

43,882

38,098

37,930

38,850

39,581

37,715

Stock-based compensation expense

333,063

254,715

258,946

260,229

257,731

247,338

Payroll and other tax expense related to stock-based

compensation

8,706

15,970

10,133

6,093

5,572

17,218

Restructuring charges1

22,211

70,108

1,943

Adjusted EBITDA2

$ 159,149

$ 45,659

$ 54,977

$ 131,962

$ 276,007

$ 108,425

Net income (loss) margin

(18)%

(26)%

(20)%

(11)%

1 %

(10)%

Adjusted EBITDA Margin2

12 %

4 %

10 %

18 %

8 %

Three Months Ended

December 31, 2023

March 31, 2024

June 30, 2024

September 30, 2024

December 31, 2024

March 31, 2025

Free Cash Flow reconciliation

Net cash provided by (used in) operating activities

$ 164,574

$ 88,352

$ (21,377)

$ 115,872

$ 230,633

$ 151,610

Less:

Purchases of property and equipment

(53,719)

(50,448)

(52,062)

(44,041)

(48,275)

(37,214)

Free Cash Flow3

$ 110,855

$ 37,904

$ (73,439)

$ 71,831

$ 182,358

$ 114,396

1In Q4 2023, charges relating to the wind down of our AR Enterprise business were composed primarily of cash severance, stock-based compensation expense, and charges related to the revision of the useful lives and disposal of certain acquired intangible assets. Additionally, we recognized an income tax benefit of $6 million in Q4 2023 relating to the wind down, which is included in the income tax (benefit) expense line item above. In Q1 2024 and Q2 2024, charges relating to the 2024 restructuring were composed primarily of cash severance and stock-based compensation expense. These charges are not reflective of underlying trends in our business.

2Adjusted EBITDA is a non-GAAP measure, which we define as net income (loss), excluding interest income; interest expense; other income (expense), net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense; payroll and other tax expense related to stock-based compensation; and certain other items impacting net income (loss) from time to time. Adjusted EBITDA Margin is a non-GAAP measure, which we define as Adjusted EBITDA divided by GAAP revenue.

3Free Cash Flow is a non-GAAP measure, which we define as net cash provided by (used in) operating activities, reduced by purchases of property and equipment. Numbers throughout presentation may not foot due to rounding.

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors' overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We use the non-GAAP financial measure of Free Cash Flow, which is defined as net cash provided by (used in) operating activities, reduced by purchases of property and equipment. We believe Free Cash Flow is an important liquidity measure of the cash that is available, after capital expenditures, for operational expenses and investment in our business and is a key financial indicator used by management. Additionally, we believe that Free Cash Flow is an important measure since we use third-party infrastructure partners to host our services and therefore we do not incur significant capital expenditures to support revenue generating activities. Free Cash Flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth. We use the non-GAAP financial measure of Adjusted EBITDA, which is defined as net income (loss), excluding interest income; interest expense; other income (expense), net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense; payroll and other tax expense related to stock-based compensation; and certain other items impacting net income (loss) from time to time. We believe that Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in Adjusted EBITDA. We use other non-GAAP financial measures such as Adjusted Cost of Revenue and Adjusted Operating Expenses (which is composed of Adjusted Research and Development Expenses, Adjusted Sales and Marketing Expenses, and Adjusted General and Administrate Expenses). These measures are defined as their respective GAAP expense line items, excluding interest income; interest expense; other income (expense), net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense; payroll and other tax expense related to stock-based compensation; and certain other items impacting net income (loss) from time to time. We use the non-GAAP financial measure of Adjusted Gross Margin, which we define as GAAP revenue less Adjusted Cost of Revenue divided by GAAP revenue as well as the non-GAAP financial measure of Adjusted Operating Expense Margin, which we define as GAAP revenue less Adjusted Operating Expenses, divided by GAAP revenue. Similar to Adjusted EBITDA, we believe these measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses we exclude in the measure. We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to key metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP measures to assist investors in seeing our financial performance through the eyes of management, and because we believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see the reconciliations included within this Appendix.

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 a Monthly Active User, or MAU, as a registered and logged-in Snapchat user who visits Snapchat through our applications or websites at least once during the 30-day period ending on the calendar month-end. We calculate average Monthly Active Users for a particular quarter by calculating the average of the MAUs as of each calendar month-end in that quarter. 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" in our most recent periodic report filed with the U.S. Securities and Exchange Commission, or the SEC, which is available on the SEC's website at https://www.sec.gov. Additional information will be made available in our periodic report that will be filed with the SEC for our most recently completed period and other filings that we make from time to time with the SEC.

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.

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. 5

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. 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. For example, in the first quarter of 2025, we refined our processes and controls in recording user activity to allow us to more accurately count DAUs that would not otherwise be counted during such period due to delays in receiving user metric information resulting from carrier or other user connectivity issues during the measurement period. While these refinements improve both our accuracy and precision in counting DAUs, they resulted in less than a 1% increase in our DAUs in the first quarter of 2025 and would have resulted in similarly immaterial changes in our DAUs for all periods in 2024, and which increase was primarily concentrated in Rest of World due to the greater prevalence of network connectivity delays in this region. Had such refinements not been made in the first quarter of 2025, the year-over-year increase in such quarter for Rest of World would have been 15% instead of 16% given that the refinements primarily affected this region. Any such adjustments would have a commensurate immaterial impact on our calculations of ARPU for such periods. As a result of such adjustments, our DAUs, ARPU, or other metrics may not be directly 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.

Disclaimer

Snap Inc. published this content on April 29, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 30, 2025 at 00:25 UTC.