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Snap Inc. Reports Fourth Quarter and Full Year 2017 Results


 Tags:   News: Cameras & Photography                This was published: 6 Feb 2018 - 09:46 pm         Print article: Printer friendly page
          

Snap Inc. Reports Fourth Quarter and Full Year 2017 Results - on DefenceBriefing.net

Snap Inc. (NYSE: SNAP) today announced financial results for the quarter and full year ended December 31, 2017.



Fourth Quarter and Full Year 2017 Financial Highlights:

  Three Months Ended

December 31,

  Percent   Year Ended

December 31,

  Percent
2017   2016 Change 2017   2016 Change
(dollars in thousands) (dollars in thousands)
(Unaudited) (NM = Not Meaningful) (NM = Not Meaningful)
Revenue $ 285,693 $ 165,682   72 % $ 824,949 $ 404,482   104 %
Net loss(1) $ (349,977 ) $ (169,945 ) 106 % $ (3,445,066 ) $ (514,643 ) NM
Adjusted EBITDA(2) $ (158,922 ) $ (152,284 ) 4 % $ (720,056 ) $ (459,243 ) 57 %
 
Other Financial Highlights
Cash, cash equivalents, and marketable securities $ 2,043,039 $ 987,368
Cash used in operating activities $ (176,083 ) $ (167,728 ) $ (734,667 ) $ (611,245 )
Free Cash Flow(3) $ (197,295 ) $ (188,104 ) $ (819,185 ) $ (677,686 )
Capital expenditures $ (21,212 ) $ (20,376 ) $ (84,518 ) $ (66,441 )
   

(1)

 

Net loss for the year ended December 31, 2017 includes $2.6 billion of stock-based compensation expense, primarily due to the recognition of expense related to RSUs with a performance condition satisfied on the effectiveness of the registration statement for our initial public offering in March 2017.

(2)

Adjusted EBITDA is defined as net income (loss), excluding interest income; interest expense; other income (expense) net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense and related payroll tax expense; and certain other non-cash or non-recurring items impacting net income (loss) from time to time, as described below.

(3)

Free Cash Flow is defined as net cash used in operating activities, reduced by purchases of property and equipment.

Note: For adjustments and additional information regarding the non-GAAP financial measures discussed, please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below.

Operational Highlights

  • Daily Active Users (DAU)(1) increased 8.9 million or 5% sequentially to 187 million, representing the highest net adds since Q3 2016. DAUs increased 28.8 million or 18% year-over-year.
  • Revenue was $285.7 million in Q4 2017, up 72% year-over-year and 37% sequentially, driven by auction traction and seasonality. Full year revenue was $824.9 million, up 104% year-over-year.
  • Average revenue per user (ARPU)(2) was $1.53 in Q4 2017, up 46% year-over-year and 31% sequentially. Cost of revenue per user (CoRPU)(3) was $1.02 in Q4 2017, up 5% year-over-year and down 14% sequentially.
  • Adjusted EBITDA loss was $(158.9) million in Q4 2017, an increase of 4% year-over-year and an improvement of 11% sequentially. Full year Adjusted EBITDA was $(720.1) million and was $(459.2) million in 2016.
  • Cash and marketable securities were $2.0 billion at December 31, 2017. Cash management reduced Q4 2017 cash burn to $255 million, down 49% sequentially. Capital expenditures remained modest in Q4 2017, given our capital light business model, at $21.2 million compared to $20.4 million in Q4 2016 and $25.9 million in Q3 2017. Full year capital expenditures were $84.5 million, less than $0.50 per DAU.
   

(1)

 

We define a Daily Active User, or DAU, as a registered Snapchat user who opens the Snapchat application at least once during a defined 24-hour period. We measure average Daily Active Users for a particular quarter by calculating the average Daily Active Users for that quarter.

(2)

We define average revenue per user, or ARPU, as quarterly revenue divided by the average Daily Active Users.

(3)

We define cost of revenue per user, or CoRPU, as quarterly cost of revenue divided by the average Daily Active Users.

 

CONFERENCE CALL INFORMATION

Snap Inc. will host a conference call to discuss the results at 2:00 p.m. Pacific / 5:00 p.m. Eastern today. The live audio webcast along with supplemental information will be accessible at investor.snap.com. A recording of the webcast will also be available following the conference call.

Snap Inc. uses the investor.snap.com and snap.com/news websites as means of disclosing material non-public information and for complying with its disclosure obligation under Regulation FD.

Forward-Looking Statements

This press release contains “forward-looking” statements that are based on our management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include statements about expected financial metrics, such as revenue, non-GAAP Adjusted EBITDA, capital expenditures, and stock-based compensation, as well as non-financial metrics, such as DAU and video views. They also include statements about our possible or assumed business strategies, potential growth opportunities, new products, and potential market opportunities.

Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “believe,” “could,” “potential,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks include, but are not limited to, risks and uncertainties related to: our limited operating history, our lack of significant revenue and profitability to date, our ability to monetize our products, the highly competitive and rapidly changing market for internet and advertising companies, infrastructure costs, our ability to create new and innovative products, our ability to maintain users and manage any future user growth, litigation, and our international expansion strategies. Additional risks and uncertainties that could affect our financial results are included in the section titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the final prospectus for our initial public offering, dated March 1, 2017, and our quarterly reports on Form 10-Q, which are available on the SEC’s website at www.sec.gov. Additional information will be made available in Snap Inc.’s annual report on Form 10-K and other filings that we make from time to time with the SEC. In addition, any forward-looking statements contained in this press release are based on assumptions that we believe to be reasonable as of this date. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use the non-GAAP financial measure of 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 and related payroll tax expense; and certain other non-cash or non-recurring items impacting net income (loss) from time to time, as described below. We believe that Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in Adjusted EBITDA.

We use the non-GAAP financial measure of Free Cash Flow, which is defined as net cash 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 Non-GAAP Net Loss, which is defined as net income (loss); excluding amortization of intangible assets; stock-based compensation expense and related payroll tax expense; certain other non-cash or non-recurring items impacting net income (loss) from time to time; and related income tax adjustments. Non-GAAP Net Loss and weighted average diluted shares are then used to calculate Non-GAAP diluted net loss per share. Similar to Adjusted EBITDA, we believe these measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses we exclude in the measure.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to key metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP measures to assist investors in seeing our financial performance through the eyes of management, and because we believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see “Reconciliation of GAAP to Non-GAAP Financial Measures” below.

Snap Inc., “Snapchat,” and our other registered and common law trade names, trademarks, and service marks are the property of Snap Inc. or our subsidiaries.

   
SNAP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts, unaudited)

 
Three Months Ended

December 31,

Year Ended

December 31,

2017   2016 2017   2016
Revenue $ 285,693 $ 165,682 $ 824,949 $ 404,482
Costs and expenses:
Cost of revenue 191,246 153,350 717,462 451,660
Research and development 233,838 64,964 1,534,863 183,676
Sales and marketing 110,458 50,389 522,605 124,371
General and administrative   111,115   66,716   1,535,595   165,160
Total costs and expenses   646,657   335,419   4,310,525   924,867
Loss from operations (360,964 ) (169,737 ) (3,485,576 ) (520,385 )
Interest income 6,070 1,486 21,096 4,654
Interest expense (876 ) (776 ) (3,456 ) (1,424 )
Other income (expense), net   2,553   (1,215 )   4,528   (4,568 )
Loss before income taxes (353,217 ) (170,242 ) (3,463,408 ) (521,723 )
Income tax benefit (expense)   3,240   297   18,342   7,080
Net loss $ (349,977 ) $ (169,945 ) $ (3,445,066 ) $ (514,643 )
Net loss per share attributable to Class A, Class B, and Class C common stockholders:
Basic $ (0.28 ) $ (0.20 ) $ (2.95 ) $ (0.64 )
Diluted $ (0.28 ) $ (0.20 ) $ (2.95 ) $ (0.64 )
 
 
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Further information:
Organisation name:    Snap Inc.
Organisation stock symbol: NYSE:SNAP


Latest stock price data for NYSE:SNAP

SNAP INC.
CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts, unaudited)

 
December 31,
2017   2016
Assets
 


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