Snap Inc. Announces Third Quarter 2023 Financial Results
Revenue increased 5% year-over-year to $1,189 million
Daily Active Users increased 12% year-over-year to 406 million
Net loss was $368 million and Adjusted EBITDA was positive $40 million
SANTA MONICA, Calif.--(BUSINESS WIRE)--October 24, 2023--
Snap Inc. (NYSE: SNAP) today announced financial results for the quarter ended September 30, 2023.
“Our revenue returned to positive growth in Q3, increasing 5% year-over-year and flowing through to positive adjusted EBITDA as our reprioritized cost structure demonstrated the leverage in our business model,” said Evan Spiegel, CEO. “We are focused on improving our advertising platform to drive higher return on investment for our advertising partners, and we have evolved our go-to-market efforts to better serve our partners and drive customer success.”
Jerry Hunter, Chief Operating Officer, has notified Snap that he will retire. Mr. Hunter joined Snap seven years ago and served an important role in building the company’s engineering and business structures. Mr. Hunter’s duties and responsibilities will be transitioned by the end of the month and he will continue to support Snap through July 1, 2024 to help ensure this transition is effective.
“I am deeply grateful to Jerry for the meaningful contributions he has made over his many years at Snap,” said Evan Spiegel. “His work to improve our advertising platform, serve our community, and build a strong team has helped lay the foundation for our future growth.”
Snap Inc. also announced today its board of directors has authorized a stock repurchase program of up to $500 million of its Class A common stock. Repurchases of the Class A common stock may be made from time to time, either through open market transactions (including through Rule 10b5-1 trading plans) or through privately negotiated transactions in accordance with applicable securities laws. The timing and actual number of shares repurchased will depend on a variety of factors, including stock price, trading volume, market and economic conditions, and other general business considerations. Repurchases under the program have been authorized for 12 months but the program may be modified, suspended, or terminated at any time.
The goal of the program is to utilize the company’s strong balance sheet to opportunistically offset a portion of the dilution related to the issuance of restricted stock units to employees as part of the overall compensation program designed to foster an ownership culture.
Repurchases under this program will be funded from existing cash and cash equivalents. As of September 30, 2023, Snap had $3.6 billion in cash, cash equivalents, and marketable securities.
Q3 2023 Financial Summary
-- Revenue was $1,189 million, compared to $1,128 million in the prior
year, an increase of 5% year-over-year.
-- Net loss was $368 million, compared to $360 million in the prior year.
-- Adjusted EBITDA was $40 million, compared to $73 million in the prior
year.
-- Operating cash flow was $13 million, compared to $56 million in the
prior year.
-- Free Cash Flow was $(61) million, compared to $18 million in the prior
year.
-- Trailing twelve months operating cash flow was $207 million and
trailing twelve months Free Cash Flow was $2 million.
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ----- -------------------------- -----
Percent Percent
2023 2022 Change 2023 2022 Change
--------- --------- --------- ---------- ---------- ---------
(Unaudited) (in thousands, except per share amounts)
Revenue $1,188,551 $1,128,476 5% $ 3,244,828 $ 3,302,112 (2)%
Operating
loss $ (380,063) $ (435,242) 13% $(1,149,666) $(1,107,709) (4)%
Net loss $ (368,256) $ (359,502) (2)% $(1,074,238) $(1,141,193) 6%
Adjusted
EBITDA(1) $ 40,094 $ 72,640 (45)% $ 2,428 $ 144,298 (98)%
Net cash
provided by
(used in)
operating
activities $ 12,781 $ 55,945 (77)% $ 81,947 $ 59,323 38%
Free Cash
Flow(2) $ (60,654) $ 18,109 (435)% $ (76,061) $ (23,058) (230)%
Diluted net
loss per
share
attributable
to common
stockholders $ (0.23) $ (0.22) (5)% $ (0.67) $ (0.70) 4%
Non-GAAP
diluted net
income
(loss) per
share(3) $ 0.02 $ 0.08 (75)% $ 0.01 $ 0.04 (75)%
(1) See page 10 for reconciliation of net loss to Adjusted EBITDA. In the
third quarter of 2023, we initiated a wind down of our AR Enterprise
business, which included a reduction of our global employee headcount
by approximately 3%. Restructuring charges in the third quarter of 2023
were $18.6 million, composed primarily of cash severance and
stock-based compensation expenses. In the third quarter of 2022, we
initiated a strategic reprioritization plan, which included a reduction
of our global employee headcount by approximately 20%. Restructuring
charges in the third quarter of 2022 were $154.6 million, composed
primarily of severance and related charges, stock-based compensation
expense, lease exit and related charges, impairment charges, and
contract termination charges.
(2) See page 10 for reconciliation of net cash provided by (used in)
operating activities to Free Cash Flow.
(3) See page 11 for reconciliation of diluted net loss per share to
non-GAAP diluted net income (loss) per share.
Q3 2023 Summary & Key Highlights
We grew and deepened our engagement with our community:
-- DAUs were 406 million in Q3 2023, an increase of 43 million, or 12%,
year-over-year.
-- Total time spent watching Spotlight increased over 200%
year-over-year.
-- Since launching My AI, our AI-powered chatbot, over 200 million people
have sent over 20 billion messages, which we believe makes My AI among
the most widely used AI chatbots available today.
-- We launched our new Generative AI powered feature called Dreams, which
enables Snapchatters to create generative AI selfies.
-- We are seeing more creators posting content to Snapchat, with nearly
three times more public Stories posted in the US compared to Q3 2022.
We are focused on accelerating and diversifying our revenue growth:
-- We returned to positive revenue growth this quarter as we continue to
execute against our strategy of accelerating and diversifying our revenue
growth.
-- During Q3, we implemented over 17 major machine learning ranking and
optimization improvements for App, Web, and Dynamic Product Ad (DPA)
optimization goals.
-- We launched our Total Takeover solution, which includes First
Commercial, First Lens, and First Story, and lets advertisers reserve the
first Commercial, Lens, or Snap Ad a Snapchatter sees.
-- Snapchat+, our subscription service that offers exclusive, experimental,
and pre-release features, reached over 5 million subscribers in Q3 2023.
-- We integrated with Shopify Audiences, which enables Shopify Plus
merchants to extend their reach and find new customers on Snapchat who
have high intent to purchase their products.
-- At our 2023 Beauty Summit in September, we announced new advertising
tools for beauty brands such as beauty AR Lenses and Bitmoji beauty
drops.
We invested in our augmented reality platform:
-- We launched the Real-Time Neural Rendering ML Model in Lens Studio,
which enables developers to build AR assets from 2D images captured on a
phone.
-- We launched Diffuse Indirect Lighting, a new Ray Tracing feature that
brings a level of realism to how colors and lights reflect and glow onto
other objects.
-- We introduced Lens Creator Rewards, a new opportunity for Snap AR
creators, developers, and teams to be rewarded for building
top-performing Lenses on Snapchat.
-- We partnered with MTV for their 2023 Video Music Awards to let the
audience live cast their vote for the Best New Artist category through an
innovative Snapchat Lens via Camera Kit.
-- For the 2023 NFL season, we partnered with the LA Rams and Disguise to
deliver a sponsored Princess Cruises AR experience powered by Camera Kit
in SoFi Stadium.
-- This summer, our AR technology enhanced music festivals across the
world, including AR experiences for Lollapalooza Paris, in partnership
with Live Nation.
-- For the 2023 FIFA Women's World Cup, we debuted a USWNT "Team Tracker"
AR Lens that used advanced AR technology, with 3D Bitmoji avatars, stats,
news, fun facts, and highlights that updated in real time.
Q4 2023 Outlook