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Snap Q3 Revenue Misses

November 8, 2017

Snap reported financial results for the quarter ended September 30, 2017.

Snap noted revenue of $207.9 million with investors looking for $236.9 million. Specifically, the average revenue per user (ARPU) was $1.17 with the Street wanting $1.30. Overall Snap posted a net loss of $443.2 million.

Snap did not hit the mark on daily active users (DAUs), where 178 million came along with 181.8 million anticipated.

Third Quarter 2017 Financial Highlights:

                 
    Three Months Ended       Nine Months Ended    
    September 30,   Percent   September 30,   Percent
    2017   2016   Change   2017   2016   Change
    (dollars in thousands)   (dollars in thousands)
(Unaudited)   (NM = Not Meaningful)   (NM = Not Meaningful)
         
Revenue   $ 207,937     $ 128,204     62 %   $ 539,256     $ 238,800     126 %
Net loss(1)   $ (443,159 )   $ (124,228 )   NM     $ (3,095,089 )   $ (344,698 )   NM  
Adjusted EBITDA(2)   $ (178,901 )   $ (108,604 )   65 %   $ (561,134 )   $ (306,959 )   83 %
                         
Other Financial Highlights                        
Cash, cash equivalents, and marketable securities   $ 2,298,068                      
Cash used in operating activities   $ (194,013 )   $ (216,866 )       $ (558,584 )   $ (443,517 )    
Free Cash Flow(3)   $ (219,961 )   $ (234,058 )       $ (621,890 )   $ (489,582 )    
Capital expenditures   $ (25,948 )   $ (17,192 )       $ (63,306 )   $ (46,065 )    
                         
(1)   Net loss for the nine months ended September 30, 2017 includes $2.5 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.
(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.
     

Operational Highlights

  • Daily active users (DAU)(1) DAUs grew from 153 million in Q3 2016 to 178 million in Q3 2017, an increase of 25.2 million or 17% year-over-year. DAUs increased 4.5 million or 3% quarter-over-quarter, from 173 million in Q2 2017.
  • Average revenue per user (ARPU)(2) ARPU was $1.17 in Q3 2017, an increase of 39% over Q3 2016 when ARPU was $0.84. ARPU increased 12% over Q2 2017 when ARPU was $1.05.
  • Hosting costs per DAU Hosting costs per DAU were $0.68 in Q3 2017, as compared to $0.64 in Q3 2016 and $0.61 in Q2 2017.
  • Capital expenditures Capital expenditures were $25.9 million in Q3 2017, as compared to $17.2 million in Q3 2016 and $19.4 million in Q2 2017.
  • Excess inventory and related charges In Q3 2017, we recorded $39.9 million of charges related to Spectacles inventory, primarily related to excess inventory reserves and inventory purchase commitment cancellation charges.

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