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


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

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

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 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 (§232.405 of this chapter) 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 emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by checkmark 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of Class A common stock on the New York Stock Exchange on June 30, ~~2021,~~2023, the last business day of the Registrant’s most recently completed second fiscal quarter, was approximately ~~$81.7~~$14.8 billion.

As of February ~~1, 2022,~~2, 2024, the Registrant had ~~1,369,920,406~~1,396,476,171 shares of Class A common stock, ~~22,749,440~~22,528,406 shares of Class B common stock, and 231,626,943 shares of Class C common stock outstanding.

Auditor Firm Id: 42Auditor Name: Ernst & Young LLPAuditor Location: Los Angeles, CA, United States

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K 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, ~~and~~ 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 Annual Report on Form 10-K primarily on our current expectations and projections about future events and trends, including our financial outlook, macroeconomic uncertainty, and ~~the ongoing COVID-19 pandemic,~~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 under “Risk Factor Summary” below, “Risk Factors” in Part I, Item 1A, and elsewhere in this Annual Report on Form 10-K, including among other things:

•

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

•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 generate and sustain positive cash flow;•

~~our ability to attract and retain users and partners;~~

•our ability to attract and retain users and partners;•

~~our ability to attract and retain advertisers;~~

•our ability to attract and retain advertisers;•

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

•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 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 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 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 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 attract and retain qualified team members and key personnel;•

~~our ability to repay outstanding debt;~~

•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~~

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

the potential adverse impact of climate change, natural disasters, and health epidemics, including the COVID-19 pandemic on our business, operations, and the markets and communities in which we and our partners, advertisers, and users operate.

•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 Annual Report on Form 10-K. 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 Annual Report on Form 10-K. 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.

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The forward-looking statements made in this Annual Report on Form 10-K 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 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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Risk Factor Summary

Our business is subject to significant risks and uncertainties that make an investment in us speculative and risky. Below we summarize what we believe are the principal risk factors but these risks are not the only ones we face, and you should carefully review and consider the full discussion of our risk factors in the section titled “Risk ~~Factors”,~~Factors,” together with the other information in this Annual Report on Form 10-K. If any of the following risks actually occurs (or if any of those listed elsewhere in this Annual Report on Form 10-K occurs), our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business.

1.Our Strategy and Advertising Business

We operate in a highly competitive and rapidly changing environment so we must continually innovate our products and evolve our business model for us to succeed.

We emphasize rapid innovation and prioritize long-term user engagement over short-term financial conditions or results if we believe that it will benefit the aggregate user experience and improve our financial performance over the long term. ~~We currently~~Although we have achieved profitability in certain periods, we have a history of operating losses ~~but,~~and, as a result of our long-term focus, we may prioritize investments and expenses we believe are necessary for our long-term growth over achieving short-term profitability. Investments in our future, including through new products or acquisitions, are inherently risky and may not pay off, which would adversely affect our ability to settle the principal and interest payments on our outstanding convertible senior notes or other indebtedness when due, and further delay or hinder our ability to ~~attain and~~ sustain profitability. This in turn would hinder our ability to secure additional financing to meet our current and future financial needs on favorable terms, or at all.

We generate substantially all of our revenue from advertising. Our advertising business is most effective when our advertisers succeed. Driving their success requires continual investment in our advertising products and may be hindered by competitive challenges and various legal, regulatory, and operating system changes that make it more difficult for us to achieve and demonstrate a meaningful return for our advertisers. For example, on-going changes to privacy and data protection laws and mobile operating systems ~~have made it more difficult~~continue to present issues for us ~~to measure~~in measuring the effectiveness of advertisements on our services. Additionally, individuals are becoming increasingly resistant to the processing of personal data to deliver behavioral, interest-based, or targeted advertisements, and regulators are likewise scrutinizing such data processing activities, which could reduce the demand for our products and services and ~~alternative~~threaten our primary revenue stream. Alternative methods, ~~will~~to the extent we can develop such methods in compliance with current or future privacy and data protection laws, mobile operating system requirements, and other requirements, may take time to develop and ~~become more widely~~be adopted by our advertisers and users, and may not be as effective as prior methods.

We believe that this impact on our targeting, measurement, and optimization capabilities has negatively affected and may continue to negatively affect our operating results. In addition, our advertising business is seasonal, volatile, and ~~volatile,~~cyclical, which could result in fluctuations in our quarterly revenues and operating results, including the expectations of our business prospects.

Our business and operations have been, and ~~could~~ in the future could be, adversely affected by events beyond our control, such as health epidemics ~~including the COVID-19 pandemic (including any variants)~~ and geo-political events and conflicts. In addition, macroeconomic factors like labor shortages and disruptions, supply chain disruptions, banking instability, and inflation ~~impacting the markets~~continue to cause logistical challenges, increased input costs, and ~~communities~~inventory constraints for our advertisers, which in ~~which we~~turn may also halt or decrease advertising spending, and harm our ~~partners, advertisers, and users operate.~~

2.business.

2. Our Community and Competition

We need to continually innovate and create new products, and enhance our existing products, to attract, retain, and grow our global community. Products that we create may fail to attract or retain users or partners, or to generate meaningful revenue, if ~~at all.~~any. In addition, we have and expect to continue to expand organically and through acquisitions, including in international markets, which we may not be able to effectively manage or scale. If our community does not see the value in our products or brand, or if competitors offer better alternatives, our community could easily switch to other services. ~~While~~Although we have experienced rapid growth in our community over the last few years, we have also experienced declines and there can be no assurance that declines won’t happen again. ~~We have and expect to continue to expand organically and through acquisitions, including in international markets, which we may not be able to effectively manage or scale.~~

Many of our competitors have significantly more resources and larger market shares than we do, ~~each of~~ which gives them advantages over us that can make it more difficult for us to succeed.

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3. Our Partners

We primarily rely on Google, Apple, and Amazon to ~~operate our service and~~ provide ~~the~~their mobile operating systems and other services for our ~~applications.~~applications and other core services, including our platform. If these partners do not provide their services as we expect, terminate their services, or change the terms, or their interpretation of the terms, of our agreements, or change the functionality of their mobile operating systems in ways that are adverse to us, our service may be interrupted and our product experience could be degraded, ~~and these~~which may harm our reputation, increase our costs, or make it harder for us to

~~attain or~~ sustain profitability. Many other parts of our business depend on partners, including content partners and advertising partners, so our success depends on our ability to attract and retain these partners.

4.Our Technology and Regulation

Our business is complex and success depends on our ability to rapidly innovate, the interoperability of our service on many different smartphones and mobile operating systems, and our ability to handle sensitive user data with the care our users expect. Because our systems and our products are constantly changing, we are susceptible to data breaches, cyberattacks, security incidents, bugs, and other vulnerabilities and errors in how our products work and are measured. We may also fail to maintain effective processes that report our metrics or financial results. Given the complexity of the systems involved and the rapidly changing nature of mobile devices and operating systems, we expect to encounter issues, particularly if we continue to expand in parts of the world where mobile data systems and connections are less stable.

We are also subject to complex and evolving federal, state, local, and foreign laws and regulations regarding privacy, data protection, biometric processing, content, artificial intelligence, taxes, and other matters, which are subject to change and have uncertain interpretations. Given the nature of our business, we are particularly susceptible to changes in such laws regarding privacy and data protection, which may require us to change our products and may impact our revenue stream. Any actual or perceived failure to comply with such legal and regulatory obligations, including in connection with our consent decree with the U.S. Federal Trade Commission, may lead to costly litigation or ~~any economic or political instability, may~~otherwise adversely impact our business.

We also must actively protect our intellectual property. ~~From time to time, we~~We are subject to various legal proceedings, claims, class actions, inquiries, and investigations ~~including class actions and matters involving~~related to our intellectual property, ~~that~~which may be costly or distract management. We also rely on a variety of statutory and common-law frameworks for the content we provide our users, including the Digital Millennium Copyright Act, the Communications Decency Act, and the fair-use doctrine, each of which has been subject to adverse judicial, political, and regulatory scrutiny in recent times.

5. Our Team and Capital Structure

We need to attract and retain a high caliber team ~~including our Chief Executive Officer and Chief Technology Officer,~~ to maintain our competitive position. We may incur significant costs and expenses in maintaining and growing our team, and may lose valuable members of our team as we compete globally, including with ~~many of~~ our competitors, for key talent. A substantial portion of our employment costs is paid in our common stock, the price of which has been volatile, and our ability to attract and retain talent may be adversely affected if our shares decline in value.

Our two co-founders, who serve as our Chief Executive Officer and Chief Technology Officer, control over 99% of the voting power of our outstanding capital stock, which means they control substantially all outcomes submitted to stockholders. Class A common stockholders have no voting rights, unless required by Delaware law. This concentrated control may result in our co-founders voting their shares in their best interest, which might not always be in the interest of our stockholders generally.

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NOTE REGARDING USER METRICS AND OTHER DATA

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 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 ~~have unauthorized or multiple Snapchat~~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. We~~behavior, although we have not determined the number of such ~~multiple~~ 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.

~~In the past we have relied on third-party analytics providers to calculate our metrics, but today we rely primarily on our analytics platform that we developed and operate.~~

We count a DAU only when a user opens the application 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 opened the application 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

Item 1. Business.

Overview

Snap Inc. is a ~~camera~~technology company. We believe ~~that reinventing~~ the camera ~~represents our~~presents the greatest opportunity to improve the way ~~that~~ people live and communicate. We contribute to human progress by empowering people to express themselves, live in the moment, learn about the world, and have fun together.

Our flagship product, Snapchat, is a ~~camera~~visual messaging application that ~~helps people~~enhances your relationships with friends, family, and the world. Visual messaging is a fast, fun way to communicate ~~visually~~ with friends and family ~~through short videos~~using augmented reality, video, voice, messaging, and ~~images called Snaps. By opening directly to the camera, we empower users to express themselves instantly.~~creative tools. Snaps are deleted by default to mimic real-life conversations, so there is less pressure to look ~~pretty~~popular or perfect when creating and sending images on Snapchat. By reducing the friction typically associated with creating and sharing content, Snapchat has become one of the most used cameras in the world.

The camera is a powerful tool for communication and the entry point for augmented reality experiences. By opening directly to the camera, Snapchat empowers our community to express themselves instantly and offers millions of augmented reality Lenses for self expression, learning, and play. In the way that the flashing cursor became the starting point for most products on desktop computers, we believe the camera screen will be the starting point for most products on smartphones. This is because images created by smartphone cameras contain more context and richer information than other forms of input like text entered on a keyboard. Given the magnitude of this opportunity, we ~~invest heavily~~are investing and ~~take big risks in an attempt~~innovating to ~~create innovative~~continue to deliver products and services that are differentiated ~~camera products~~and that are better able to reflect and improve our life experiences.

Snapchat

Snapchat is our core mobile device application and contains five distinct tabs, complemented by additional tools that function outside of the application. With a breadth of visual ~~communication~~messaging and content experiences available within the application, Snapchatters can interact with any or all ~~five, or a subset~~ of ~~those~~the five tabs.

Camera: The Camera is a powerful tool for communication and the ~~starting~~entry point for ~~creation~~augmented reality experiences in Snapchat. Snapchat opens directly to the Camera, making it easy to create a Snap and send it to friends. Our augmented reality, or AR, capabilities within our Camera allow for creativity and self-expression. We offer millions of Lenses, created by both us and our community, along with creative tools and licensed music and audio clips, which make it easy for people to personalize and contextualize their Snaps. We also offer voice and scanning technology within our Camera. While Snaps are deleted by default to mimic real-life conversations, users can save their creativity through a searchable collection of Memories stored on both their Snapchat account and their mobile device. A user can also create Snaps on our wearable devices, Spectacles. Spectacles connect seamlessly with Snapchat and capture photos and video from a human perspective. Our latest version of Spectacles, designed for creators, overlays AR Lenses directly onto the world.

~~Communication~~

Visual Messaging: ~~Communication allows users~~Visual Messaging is a fast, fun way to ~~send Snaps to~~communicate with friends ~~collectively or individually, through~~and family using augmented reality, video, voice, messaging, and creative tools. We also offer My AI, our ~~ephemeral, efficient messaging architecture. Within Communication, users can send messages through text, Snaps,~~AI-powered chatbot, which helps our community foster creativity and ~~voice or video calling.~~connection with friends, receive real-world recommendations, and learn more about their interests and favorite subjects. They can also communicate ~~with~~through our proprietary personalized avatar tool, Bitmoji, and its associated contextual stickers and images, which integrate seamlessly into both mobile devices and desktop browsers. Further, users can communicate by playing one of our Games together, many of which allow a user’s avatar to be their Bitmoji, and through Minis, which bring bite-sized utility experiences to our community inside Snapchat.

Snap Map: Snap Map is a live and highly personalized map that allows Snapchatters to connect with friends and explore what is going on in their local area. Snap Map makes it easy to locate nearby friends who choose to share their location, view a heatmap of recent Snaps posted to Our Story by location, and locate local businesses. Places, rich profiles of local businesses that include information such as store hours and reviews, overlay specialized experiences from select partners on top of Snap Map, and allow Snapchatters to take direct actions from Snap Map, such as sharing a favorite store, ordering takeout, or making a reservation.

Stories: Stories are a fun way to stay connected with people you care most about. Stories feature content from a Snapchatter’s friends, our community, and our content partners. Friends Stories allow our community to express themselves in narrative form through photos and videos, shown in chronological order, to their friends. The Discover section of this tab displays curated content based on a Snapchatter’s subscriptions and interests, and features news and

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entertainment from both our creator community and publisher ~~partners, as well as original content in Snap Originals.~~partners. We also offer Public Profiles, as a way for our creator community and our advertising partners to memorialize and scale their content and AR Lenses on our platform.

Spotlight: Spotlight isshowcases the best of Snapchat, helping people discover new creators and content in a ~~way to broadly share user-generated content with the entire Snapchat community.~~personalized way. Here we surface the most entertaining Snaps from our community all in one place, which becomes tailored to each Snapchatter over time based on their preferences and favorites. The Trending page allows Snapchatters to discover and engage with popular topics and genres.

Additionally, we offer Snapchat+, our subscription product that provides subscribers access to exclusive, experimental, and pre-release features. Snapchat+ offers a variety of features from allowing Snapchatters to customize the look and feel of their app, to giving special insights into their friendships. We also offer Snapchat for Web, a browser-based product that brings Snapchat’s signature capabilities to the web.

Our Partner Ecosystem

Many elements and features of Snapchat are enhanced by our expansive partner ecosystem that includes developers, creators, publishers, and advertisers, among others. We help them create and bring diverse content and experiences into Snapchat, leverage Snapchat capabilities in their own applications and websites, and use advertising to promote these and other experiences to our large, engaged, and differentiated user base.

We seek to reward our partner ecosystem for their creativity, and continue to support them as they grow their audience and build their business on Snapchat.

Developers are able to integrate with Snapchat ~~in many ways, including~~and its core technologies, like Snap’s AR Camera and Bitmoji, through ~~Games, Minis,~~a variety of tools. Creative Kit gives developers and ~~Snap Kit. Snap Kit invites developers~~their communities a seamless sharing experience from their app directly to ~~easily build with Snapchat, bringing the best of Snapchat’s technology to grow their businesses and create engaging experiences.~~Snapchat. Through Camera Kit, our partners can embed Snap’s AR platform directly into their application, extending ~~our reach~~the use of AR beyond self-expression and ~~expanding our opportunity to learn through new AR~~communication use cases. ~~Partners can access~~We also provide developers a turnkey suite of tools and services ~~from~~that enable them to create AR Lenses ~~AR experiences creation~~and track the performance of those through analytics. Finally, developers can bring an inclusive mode of identity and expression to ~~Lens carousel management~~their apps and ~~analytics, to enable AR technology~~games with our Bitmoji for ~~their community. Snap Kit products include Camera Kit, Creative Kit, Login Kit, Bitmoji Kit, Story Kit, Ad Kit,~~Developers APIs and ~~Sticker Kit.~~

SDKs.

AR creators can use Lens Studio, our powerful desktop application designed for creators and developers, to build augmented reality experiences for Snapchatters. Spotlight creators can utilize our content creation tools to reach millions of Snapchatters and build their businesses through various monetization opportunities. Our Creator Marketplace connects both AR and Spotlight creators directly with our advertising partners.

We provide monetizable opportunities through programs like the Snap Lens Network and Ghost, which provide grants to support AR product development across many industries. We also support our content creator community through a number of programs, including advertising revenue sharing on our mid-roll advertisements in Snap Stars’ Stories.

Publisher partners can expand their audiences and monetize content through our Discover platform. In addition, we work with various telecommunications providers and original equipment manufacturers, particularly as we build our presence in new markets.

Our Advertising Products

We connect both brand and direct response advertisers to Snapchatters globally. Our ad products are built on the same foundation that makes our consumer products successful. This means that we can take the things we learn while creating our consumer products and apply them to building innovative and engaging advertising products familiar to our community.

AR Ads: Advertising through Snap’s AR tools unlocks the ability to reach a unique audience in a highly differentiated ~~way. Ads can be served as Sponsored Lenses or Sponsored Filters.~~way through AR Lenses. AR Lenses are designed through our camera to take advantage of the reach and scale of our augmented reality platform to create visually engaging 3D experiences, including the ability to ~~sample~~visualize and try on products such as beauty, apparel, accessories, and footwear. ~~Filters are entertaining, artistic overlays that appear after you take a Snap. These~~AR Lenses ~~and Filters~~ can be memorialized on Snapchat, through Public Profiles that aggregate content ~~filters,~~ and lenses in a single, easy to find place.

Snap Ads: We let advertisers tell their stories the same way our users do, using full screen videos with sound. These also allow advertisers to integrate additional experiences and actions directly within these advertisements, including watching a long-form video, visiting a website, or installing an app. Snap Ads include the following:

•

~~Single Image or Video Ads: These are full screen ads that are skippable, and can contain an attachment to enable Snapchatters to swipe up and take action.~~

•Single Image or Video Ads: These are full screen ads that are skippable, and can contain an attachment to enable Snapchatters to swipe up and take action. •

~~Story Ads: Story Ads are branded tiles that live within the Discover section of the Stories tab that can be either video ads or a series of 3 to 20 images.~~

•Story Ads: Story Ads are branded tiles that live within the Discover section of the Stories tab that can be either video ads or a series of 3 to 20 images. •

~~Collection Ads: Collection Ads feature four tappable tiles to showcase multiple products, giving Snapchatters a frictionless way to browse and buy.~~

•Collection Ads: Collection Ads feature four tappable tiles to showcase multiple products, giving Snapchatters a frictionless way to browse and buy. •

~~Dynamic Ads: Dynamic ads leverage our machine learning algorithm to match a product catalog to serve the right ad to the right Snapchatter at the right time.~~

•Dynamic Ads: Dynamic ads leverage our machine learning algorithm to match a product catalog to serve the right ad to the right Snapchatter at the right time. •

~~Commercials: Commercials are non-skippable for six seconds, but can last up to three minutes. These ads appear within Snapchat’s curated content.~~

•Commercials: Commercials are non-skippable for six seconds, but can last up to three minutes. These ads appear within Snapchat’s curated content.

Campaign Management and Delivery: We aim to continually improve the way these ad formats are purchased and delivered. We have invested heavily to build our self-serve advertising platform, which provides automated, sophisticated, and scalable ad buying and campaign management.

We offer the ability to bid for advertisements that are designated to drive Snapchatters to: visit a website, make a purchase, visit a local business, call or text a business, watch a story or video, download an app, or return to an app, among others. Additionally, our delivery framework continues to optimize relevance of ads across the entire platform by determining the best ad to show to any given user based on their real-time and historical attributes and activity. This decreases the number of wasted impressions while improving the effectiveness of the ads that are shown to our community. This helps advertisers increase their return on investment by providing more refined targeting, the ability to test and learn with different creatives or campaign attributes in real time, and the dynamics of our self-serve pricing.

Measuring Advertising Effectiveness: We offer first-party measurement solutions and we support our advertising partners preferred third-party measurement solutions to provide a vast array of analytics on campaign attributes like reach, frequency, demographics, and viewability; changes in perceptions like brand favorability or purchase intent; and lifts in actual behavior like purchases, foot traffic, app installs, and online purchases.

Technology

Our research and development efforts focus on product development, advertising technology, and large-scale infrastructure.

Product Development: We work relentlessly and invest ~~heavily~~deliberately to create and improve products for our community and our partners. We develop a wide range of products related to visual ~~communication~~messaging and storytelling that are powered by a variety of new technologies.

Advertising Technology: We constantly develop and expand our advertising products and technology. In an effort to provide a strong and scalable return on investment to our advertisers, our advertising technology roadmap centers around improving our delivery framework, measurement capabilities, and self-serve tools.

Large-scale Infrastructure: We spend considerable resources and investment on the underlying architecture that powers our products, such as optimizing the delivery of billions of videos to hundreds of millions of people around the world every day. We currently partner with third party providers to support the infrastructure for our growing needs. These partnerships have allowed us to scale quickly without upfront physical infrastructure costs, allowing us to focus our efforts on product innovation.

Employees and Culture

We seek to be a force for good through our products, our work to strengthen our communities, our efforts to make a positive impact on the planet, and our inclusive workplace.

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Supporting Our Team: Our values at Snap are being kind, smart, and creative, and we put those values into action through how we support our team and how our team supports one another. Council, which is a practice of active listening that promotes open-mindedness and cultivates empathy and compassion among participants, helps us build and sustain a community steeped in integrity, connection, collaboration, creativity, and kindness. Our talent development programs seek to unlock potential by helping team members advance, learn, and grow in a fair and equitable way at Snap. We focus on the health and well-being of our employees through programs and benefits that support their physical, emotional, and financial fitness. To attract and retain the best talent, we aim to offer challenging work in an environment that enables our employees to have a direct meaningful contribution to new and exciting projects. Underlying these values is our commitment to ethical conduct where we work to instill in our team that acting with integrity means being your whole self, being honest, and doing the right thing.

Diversity, Equity, and Inclusion: Snap has long supported a Diversity, Equity and Inclusion, or DEI, ~~program,~~initiatives, and we have made progress on a number of fronts, including diversifying our board of directors and executive leadership, introducing new accountability around DEI outcomes, ~~rolling out~~maintaining an allyship program to inspire a more inclusive culture, and enhancing our recruiting process to continue driving diverse hiring. To aid in our mission, we publish a Diversity Annual Report that discusses our goals with respect to diversity, equity, and inclusion efforts. This report outlines our beliefs around the idea that an inclusive workplace and inclusive products are central to achieving that purpose. This report is excerpted in our broader CitizenSnap Report that details the work we’re doing to support our communities, our planet, and our team, and is available on our website at www.snap.com.

Human Capital: As part of our human capital resource objectives, we seek to recruit, retain, and incentivize our highly talented existing and future employees. We believe that creating an inclusive environment where team members can grow, develop, and be their true selves is critical to attracting and retaining talent. Our compensation philosophies also align to that belief.

Our compensation philosophy is based around building a culture of ownership and high performance by putting both impact and our values at the center of our performance feedback process and pay outcomes. We utilize equity as part of our compensation practices to drive a long-term orientation and have committed to paying a minimum living wage for all employees globally.

As of December 31, ~~2021,~~2023, we had ~~approximately 5,661~~5,289 full-time employees, of whom approximately 54% are in engineering roles involved in the design, development, support, and manufacture of new and existing products and processes.

Climate Change: ~~We are deepening our~~Our commitment to ~~help combat~~combating climate ~~change.~~change remains unchanged. In 2021, we adopted science-based emissions reduction targets approved by the Science Based Targets Initiative. ~~We became historically carbon neutral~~Additionally, in 2021, ~~by purchasing offsets to balance emissions attributable to Snap~~we achieved carbon neutrality from our founding in 2011 through 2020. In 2023 and 2022, we maintained our carbon-neutral status by purchasing offsets to emissions attributable to Snap as of December 31, ~~2020.~~2022 and 2021, respectively. We ~~also~~remain committed to achieve net negative carbon emissions by 2030. In 2023 and 2022, we purchased renewable energy certificates ~~in 2021 sufficient to cover~~covering all ~~of the~~ electricity consumed in our ~~U.S.~~global operations for the ~~year~~years ended December 31, ~~2020.~~2022 and 2021, respectively.

Our Commitment to Privacy

Our approach to privacy is simple: Be upfront, offer choices, and never forget that our community comes first.

We built Snapchat as an antidote to the context-less communication that has plagued “social media.” Not so long ago, a conversation among friends would be just that: a private communication in which you knew exactly who you were talking to, what you were talking about, and whether what you were saying was being memorialized for eternity. Somewhere along the way, social media—by prioritizing virality and permanence—sapped conversations of this valuable context and choice. When we began to communicate online, we lost some of what made communication great: spontaneity, emotion, honesty—the full range of human expression that makes us human in the first place.

We don’t think digital communication has to be this way. That’s why choice matters. We build products and services that emphasize the context of a conversation—who, when, what, and where something is being said. If you don’t have the autonomy to shape the context of a conversation, the conversation will simply be shaped by the permanent feeds that homogenize online conversations.

When you read our Privacy Policy, we hope that you’ll notice how much we care about the integrity of personal communication. For starters, we’ve written our Privacy Policy in plain language because we think it’s important that everyone understands exactly how we handle their information. Otherwise, it’s hard to make informed choices about how you communicate. We’ve also created a robust Safety and Privacy ~~Center~~Hub where we show that context and choice are more than talking points. There, we point out the many ways that users can control who sees their Snaps and Stories, and explain how long content will remain on our servers, how users can manage the information that we do have about them, and much more. This is where you’ll also find our Transparency Report in which we provide insight into these efforts and visibility into the nature and volume of content reported on our platform.

We also understand that privacy policies—no matter how ambitious—are only as good as the people and practices behind those policies. When someone trusts us to transmit or store their information, we know we have a responsibility to protect that information and we work hard to keep it secure. New features go through an intense privacy-review process—we debate pros and cons, and we work hard to build products we’re proud of and that we’ll want to use. We use Snapchat constantly, both at work and in our personal lives, and we handle user information with the same care that we want for our family, our friends, and ourselves.

We compete with other companies in every aspect of our business, particularly with companies that focus on mobile engagement and advertising. Many of these companies, such as Alphabet (including Google and YouTube), Apple, ByteDance (including TikTok), Meta (including Facebook, Instagram, Threads, and WhatsApp), Pinterest, and ~~Twitter,~~X (formerly Twitter), may have greater financial and human resources and, in some cases, larger user bases. Given the breadth of our product offerings, we also compete with

companies that develop products or otherwise operate in the mobile, camera, communication, content, and advertising industries that offer, or will offer, products and services that may compete with Snapchat features or offerings. Our competitors span from internet technology companies and digital platforms, to traditional companies in print, radio, and television sectors to underlying technologies like default smartphone cameras and messaging. Additionally, our competition for engagement varies by region. For instance, we face competition from companies like Kakao, LINE, Naver (including Snow), and Tencent in Asia.

We compete to attract and retain our users’ attention, both in terms of reach and engagement. Since our products and those of our competitors are typically free, we compete based on our brand and the quality and nature of our product offerings rather than on price. As such, we invest heavily in constantly improving and expanding our product lines.

We also compete with other companies to attract and retain partners and advertisers, which depends primarily on our reach and ability to deliver a strong return on investment.

Finally, we compete to attract and retain highly talented individuals, including software engineers, designers, and product managers. In addition to providing competitive compensation packages, we compete for talent by fostering a culture of working hard to create great products and experiences and allowing our employees to have a direct meaningful contribution to new and exciting projects.

Seasonality in Our Business

We have historically seen seasonality in our business. Overall advertising spend tends to be strongest in the fourth quarter of the calendar year, and we have observed a similar pattern in our historical revenue. We have also experienced seasonality in our user engagement, generally seeing lower engagement during summer months and higher engagement in December.

Intellectual Property

Our success depends in part on our ability to protect our intellectual property and proprietary technologies. To protect our proprietary rights, we rely on a combination of intellectual property rights in the United States and other jurisdictions, including patents, trademarks, copyrights, trade secret laws, license agreements, internal procedures, and contractual provisions. We also enter into confidentiality and invention assignment agreements with our employees and contractors and sign confidentiality agreements with third parties. Our internal controls are designed to restrict access to proprietary technology.

As of December 31, ~~2021,~~2023, we had approximately ~~1,524~~3,174 issued patents and approximately ~~2,223~~3,111 filed patent applications in the United States and foreign countries relating to our camera platform and other technologies. Our issued patents will expire between ~~2022~~2024 and ~~2046.~~2047. We may not be able to obtain protection for our intellectual property, and our existing and future patents, trademarks, and other intellectual property rights may not provide us with competitive advantages or distinguish our products and services from those of our competitors.

We license content, trademarks, technology, and other intellectual property from our partners, and rely on our license agreements with those partners to use the intellectual property. We also enter into licensing agreements with third parties to receive rights to patents and other know-how. Third parties may assert claims related to intellectual property rights against our partners or us.

Other companies and “non-practicing entities” that own patents, copyrights, trademarks, trade secrets, and other intellectual property rights related to the mobile, camera, communication, content, internet, and other technology-related industries frequently enter into litigation based on allegations of infringement, misappropriation, and other violations of intellectual property or other rights. As our business continues to grow and competition increases, we will likely face more claims related to intellectual property and litigation matters.

Government Regulation

We are subject to many federal, state, local, and foreign laws and regulations, including those related to privacy, rights of publicity, data protection, content regulation, intellectual property, health and safety, competition, protection of minors, consumer protection, employment, money transmission, import and export restrictions, gift cards, electronic funds transfers, anti-money laundering, advertising, algorithms, encryption, and taxation. These laws and regulations are constantly evolving and may be interpreted, applied, created, or amended in a manner that could harm our business. Compliance with these laws

and regulations has not had, and is not expected to have, a material effect on our capital expenditures, results of operations, and competitive position as compared to prior periods, and we do not currently anticipate material capital expenditures for environmental control facilities.

In December 2014, the Federal Trade Commission resolved an investigation into some of our early practices by handing down a final order. That order requires, among other things, that we establish a robust privacy program to govern how we treat user data. During the 20-year lifespan of the order, we must complete biennial independent privacy audits. In June 2014, we entered into a 10-year assurance of discontinuance with the Attorney General of Maryland implementing similar practices, including measures to prevent minors from creating accounts and providing annual compliance reports. Violating existing or future regulatory orders or consent decrees could subject us to substantial monetary fines and other penalties that could negatively affect our financial condition and results of operations.

Furthermore, foreign data protection, privacy, consumer protection, content regulation, and other laws and regulations are often more restrictive than those in the United States. It is possible that certain governments may seek to block or limit our products or otherwise impose other restrictions that may affect the accessibility or usability of any or all our products for an extended period of time or indefinitely. Not all of our products are available in all locations and may not be due to such laws and regulations. Our public policy team monitors legal and regulatory developments in the United States, as well as many foreign countries, and communicates with policymakers and regulators in the United States and internationally.

~~Corporate Information~~

We were formed as Future Freshman, LLC, a California limited liability company, in 2010. We changed our name to Toyopa Group, LLC in 2011, incorporated as Snapchat, Inc., a Delaware corporation, in 2012, and changed our name to Snap Inc. in 2016. We completed our initial public offering in March 2017 and our Class A common stock is listed on the New York Stock Exchange, or NYSE, under the symbol “SNAP.”

Our principal executive offices are located at 3000 31st Street, Santa Monica, California 90405, and our telephone number is (310) 399-3339. Snap Inc., “Snapchat,” and our other registered and common-law trade names, trademarks, and service marks appearing in this Annual Report on Form 10-K are property of Snap Inc. or our subsidiaries.

Information about Segment and Geographic Revenue

Information about segment and geographic revenue is set forth in Notes 1 and 2 of the notes to our consolidated financial statements included in “Financial Statements and Supplementary Data” ofin this Annual Report on Form 10-K.

Available Information

Our website address is www.snap.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act are filed with the SEC. Such reports and other information filed or furnished by us with the SEC are available free of charge on our website at investor.snap.com when such reports are available on the SEC’s website. We use our website, including investor.snap.com, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

Information contained in, or accessible through, the websites referred to in this Annual Report on Form 10-K is not incorporated into this filing. Further, our references to website addresses are only as inactive textual references.

Item 1A. Risk ~~Factors~~

Factors.

You should carefully consider the risks and uncertainties described below, together with all the other information in this Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes. If any of the following risks actually occurs ~~our business could be seriously harmed. Unless otherwise indicated, references to our business being seriously harmed~~(or if any of those discussed elsewhere in ~~these risk factors will include harm to~~this Annual Report on Form 10-K occurs), our business, reputation, financial condition, results of operations, revenue, and future ~~prospects.~~prospects could be seriously harmed. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. Unless otherwise indicated, references to our business being seriously harmed in these risk factors will include harm to our business, reputation, financial condition, results of operations, revenue, and future prospects. In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment..

Risks Related to Our Business and Industry

Our ecosystem of users, advertisers, and partners depends on the engagement of our user base. ~~We have seen the~~Our user base growth rate ~~of our user base decline~~has declined in the past and it may do so again in the future. If we fail to retain current users or add new users, or if our users engage less with Snapchat, our business would be seriously harmed.

We had ~~319~~414 million daily active users, or DAUs, on average in the quarter ended December 31, ~~2021.~~2023. We view DAUs as a critical measure of our user engagement, and adding, maintaining, and engaging DAUs have been and will continue to be necessary. Our DAUs and DAU growth rate have declined in the past and they may decline in the future due to various factors, including as the size of our active user base increases, as we achieve higher market penetration rates, as we face continued competition for our users and their time, or if there are performance issues with our ~~application. For example, in 2018, we believe our DAUs declined primarily due to changes in the design of our application and continued performance issues with the Android version of our application.~~service. In addition, as we achieve maximum market penetration rates among younger users in developed markets, future growth in DAUs will need to come from older users in those markets or from developing markets, ~~or users with Android operating systems,~~ which may not be possible or may be more difficult, expensive, or time-consuming for us to achieve. While we may experience periods when our DAUs increase due to products and services with short-term popularity, ~~or due to a lack of other events that compete for our users’ attention,~~ we may not always be able to attract new users, retain existing users, or maintain or increase the frequency and duration of their engagement if current or potential new users do not perceive our products to be fun, engaging, ~~and~~or useful. In addition, because our products typically require high bandwidth data capabilities ~~in order~~ for users to benefit from all of the features and capabilities of our application, many of our users live in countries with high-end mobile device penetration and high bandwidth capacity cellular networks with large coverage areas. We therefore do not expect to experience rapid user growth or engagement in regions with either low smartphone penetration or a lack of well-established and high bandwidth capacity cellular networks. IfAs our DAU growth rate ~~slows~~continues to slow or if the number of DAUs becomes stagnant, or we have a decline in DAUs, our financial performance will increasingly depend on our ability to elevate user activity or increase the monetization of our users.

Snapchat is free and easy to join, the barrier to entry for new entrants in our business is low, and the switching costs to another platform are also low. Moreover, the majority of our users are 18-34 years old. This demographic may be less brand loyal and more likely to follow trends, including viral trends, than other demographics. These factors may lead users to switch to another product, which would negatively affect our user retention, growth, and engagement. Snapchat also may not be able to penetrate other demographics in a meaningful manner. Falling user retention, growth, or engagement could make Snapchat less attractive to advertisers and partners, which may seriously harm our business. In addition, we continue to compete with other companies to attract and retain our users’ attention. 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. This calculation may mask any individual days or months within the quarter that are significantly higher or lower than the quarterly average. There are many factors that could negatively affect user retention, growth, and engagement, including if:

●

~~users engage more with competing products instead of ours;~~

●•users engage more with competing products instead of ours;

~~our competitors continue to mimic our products or improve on them, which could harm our user engagement and growth;~~

●•our competitors continue to mimic our products or improve on them;

~~we fail to introduce new and exciting products and services or those we introduce or modify are poorly received;~~

●•we fail to introduce new and exciting products and services or those we introduce or modify are poorly received;

~~our products fail to operate effectively on the iOS or Android mobile operating systems;~~

●•our products fail to operate effectively or compatibly on the iOS or Android mobile operating systems;

~~we are unable to continue to develop products that work with a variety of mobile operating systems, networks, and smartphones;~~

•we are unable to continue to develop products that work with a variety of mobile operating systems, networks, and smartphones;

•we do not provide a compelling user experience because of the decisions we make regarding the type and frequency of advertisements that we display or the structure and design of our products;

●

~~we do not provide a compelling user experience because of the decisions we make regarding the type and frequency of advertisements that we display or the structure and design of our products;~~

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•we are unable to combat bad actors, spam, or other hostile or inappropriate usage on our products;

●

~~there are changes in user sentiment about the quality or usefulness of our products in the short term, long term,~~•there are changes in user sentiment about the quality or usefulness of our products in the short-term, long-term, or both;

●•there are concerns about the privacy implications, safety, or security of our products and our processing of personal data;

~~there are concerns about the privacy implications, safety, or security of our products;~~

●

•our content partners ~~who provide content to Snapchat~~ do not create content that is engaging, useful, or relevant to users;

●

•our content partners ~~who provide content to Snapchat~~ decide not to renew agreements or devote the resources to create engaging content, or do not provide content exclusively to us;

●

•advertisers and partners display ads that are untrue, offensive, or otherwise fail to follow our guidelines;

●

•our products are subject to increased regulatory scrutiny or approvals, including from foreign privacy regulators, or there are changes in our products that are mandated or prompted by legislation, regulatory authorities, executive actions, or litigation, including settlements or consent decrees, that adversely affect the user experience;

●•technical or other problems frustrate the user experience or negatively impact users' trust in our service, including by providers that host our platforms, particularly if those problems prevent us from delivering our product experience in a fast and reliable manner, or cyberattacks, breaches, or other security incidents that compromise our sensitive user data;

technical or other problems frustrate the user experience, including by providers that host our platforms, particularly if those problems prevent us from delivering our product experience in a fast and reliable manner;

●

•we fail to provide adequate service to users, advertisers, or partners;

●

•we do not provide a compelling user experience to entice users to use the Snapchat application on a daily basis, or our users don’t have the ability to make new friends to maximize the user experience;

●

•we, our partners, or other companies in our industry segment are the subject of adverse media reports or other negative publicity, some of which may be inaccurate or include confidential information that we are unable to correct or retract;

●

•we do not maintain our brand image or our reputation is damaged; or

●

•our current or future products reduce user activity on Snapchat by making it easier for our users to interact directly with our partners.

Any decrease to user retention, growth, or engagement could render our products less attractive to users, advertisers, or partners, and would seriously harm our business.

We generate substantially all of our revenue from advertising. The failure to attract new advertisers, the loss of advertisers, or a reduction in how much they spend could seriously harm our business.

Substantially all of our revenue is generated from third parties advertising on Snapchat. For the years ended December 31, 2023, 2022, and 2021, advertising revenue accounted for approximately 96%, 99%, and 99% of our total revenue, respectively. Even though we have introduced other revenue streams, including a subscription model for one of our products, we still expect this trend to continue for the foreseeable future. Most advertisers do not have long-term advertising commitments with us, and our efforts to establish long-term commitments may not succeed.

Our advertising customers range from small businesses to well-known brands, and may include advertising resellers. Many of our customers spend a relatively small portion of their overall advertising budget with us, but some customers have devoted meaningful budgets that contribute more significantly to our total revenue. In addition, advertisers may view some of our advertising solutions as experimental and unproven, or prefer certain of our products over others. Advertisers, including our customers who have devoted meaningful advertising budgets to our product, will not continue to do business with us if we do not deliver advertisements in an effective manner, or if they do not believe that their investment in advertising with us will generate a competitive return relative to other alternatives. As our business continues to develop, there may be new or existing customers, including from different geographic regions, that contribute more significantly to our total revenue, and a loss of such customers or a significant reduction in how much they spend with us could adversely impact our business. Any economic or political instability, whether as a result of the macroeconomic climate, war or other armed conflict, terrorism, or otherwise, in a specific country or region, may negatively impact the global or local economy, advertising ecosystem, our customers and their budgets with us, or our ability to forecast our advertising revenue, and could seriously harm our business.

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Moreover, we rely heavily on our ability to collect and disclose data and metrics to our customers so we can attract new customers and retain existing customers. Any restriction, whether by law, regulation, policy, or other reason, on our ability to collect and disclose data and metrics that our customers find useful would impede our ability to attract and retain advertisers. Regulators in many of the countries in which we operate or have users are increasingly scrutinizing and regulating the collection, use, and sharing of personal data related to advertising, which could materially impact our revenue and seriously harm our business. Many of these laws and regulations expand the rights of individuals to control how their personal data is collected and processed, and place restrictions on the use of personal data of teens. The processing of personal data for personalized advertising continues to be under increased scrutiny from regulators, which includes ongoing regulatory action against large technology companies like ours, the outcomes of which may be uncertain and subject to appeal. These laws may prohibit us and our customers from targeting advertising to teens based on the profiling of personal data. Other legislative proposals and present laws and regulations may also apply to our or our advertisers’ activities and require significant operational changes to our business. These laws and regulations could have a material impact on the development and deployment of AI and machine learning in the context of our targeted advertising activities. Other laws to which we are or may become subject further regulate behavioral, interest-based, or targeted advertising, making certain online advertising activities more difficult and subject to additional scrutiny. These laws grant users the right to opt-out of sharing of their personal data for certain advertising purposes in exchange for money or other valuable consideration, or require parental consent to be obtained for the processing of personal data of users under a certain age and restrict tracking and use of teens’ data, including for advertising. Regulators have issued significant monetary fines in certain circumstances where the regulators alleged that appropriate consent was not obtained in connection with targeted advertising activities. In addition, legislative proposals and present laws and regulations in countries where we operate regulate the use of cookies and other tracking technologies, electronic communications, and marketing.

Furthermore, in April 2021, Apple issued an iOS update that imposed heightened restrictions on our access and use of user data by allowing users to more easily opt-out of tracking of activity across devices. Additionally, Google announced that it will implement similar changes with respect to its Android operating system, and major web browsers, like Firefox, Safari, and Chrome, have or plan to make similar changes as well. The implemented changes have had, and the announced or planned changes likely will have, an adverse effect on our targeting, measurement, and optimization capabilities, and in turn our ability to target advertisements and measure the effectiveness of advertisements on our services. This has resulted in, and in the future is likely to continue to result in, reduced demand and pricing for our advertising products and could seriously harm our business. The longer-term impact of these changes on the overall mobile advertising ecosystem, our competitors, our business, and the developers, partners, and advertisers within our community remains uncertain, and depending on how we, our competitors, and the overall mobile advertising ecosystem adjusts, and how our partners, advertisers, and users respond, our business could be seriously harmed. Any alternative solutions we implement are subject to rules and standards set by the owners of such mobile operating systems which may be unclear, change, or be interpreted in a manner adverse to us and require us to halt or change our solutions, any of which could seriously harm our business. In addition, if we are unable to mitigate or respond to these and future developments, and alternative solutions do not become widely adopted by our advertisers, then our targeting, measurement, and optimization capabilities will be materially and adversely affected, which would in turn continue to negatively impact our advertising revenue. Our advertising revenue could also be seriously harmed by many other factors, including:

•diminished or stagnant growth, or a decline, in the total or regional number of DAUs on Snapchat;

•our inability to deliver advertisements to all of our users due to legal restrictions or hardware, software, or network limitations;

•a decrease in the amount of time spent on Snapchat, a decrease in the amount of content that our users share, or decreases in usage of our Camera, Visual Messaging, Map, Stories, and Spotlight platforms;

•our inability to create new products that sustain or increase the value of our advertisements;

•changes in our user demographics that make us less attractive to advertisers;

•lack of ad creative availability by our advertising partners;

•a decline in our available content, including if our content partners do not renew agreements, devote the resources to create engaging content, or provide content exclusively to us;

•decreases in the perceived quantity, quality, usefulness, or relevance of the content provided by us, our community, or partners;

•increases in resistance by users to our collecting, using, and sharing their personal data for advertising-related purposes;

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•changes in our analytics and measurement solutions, including what we are permitted to collect and disclose under the terms of Apple’s and Google’s mobile operating systems, that demonstrate the value of our advertisements and other commercial content;

•competitive developments or advertiser perception of the value of our products that change the rates we can charge for advertising or the volume of advertising on Snapchat;

•product changes or advertising inventory management decisions we may make that change the type, size, frequency, or effectiveness of advertisements displayed on Snapchat or the method used by advertisers to purchase advertisements;

•adverse legal developments relating to advertising, including changes mandated or prompted by legislation, regulation, executive actions, or litigation regarding the collection, use, and sharing of personal data for certain advertising-related purposes;

•adverse media reports or other negative publicity involving us, our founders, our partners, or other companies in our industry;

•advertiser or user perception that content published by us, our users, or our partners is objectionable;

•the degree to which users skip advertisements and therefore diminish the value of those advertisements to advertisers;

•changes in the way advertising is priced or its effectiveness is measured;

•our inability, or perceived inability, to achieve an advertiser’s intended performance metric, measure the effectiveness of our advertising, or target the appropriate audience for advertisements;

•our inability to access, collect, and disclose user’s personal data, including advertising or similar deterministic identifiers that new and existing advertisers may find useful;

•difficulty and frustration from advertisers who may need to reformat or change their advertisements to comply with our guidelines;

•volatility in the equity markets, which may reduce our advertisers’ capacity or desire for aggressive advertising spending towards growth; and

•the political, economic, and macroeconomic climate and the status of the advertising industry in general, including impacts related to labor shortages and disruptions, supply chain disruptions, banking instability, inflation, and as a result of war, terrorism, or armed conflict.

Moreover, individuals are also becoming increasingly aware of and resistant to the collection, use, and sharing of personal data in connection with advertising. Individuals are becoming more aware of options and certain rights related to consent and other options to opt-out of such data processing, including through media attention about privacy and data protection. Some users have opted out of allowing Snap to combine certain data from third-party apps and websites with certain data from Snapchat for advertising purposes, which has negatively impacted our ability to collect certain user data and our advertising partners’ ability to deliver relevant content, all of which could negatively impact our business

These and other factors could reduce demand for our advertising products, which may lower the prices we receive, or cause advertisers to stop advertising with us altogether. Either of these would seriously harm our business.

Snapchat depends on effectively operating with mobile operating systems, hardware, networks, regulations, and standards that we do not control. Changes in our products or to those mobile operating systems, hardware, networks, regulations, or standards may seriously harm our user retention, growth, and engagement.

Because Snapchat is used primarily on mobile devices, the application must remain interoperable with popular mobile operating systems, primarily Android and iOS, application stores, and related hardware, including mobile-device cameras. The owners and operators of such mobile operating systems and application stores, primarily Google and Apple, each have approval authority over whether to feature our core products on their application stores and ~~provide~~make available to consumers ~~with~~third-party products that compete with ~~ours, and~~ours. Furthermore, there is no guarantee that any approval previously provided by such owner or operator will not be rescinded in the future. Additionally, mobile devices and mobile-device cameras are manufactured by a wide array of companies. Those companies have no obligation to test the interoperability of new mobile devices, mobile-device cameras, or related devices with Snapchat, and may produce new products that are incompatible with or not optimal for Snapchat. We have no control over these mobile operating systems, application stores,

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or hardware, and any changes ~~to these systems or hardware that~~may degrade our products’ functionality, or give preferential treatment to competitive ~~products, or actions~~products. Actions by government authorities ~~that~~may also impact our access to these systems or hardware and could seriously harm Snapchat ~~usage on mobile devices.~~usage. Our competitors that control the mobile operating systems and related hardware ~~our application runs on~~ could make interoperability of our products ~~with those mobile operating systems~~ more difficult or display their competitive offerings more prominently than ours. Additionally, our competitors that control the standards for the application stores ~~for their operating systems~~ could make Snapchat, or certain features of Snapchat, inaccessible for a potentially significant period of ~~time.~~time or require us to make changes to maintain access. We plan to continue to introduce new products and features regularly, including some features that may only work on the latest systems and hardware, and have experienced that it takes significant time to optimize ~~such~~new products and features to function with ~~these~~the variety of existing mobile operating systems, hardware, and standards, impacting the popularity of such products, and we expect this trend to continue.

Moreover, our products require high-bandwidth data capabilities. If the costs of data usage increase or access to cellular networks is limited, our user retention, growth, and engagement may be seriously harmed. Additionally, to deliver high-quality video and other content over mobile cellular networks, our products must work well with a range of mobile technologies, systems, networks, regulations, and standards that we do not ~~control. In particular, any~~control and which may be subject to future changes to the iOS or Android operating systems or application stores may impact the accessibility, speed, functionality, and other performance aspects of our products and features, and result in issues in the future from time to time.changes. In addition, the proposal or adoption of any laws, regulations, or initiatives that adversely affect the growth, popularity, or use of the internet, including laws governing internet neutrality, could decrease the demand for our products, ~~and increase our cost of doing business.~~

For example, in January 2018, the Federal Communications Commission, or FCC, issued an order that repealed the “open internet rules,” which prohibit mobile providers in the United States from impeding access to most content, or otherwise unfairly discriminating against content providers like us and also prohibit mobile providers from entering into arrangements with specific content providers for faster or better access over their data networks. The FCC order repealing the open internet rules went into effect in June 2018. The core aspects of that order have been upheldincluding by the United States Court of Appeals for the District of Columbia Circuit, but a number of states have adopted or are considering legislation or executive actions to impose state-level open internet rules, and those actions have been or can be expected to be challenged in court. More recently, U.S. President Biden issued an executive order encouraging the FCC to restore the open internet rules. We cannot predict whether the FCC order or state initiatives regulating providers will ultimately be upheld, modified, overturned, or vacated by further legal action, federal legislation, or the FCC, or the degree to which such outcomes would adversely affect our business, if at all. Similarly, the European Union requires equal access to internet content, but as part of certain initiatives and reviews (including recent modifications to the European Electronic Communications Code and proposals to expand the scope and nature of the EU Network and Information Security Directive), the European Union may impose additional obligations, including network security requirements, reporting and transparency obligations, disability access, or 911-like obligations on certain “over-the-top” services or those that qualify as “electronic communication services.” If we are considered to be in the scope of such service definition, our costs of doing business could increase and our business could be seriously harmed. The European Union’s highest court has also issued rulings that may limit our ability to engage in certain practices, such as “zero rating.” If the FCC’s repeal of the open internet rules is maintained, state initiatives are modified, overturned, or vacated, or the European Union modifies these open internet rules or limits commercial practices, mobile and internet providers may be able to limit our users’ ability to access Snapchat or make Snapchat a less attractive alternative to our competitors’ applications. Were that to happen,impairing our ability to retain existing users or attract new users, ~~may be impaired,~~make Snapchat a less attractive alternative to our competitors' applications, and increase our ~~business would be seriously harmed.~~

cost of doing business.

We may not successfully cultivate relationships with key industry participants or develop products that operate effectively with these technologies, systems, networks, regulations, or standards. If it becomes more difficult for our users to access and use Snapchat, ~~on their mobile devices,~~ if our users choose not to access or use Snapchat, ~~on their mobile devices,~~ or if our users choose to use ~~mobile~~ products that do not offer access to Snapchat, our business and user retention, growth, and engagement could be seriously harmed.

We rely on Google Cloud and Amazon Web Services, or AWS, for the vast majority of our computing, storage, bandwidth, and other services. Any disruption of or interference with our use of either platform would negatively affect our operations and seriously harm our business.

Google and Amazon provide distributed computing infrastructure platforms for business operations, ~~or what is~~ commonly referred to as a “cloud” computing service. We currently run the vast majority of our computing on Google Cloud and AWS and have built our software and computer systems to use computing, storage capabilities, bandwidth, and other services provided by Google and ~~AWS, and our~~AWS. Our systems are not fully redundant on the two platforms. Any transition of the cloud services currently provided by either Google Cloud or AWS to the other platform or to another cloud provider would be difficult to implement and would cause us to incur significant time and expense. Given this, any significant disruption of or interference with ~~our use of~~ Google Cloud or AWS, whether temporary, regular, or prolonged, would negatively impact our operations and our business would be seriously harmed. If our users or partners are not able to access Snapchat or specific Snapchat features, or encounter difficulties in doing so, due to issues or disruptions with Google Cloud or AWS, we may lose users, partners, or advertising revenue. The level of service provided by Google Cloud and AWS or similar providers may also impact our users’, advertisers’, and partners’ usage of and satisfaction with Snapchat and could seriously harm our business and ~~reputation. If Google Cloud, AWS, or similar providers experience interruptions in~~reputation if the level of service ~~regularly or for a prolonged basis, or other similar issues, our business would be seriously harmed.~~decreases. Hosting costs also have and will continue to increase as our user base and user engagement grows and may seriously harm our business if we are unable to grow our revenues faster than the cost of utilizing the services of Google Cloud, AWS, or similar providers.

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~~discontinuing or limiting our access to its cloud platform;~~

●•discontinuing or limiting our access to its cloud platform;

~~increasing pricing terms;~~

●•increasing pricing terms;

~~terminating or seeking to terminate our contractual relationship altogether;~~

●•terminating or seeking to terminate our contractual relationship altogether;

~~establishing more favorable relationships or pricing terms with one or more of our competitors; and~~

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•establishing more favorable relationships or pricing terms with one or more of our competitors; or

•modifying or interpreting ~~its terms of service or other policies in a manner that impacts our ability to run our business and operations.~~

If we are unable to protect our intellectual property, the value of our brand and other ~~policies~~intangible assets may be diminished, and our business may be seriously harmed. If we need to license or acquire new intellectual property, we may incur substantial costs.

We aim to protect our confidential proprietary information, in part, by entering into confidentiality agreements and invention assignment agreements with our employees, consultants, advisors, and third parties who access or contribute to our proprietary know-how, information, or technology. We, however, cannot assure you that these agreements will be effective in controlling access to, or preventing unauthorized distribution, use, misuse, misappropriation, reverse engineering, or disclosure of our proprietary information, know-how, and trade secrets. These agreements may be breached, and we may not have adequate remedies for any such breach. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret or know-how can be difficult, expensive, and time-consuming, and the outcome can be unpredictable. Furthermore, these agreements do not prevent our competitors or partners from independently developing offerings that are substantially equivalent or superior to ours.

We also rely on trademark, copyright, patent, trade secret, and domain-name protection laws to protect our proprietary rights. In the United States and internationally, we have filed various applications to protect aspects of our intellectual property, and we currently hold a number of issued patents, trademarks, and copyrights in multiple jurisdictions. In the future, we may acquire additional patents or patent portfolios in the future, which could require significant cash expenditures. However, third parties may knowingly or unknowingly infringe our proprietary rights, third parties may challenge proprietary rights held by us, third parties may design around our proprietary rights or independently develop competing technology, and pending and future trademark, copyright, and patent applications may not be approved. Moreover, we cannot ensure that the claims of any granted patents will be sufficiently broad to protect our technology or platform and provide us with competitive advantages. Additionally, failure to comply with applicable procedural, documentary, fee payment, and other similar requirements could result in abandonment or lapse of the affected patent, trademark, or copyright application or registration.

Moreover, a portion of our intellectual property has been acquired or licensed from one or more third parties. While we have conducted diligence with respect to ~~us,~~such acquisitions and ~~those actions~~licenses, because we did not participate in the development or prosecution of much of the acquired intellectual property, we cannot guarantee that our diligence efforts identified and remedied all issues related to such intellectual property, including potential ownership errors, potential errors during prosecution of such intellectual property, and potential encumbrances that could limit our ability to enforce such intellectual property rights.

Further, the laws of certain foreign countries do not provide the same level of protection of corporate proprietary information and assets such as intellectual property, trade secrets, know-how, and records as the laws of the United States. For instance, the legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection. As a result, we may be ~~unfavorable~~exposed to ~~us. They~~material risks of theft of our proprietary information and other intellectual property, including technical data, manufacturing processes, data sets, or other sensitive information, and we may also ~~alter how~~encounter significant problems in protecting and defending our intellectual property or proprietary rights abroad. In any of these cases, we may be required to expend significant time and expense to prevent infringement or to enforce our rights. Our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights, and, if such defenses, counterclaims, and countersuits are successful, we could lose valuable intellectual property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could impair the functionality of our platform, delay introductions of enhancements to our platform, result in our substituting inferior or more costly technologies into our platform, or harm our reputation and brand. In addition, we may be required to license additional technology from third parties to develop and market new platform features, which may not be on commercially reasonable terms, or at all, and would adversely affect our ability to compete. Although we have taken measures to protect our proprietary rights, there can be no assurance that others will not offer products, brands, content, or concepts that are substantially similar to ours and compete with our business. If we are unable to protect our proprietary rights or prevent unauthorized use or appropriation by third parties, the value of our brand and other intangible assets may be diminished, and competitors may be able to ~~process data on their cloud platforms. If Google or Amazon makes changes or interpretations that are unfavorable to us,~~more effectively mimic our ~~business could be seriously harmed.~~

~~We generate substantially all~~service and methods of ~~our revenue from advertising. The failure to attract new advertisers, the loss~~operations. Any of ~~advertisers, or a reduction in how much they spend~~these events could seriously harm our business.

Substantially all of our revenue is generated from third parties advertising on Snapchat. For the years ended December 31, 2021, 2020, and 2019, advertising revenue accounted for approximately 99%, 99%, and 98% of total revenue, respectively. We expect this trend to continue for the foreseeable future. Although we have and continue to try to establish longer-term advertising commitments with advertisers, most advertisers do not have long-term advertising commitments with us, and our efforts to establish long-term commitments may not succeed.

We are still early in developing our advertising business. Our advertising customers vary from small businesses to well-known brands. Many of our customers only recently started working with our advertising solutions and spend a relatively small portion of their overall advertising budget with us, but some customers have devoted meaningful budgets that contribute to our total revenue. In addition, advertisers may view some of our products as experimental and unproven, or prefer certain of our products over others. Advertisers will not continue to do business with us if we do not deliver advertisements in an effective manner, or if they do not believe that their investment in advertising with us will generate a competitive return relative to other alternatives. As our business continues to develop, including globally, there may be new or existing advertisers or resellers, or advertisers or resellers from different geographic regions that contribute more significantly to our total revenue. Any economic or political instability, whether as a result of the COVID-19 pandemic or otherwise, in a specific country or region may negatively impact the global or local economy, advertising ecosystem, our customers and their budgets with us, or our ability to forecast our advertising revenue, and our business would be seriously harmed.

Moreover, we rely heavily on our ability to collect and disclose data and metrics to our advertisers so we can attract new advertisers and retain existing advertisers. Any restriction, whether by law, regulation, policy, or other reason, on our ability to collect and disclose data and metrics which our advertisers find useful would impede our ability to attract and retain advertisers. For example, the General Data Protection Regulation, or GDPR, in the European Union, which went into effect in May 2018, expanded the rights of individuals to control how their personal data is collected and processed, and placed restrictions on the use of personal data of younger minors. In addition, in the United States, the California Consumer Privacy Act, or CCPA, went into effect in January 2020, and the California Privacy Rights Act of 2020, or CPRA, which replaces the CCPA and goes into effect in January 2023, place additional requirements on the handling of personal data for us, our partners, and our advertisers. The CCPA and CPRA also provide for civil penalties for violations, as well as a private right of action for data breaches, which may increase the likelihood and cost of data breach litigation. The potential effects of this legislation, including any regulations implemented by the legislation, are far-reaching, uncertain, and evolving, and may require us to modify our data processing practices and policies and incur substantial costs and expenses in an effort to comply. Other state, federal, and foreign legislative and regulatory bodies have also implemented or may implement similar legislation regarding the handling of personal data. For example, in the United States, the Commonwealth of Virginia enacted the Consumer Data Protection Act and the State of Colorado enacted the Colorado Privacy Act, both of which take effect January 1, 2023 and may impose obligations similar to or more stringent than those we may face under other data protection laws. Further, changes in the European Union’s Electronic Communications Code, which became effective in December 2020, may result in the expanded applicability of the European Union’s ePrivacy Directive over parts of our services, requiring us to make changes to how we process and store certain types of communications data of users in the European Union, which could have a material impact on the availability of data we rely on to improve and personalize our products and features.

Furthermore, in April 2021 Apple issued an iOS update that imposes heightened restrictions on our access and use of user data. Google has announced that it will implement similar changes with respect to its Android operating system and major web browsers, like Safari and Chrome, may make similar changes as well. These changes have adversely affected our targeting, measurement, and optimization capabilities, and in turn affected our ability to measure the effectiveness of advertisements on our services. This has resulted in, and in the future is likely to continue to result in, reduced demand and pricing for our advertising products and could seriously harm our business. The impact of these changes on the overall mobile advertising ecosystem, our competitors, our business, and the developers, partners, and advertisers within our community is uncertain, and depending on how we, our competitors, and the overall mobile advertising ecosystem adjusts, and how our partners, advertisers, and users respond, our business could be seriously harmed. In addition, if we are unable to mitigate these and future developments, and alternative methods do not become widely adopted by our advertisers, then our targeting, measurement, and optimization capabilities will be materially and adversely affected, which would in turn continue to negatively impact our advertising revenue. Any adverse effects could be particularly material to us because we are still early in building our advertising business. Our advertising revenue could also be seriously harmed by many other factors, including:

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~~a diminished or stagnant growth in the total and regional number of DAUs on Snapchat;~~

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~~our inability to deliver advertisements to all of our users due to hardware, software, or network limitations;~~

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a decrease in the amount of time spent on Snapchat, a decrease in the amount of content that our users share, or decreases in usage of our Camera, Communication, Snap Map, Stories, and Spotlight platforms;

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~~our inability to create new products that sustain or increase the value of our advertisements;~~

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~~changes in our user demographics that make us less attractive to advertisers;~~

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~~lack of ad creative availability by our advertising partners;~~

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~~our partners who provide content to us not renewing agreements or devoting the resources to create engaging content, or not providing content exclusively to us;~~

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~~decreases in the perceived quantity, quality, usefulness, or relevance of the content provided by our users or partners;~~

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changes in our analytics and measurement solutions, including what we are permitted to collect and disclose under the terms of Apple’s and Google’s mobile operating systems, that demonstrate the value of our advertisements and other commercial content;

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~~competitive developments or advertiser perception of the value of our products that change the rates we can charge for advertising or the volume of advertising on Snapchat;~~

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product changes or advertising inventory management decisions we may make that change the type, size, or frequency of advertisements displayed on Snapchat or the method used by advertisers to purchase advertisements;

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~~adverse legal developments relating to advertising, including changes mandated or prompted by legislation, regulation, executive actions, or litigation;~~

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~~adverse media reports or other negative publicity involving us, our founders, our partners, or other companies in our industry segment;~~

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~~advertiser or user perception that content published by us, our users, or our partners is objectionable;~~

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~~the degree to which users skip advertisements and therefore diminish the value of those advertisements to advertisers;~~

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~~changes in the way advertising is priced or its effectiveness is measured;~~

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~~our inability, or perceived inability, to measure the effectiveness of our advertising or target the appropriate audience for advertisements;~~

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~~our inability to collect and disclose data or access a user’s Identifier for Advertising or similar deterministic identifier that new and existing advertisers may find useful;~~

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~~difficulty and frustration from advertisers who may need to reformat or change their advertisements to comply with our guidelines; and~~

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~~the macroeconomic climate and the status of the advertising industry in general, including labor shortages, supply chain disruptions, and inflation.~~

Our two co-founders have control over all stockholder decisions because they control a substantial majority of our voting stock.

Our two co-founders, Evan Spiegel and Robert Murphy, control over 99% of the voting power of our outstanding capital stock as of December 31, ~~2021,~~2023, and Mr. Spiegel alone can exercise voting control over a majority of our

outstanding capital stock. As a result, Mr. Spiegel and Mr. Murphy, or in many instances Mr. Spiegel acting alone, have the ability to control the outcome of all matters submitted to our stockholders for approval, including the election, removal, and replacement of our directors and any merger, consolidation, or sale of all or substantially all of our assets.

If Mr. Spiegel’s or Mr. Murphy’s employment with us is terminated, they will continue to have the ability to exercise the same significant voting power and potentially control the outcome of all matters submitted to our stockholders for approval. Either of our co-founders’ shares of Class C common stock will automatically convert into Class B common stock, on a one-to-one basis, nine months following his death or on the date on which the number of outstanding shares of Class C common stock held by such holder represents less than 30% of the Class C common stock held by such holder on the closing of our IPO, or 32,383,178 shares of Class C common stock. Should either of our co-founders’ Class C common stock be converted to Class B common stock, the remaining co-founder will be able to exercise voting control over our outstanding capital stock. Moreover, Mr. Spiegel and Mr. Murphy have entered into a proxy agreement under which each has granted to the other a voting proxy with respect to all shares of our Class B common stock and Class C common stock that each may beneficially own from time to time or have voting control over. The proxy would become effective on either founder’s death or disability. Accordingly, on the death or incapacity of either Mr. Spiegel or Mr. Murphy, the other could individually control nearly all of the voting power of our outstanding capital stock.

In addition, in October 2016, we issued a dividend of one share of non-voting Class A common stock to all our equity holders, which will prolong our co-founders’ voting control because our co-founders are able to liquidate their holdings of non-voting Class A common stock without diminishing their voting control. Furthermore, in July 2022, our board of directors approved the future declaration and payment of a special dividend of one share of Class A Common stock on each outstanding share of Snap’s common stock, subject to certain triggering conditions. In the future, our board of directors may, from time to time, decide to issue additional special or regular stock dividends in the form of Class A common stock, and if we do so our co-founders’ control could be further prolonged. This concentrated control could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that our other stockholders support. Conversely, this concentrated control could allow our co-founders to consummate such a transaction that our other stockholders do not support. In addition, our co-founders may make long-term strategic investment decisions for the company and take risks that may not be successful and may seriously harm our business.

As our Chief Executive Officer, Mr. Spiegel has control over our day-to-day management and the implementation of major strategic investments of our company, subject to authorization and oversight by our board of directors. As board members and officers, Mr. Spiegel and Mr. Murphy owe a fiduciary duty to our stockholders and must act in good faith in a manner they reasonably believe to be in the best interests of our stockholders. As stockholders, even controlling stockholders, Mr. Spiegel and Mr. Murphy are entitled to vote their shares, and shares over which they have voting control, in their own interests, which may not always be in the interests of our stockholders generally. We have not elected to take advantage of the “controlled company” exemption to the corporate governance rules for companies listed on the New York Stock Exchange, or NYSE.

~~Health epidemics,~~

Macroeconomic uncertainties, including ~~the COVID-19 pandemic,~~labor shortages and disruptions, supply chain disruptions, banking instability, inflation, and recession risks, have ~~had, and could~~ in the ~~future~~past and may continue to adversely impact our business.

Global economic and business activities continue to face widespread macroeconomic uncertainties, including labor shortages and disruptions, supply chain disruptions, banking instability, inflation, and recession risks, which may continue for an extended period, and some of which have ~~an adverse impact on our business, operations, and the markets and communities in which we and our partners, advertisers, and users operate.~~

~~The ongoing global COVID-19 pandemic~~ adversely impacted, and may continue to adversely impact, many aspects of our business.

As some of our advertisers ~~experience~~experienced downturns or uncertainty in their own business operations and revenue, ~~because of the economic effects resulting from the spread of COVID-19 and the emergence of variants,~~ they halted or decreased or may halt, decrease, or continue to decrease, temporarily or permanently, their advertising spending or may focus their advertising spending more on other platforms, all of which may result in decreased advertising revenue. Labor shortages and disruptions, supply chain disruptions, banking instability, and inflation continue to cause logistical challenges, increased input costs, ~~and~~ inventory constraints, and liquidity uncertainty for our advertisers, which in turn may also halt or decrease advertising ~~spending. Furthermore, a portion of our advertising revenue is related to in-person events or activities, such as sporting events, music festivals,~~spending and ~~in-person learning, which were postponed, cancelled, or limited during the COVID-19 pandemic and may continue to be adversely affected. In addition, the unpredictability of the COVID-19 pandemic~~ may make it difficult to forecast our advertising ~~revenue, and although we may benefit in the shorter term from changes in the current advertising landscape, any increases may not be indicative of longer-term trends.~~revenue. Any decline in advertising revenue or the collectability of our receivables could seriously harm our business.

In response to the COVID-19 pandemic, many federal, state, local, and foreign governments put in place, and others in the future may put in place, quarantines, executive actions, shelter-in-place orders, physical distancing requirements, and similar government orders and restrictions in order to control the spread of the disease. Such orders or restrictions, or the perception

interruption in the services provided to us, could lead to a decline in user engagement, which could seriously harm our business.

~~The effects~~

To the extent that macroeconomic uncertainties continue to impact our business, many of the ~~COVID-19 pandemic~~other risks described in these risk factors may be exacerbated.

Exposure to geo-political conflicts and events could put our employees and partners at substantial risk, interrupt our operations, increase costs, create additional regulatory burdens, and have significant negative macroeconomic effects, any of which could seriously harm our business.

Significant geo-political conflicts and events have had, and will likely continue to have, a substantial effect on ~~user engagement or growth are highly uncertain,~~our business and ~~may lead~~operations. We have had, and will likely continue to ~~unpredictable results~~have, team members and their families in impacted regions who face substantial personal risk, unprecedented disruption of their lives, and uncertainty as to the future. We have provided emergency assistance and support to these team members and their families, and we expect to continue this support in the ~~short term~~future. In addition, we have offices, hardware, and ~~long term, including shorter-term increases~~other assets in ~~user engagement or growth~~impacted regions that may ~~not~~ be ~~indicative~~at risk of ~~longer-term trends.~~ ~~As physical distancing requirements~~destruction or theft. We have incurred, and ~~shelter-in-place orders~~will likely continue ~~or are reactivated,~~to incur, costs to support our team members and ~~as fewer in-person activities take place, we may experience short-term~~reorganize our operations to address these ongoing challenges. In addition, our management has spent significant time and ~~long-term disruption~~attention on these and related events. The ongoing disruptions to ~~user behavior~~our team members, our management, and our operations could seriously harm our business.

Generally, during times of war and other major conflicts, we, the third parties on which we rely, and our partners are vulnerable to a heightened risk of cyberattacks, including retaliatory cyberattacks, that could seriously disrupt our business. We have experienced an increase in attempted cyberattacks on our products, systems, and networks, which we believe are related to the conflicts. We may also ~~experience inconsistent~~face retaliatory attacks by governments, entities, or ~~negative engagement as user behavior on~~individuals who do not agree with our public expressions with regards to any conflicts or support for team members. Any such attack could cause disruption to our platform, ~~changes, including changes~~systems, and networks, result in ~~user activity as a result of continued physical distancing requirements and shelter-in-place orders.~~security breaches or data loss, damage our brand, or reduce demand for our services or advertising products. In addition, ~~while~~we may face significant costs (including legal and litigation costs) to prevent, correct, or remediate any such breaches. We may also be forced to expend additional resources monitoring our platform for evidence of disinformation or misuse in connection with the ~~potential impact~~ongoing conflict.

Geo-political conflicts and ~~duration of the COVID-19 pandemic on~~events are inherently unpredictable, evolve quickly, and may have negative long-term impacts. On a macroeconomic level, geo-political conflicts may disrupt trade, intensify problems in the global ~~economy~~supply chain, and ~~our business~~contribute to inflationary pressures. All of these factors may negatively impact the demand for advertising as companies face limited product availability, restricted sales opportunities, and condensed margins. Any pause or reduction in ~~particular may be difficult to assess~~advertising spending in connection with geo-political conflicts or ~~predict, the COVID-19 pandemic has resulted in, and may continue to result in, significant volatility and disruption of global financial markets, reducing our ability to access capital, which~~events could negatively ~~affect~~impact our ~~liquidity in the future.~~

~~The global impact of COVID-19 has~~revenue and continues to rapidly evolve, and we will continue to monitor the situation closely. While there have been vaccines developed and administered, and the spread of COVID-19 may eventually be contained or mitigated, we cannot predict the timing of the vaccine adoption or roll-out globally or the efficacy of such vaccines, including against variants that emerge, and we do not yet know how businesses, advertisers, orharm our partners will operate in a post-COVID-19 environment. Our users may change how they use our products and services in an environment where the perceived risk of COVID-19 and regulations surrounding it have changed. There may be additional costs or impacts to our business and operations, including when we are able to return to our offices and resume in-person activities, travel, and events. In addition, there is no guarantee that a future outbreak of this or any other widespread epidemics will not occur, or if or when the global economy will fully recover. The ultimate impact of the COVID-19 pandemic or a similar health epidemic on our business, operations, or the global economy as a whole remains highly uncertain.

business.

If we do not develop successful new products or improve existing ones, our business will suffer. We may also invest in new lines of business that could fail to attract or retain users or generate revenue.

Our ability to engage, retain, and increase our user base and to increase our revenue will depend heavily on our ability to successfully create new products, both independently and together with third parties. We may introduce significant changes to, or discontinue, our existing products or develop and introduce new and unproven products and services, including technologies with which we have little or no prior development or operating experience. These new products and updates may fail to increase the engagement of our users, advertisers, or partners, may subject us to increased regulatory requirements or scrutiny, and may even result in short-term or long-term decreases in such engagement by disrupting existing user, advertiser, or partner behavior or by introducing performance and quality issues. For example, ~~beginning~~ in ~~2017,~~January 2023, we ~~started transitioning~~made changes to our advertising ~~sales to a self-serve~~ platform, which ~~decreased average advertising prices. In 2018,~~ we believe will lay the foundation for future growth, but which have been disruptive to our ~~DAUs declined primarily due to changes in the design~~customers and how some of them utilized our ~~application and continued performance issues with the Android version of our application.~~platform. The short- and long-term impact of any major change, ~~like our early 2018 application redesign and the rewrite of our application for Android users in 2019,~~ or even a less significant change such as a refresh of the application or a feature change, is difficult to predict. Although we believe that these decisions will benefit the aggregate user experience and improve our financial performance over the long term, we may experience disruptions or declines in our DAUs or user activity broadly or concentrated on certain portions of our application. Product innovation is inherently volatile, and if new or enhanced products

fail to engage our users, advertisers, or partners, or if we fail to give our users meaningful reasons to return to our application, we may fail to attract or retain users or to generate sufficient revenue, operating margin, or other value to justify our investments, any of which may seriously harm our business in the short term, long term, or both. ~~Additionally, we frequently launch new products and the products that we launch may have technical issues that diminish the performance~~

Because our products created new ways of communicating, they have often required users to learn new behaviors to use our products, or to use our products repeatedly to receive the most benefit. These new behaviors, such as swiping and tapping in the Snapchat application, are not always intuitive to users. This can create a lag in adoption of new products and new user additions related to new products. We believe this has not hindered our user growth or engagement, but that may be the result of a large portion of our user base being in a younger demographic and more willing to invest the time to learn to use our products most effectively. To the extent that future users, including those in older demographics, are less willing to invest the time to learn to use our products, and if we are unable to make our products easier to learn to use, our user growth or engagement could be affected, and our business could be harmed. We may also develop new products or initiatives that increase user engagement and costs without increasing ~~revenue. For example,~~revenue in ~~2016, we introduced Memories, our cloud storage service for Snaps, which increases our storage costs but does not currently generate revenue.~~

the short or long term.

In addition, we have invested, and expect to continue to invest, in new lines of business, new products, and other initiatives to increase our user base and user activity, and attempt to monetize the platform. For example, in ~~2019 we launched Snap Games, a live, multi-player gaming experience, and in November~~ 2020, we launched Spotlight, a new entertainment platform for user-generated content within ~~Snapchat.~~Snapchat, in 2022, we launched Snapchat+, a subscription product that gives subscribers access to exclusive, experimental, and pre-release features, and Snapchat for Web, a browser-based product that brings Snapchat’s signature capabilities to the web, and in 2023, we launched My AI, an artificial intelligence powered chatbot. Such new lines of business, new products, and other initiatives may be costly, difficult to operate and monetize, increase regulatory scrutiny and product liability and litigation risk, and divert management’s attention, and there is no guarantee that they will be positively received by our community or provide positive returns on our investment. We frequently launch new products and the products that we launch may have technical issues that diminish the performance of our application, experience product failures, or become subject to product recalls. These performance issues or issues that we encounter in the future could impact our user engagement. In addition, new products or features that we launch may ultimately prove unsuccessful or no longer fit with our priorities, and may be eliminated in the future. Such eliminations may require us to reduce our workforce and incur significant expenses. In certain cases, new products that we develop may require regulatory approval prior to launch or may require us to comply with additional regulations or ~~legislation.~~legislation, including laws that are rapidly changing. There is no guarantee that we will be able to obtain such regulatory approval, and our efforts to comply with these laws and regulations could be costly and divert management’s time and effort and may still not guarantee ~~compliance~~.compliance. If we do not successfully develop new approaches to monetization or meet the expectations of our users or partners, we may not be able to maintain or grow our revenue as anticipated or recover any associated development costs, and our business could be seriously harmed.

Our business is highly competitive. We face significant competition that we anticipate will continue to intensify. If we are not able to maintain or improve our market share, our business could suffer.

We face significant competition in almost every aspect of our business both domestically and internationally, especially because our products and services operate across a broad list of categories, including camera, ~~communication,~~visual messaging, content, ~~games,~~ and augmented reality. Our competitors range from smaller or newer companies to larger, more established companies such as Alphabet (including Google and YouTube), Apple, ByteDance (including TikTok), Kakao, LINE, Meta (including Facebook, Instagram, Threads, and WhatsApp), Naver (including Snow), Pinterest, Tencent, and ~~Twitter.~~X (formerly Twitter). Our competitors also include platforms that offer, or will offer, a variety of products, services, content, and online advertising offerings that compete or may compete with Snapchat features or offerings. For example, Instagram, a competing application owned by Meta, has incorporated many of our features, including a “stories” feature that largely mimics our Stories feature and may be directly competitive. Meta has introduced, and likely will continue to introduce, more private ephemeral products into its various platforms which mimic other aspects of Snapchat’s core use case. We also compete for users and their time, so we may lose users or their attention not only to companies that offer products and services that specifically compete with Snapchat features or offerings, but to companies with products or services that target or otherwise appeal to certain demographics, such as Discord or Roblox. Moreover, in emerging international markets, where mobile devices often lack large storage capabilities, we may compete with other applications for the limited space available on a user’s mobile device. We also face competition from traditional and online media businesses for advertising budgets. We compete broadly with the ~~social media offerings~~products and services of Alphabet, Apple, ByteDance, Meta, Pinterest, and ~~Twitter,~~X (formerly Twitter), and with other, largely regional, social media platforms that have strong positions in particular countries. As we introduce new products, as our existing products evolve, or as other companies introduce new products and services, we may become subject to additional competition. In addition, ongoing changes to privacy laws and mobile operating systems have made it more difficult for us to target and measure advertisements effectively. As a result, our competitors may, and in some cases will, acquire and engage users or generate advertising or other revenue at the expense of our own efforts, which would negatively affect our business.

difficult for us to target and measure advertisements effectively, and advertisers may prioritize the solutions of larger, more established companies. As a result, our competitors may, and in some cases will, acquire and engage users or generate advertising or other revenue at the expense of our own efforts, which would negatively affect our business. Advertisers may use information that our users share through Snapchat to develop or work with competitors to develop products or features that compete with us. Certain competitors, including Alphabet, Apple, and Meta, could use strong or dominant positions in one or more market segments to gain competitive advantages against us in areas where we operate, including by:

●

~~integrating competing social media platforms or features into products they control such as search engines, web browsers, advertising networks, or mobile device operating systems;~~

●•integrating competing social media platforms or features into products they control such as search engines, web browsers, artificial intelligence services, advertising networks, or mobile operating systems;

~~making acquisitions for similar or complementary products or services; or~~

●•making acquisitions for similar or complementary products or services; or

~~impeding Snapchat’s accessibility and usability by modifying existing hardware and software on which the Snapchat application operates.~~

•impeding Snapchat’s accessibility and usability by modifying existing hardware and software on which the Snapchat application operates.

Certain acquisitions by our competitors may result in reduced functionality of our products and services, provide our competitors with valuable insight into the performance of our and our partners’ businesses, and provide our competitors with a pipeline of future acquisitions to maintain a dominant position. As a result, our competitors may acquire and engage users at the expense of our user base, growth, or engagement, which may seriously harm our business.

We believe that our ability to compete effectively depends on many factors, many of which are beyond our control, including:

●

~~the usefulness, novelty, performance, and reliability of our products compared to our competitors;~~

●•the usefulness, novelty, performance, and reliability of our products compared to our competitors’ products;

~~the number and demographics of our DAUs;~~

●•the number and demographics of our DAUs;

~~the timing and market acceptance of our products, including developments and enhancements of our competitors’ products;~~

●

~~our ability to monetize~~•the timing and market acceptance of our products, including developments and enhancements of our competitors’ products;

●•our ability to monetize our products and services, including new products and services;

~~the availability of our products to users;~~

●•the availability of our products to users;

~~the effectiveness of our advertising and sales teams;~~

●•the effectiveness of our advertising and sales teams;

~~the effectiveness of our advertising products;~~

●•the effectiveness of our advertising products;

~~our ability to establish and maintain advertisers’ and partners’ interest in using Snapchat;~~

●•our ability to establish and maintain advertisers’ and partners’ interest in using Snapchat;

~~the frequency, relative prominence, and type of advertisements displayed on our application or by our competitors;~~

●•the frequency, relative prominence, and type of advertisements displayed on our application or by our competitors;

~~the effectiveness of our customer service and support efforts;~~

●•the effectiveness of our customer service and support efforts;

~~the effectiveness of our marketing activities;~~

●•the effectiveness of our marketing activities;

~~changes as a result of actual or proposed legislation, regulation, executive actions, or litigation, including settlements and consent decrees, some of which may have a disproportionate effect on us;~~

●•actual or proposed legislation, regulation, executive actions, or litigation, including settlements and consent decrees, some of which may have a disproportionate effect on us;

~~acquisitions or consolidation within our industry segment;~~

●•acquisitions or consolidation within our industry segment;

~~our ability to attract, retain, and motivate talented team members, particularly engineers, designers, and sales personnel;~~

●•our ability to attract, retain, and motivate talented team members, particularly engineers, designers, and sales personnel;

~~our ability to successfully acquire and integrate companies and assets;~~

●•our ability to successfully acquire and integrate companies and assets;

~~our ability to cost-effectively manage and scale our rapidly growing operations; and~~

●•the security, or perceived security, of our products and data protection measures compared to our competitors' products;

~~our reputation and brand strength relative to our competitors.~~

•our ability to cost-effectively manage and scale our operations; and

•our reputation and brand strength relative to our competitors.

If we cannot effectively compete, our user engagement may decrease, which could make us less attractive to users, advertisers, and partners and seriously harm our business.

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We have incurred operating losses in the past, and may not be able to ~~maintain~~attain and sustain profitability.

We began commercial operations in 2011 and we have historically experienced net losses and negative cash flows from operations. As of December 31, ~~2021,~~2023, we had an accumulated deficit of ~~$8.3~~$11.7 billion and ~~while we achieved profitability in the fourth quarter of 2021,~~ for the year ended December 31, ~~2021,~~2023, we ~~experienced~~had a net loss of ~~$488.0 million.~~$1.3 billion. We expect our operating expenses to increase in the future as we expand our operations. We may incur significant losses in the future for many reasons, including due to the other risks and uncertainties described in this report. Additionally, we may encounter unforeseen expenses, operating delays, or other unknown factors that may result in losses in future ~~periods.~~periods. If our revenue does not grow at a greater rate than our expenses, our business may be seriously harmed and we may not be able to ~~maintain~~attain and sustain profitability.

The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could seriously harm our business.

We depend on the continued services and performance of our key personnel, including Mr. Spiegel and Mr. Murphy. Although we have entered into employment agreements with Mr. Spiegel and Mr. Murphy, the agreements are at-will, which means that they may resign or could be terminated for any reason at any time. Mr. Spiegel and Mr. Murphy are high profile individuals who have received threats in the past and are likely to continue to receive threats in the future. Mr. Spiegel, as Chief Executive Officer, has been responsible for our company’s strategic vision and Mr. Murphy, as Chief Technology Officer, developed the Snapchat application’s technical foundation. Should either of them stop working for us for any reason, it is unlikely that the other co-founder would be able to fulfill all of the responsibilities of the departing co-founder nor is it likely that we would be able to immediately find a suitable replacement. The loss of key personnel, including members of management and key engineering, product development, marketing, and sales personnel, could disrupt our operations, adversely impact employee retention and morale, and seriously harm our business.

~~As we continue to grow, we~~

We cannot guarantee we will continue to attract and retain the personnel we need to maintain our competitive position. We face significant competition in hiring and attracting qualified engineers, designers, and sales personnel, and the ~~recent move~~change by companies to offer a remote or hybrid work environment may increase the competition for such employees from employers outside of our traditional office locations. In February 2023, we implemented our return to office plan that still encompasses a hybrid approach, but requires greater in-office attendance. While we intend to continue offering flexible work arrangements based on the different needs of teams across our company on a case-by-case basis, we may face difficulty in hiring and retaining our workforce as a result of this shift to have greater in-office attendance. Further, labor is subject to external factors that are beyond our control, including our industry’s highly competitive market for skilled workers and leaders, ~~cost~~ inflation, ~~the ongoing COVID-19 pandemic,~~other macroeconomic uncertainties, and workforce participation rates. In addition, if our reputation were to be harmed, whether as a result of our strategic decisions or media, legislative, or regulatory scrutiny or otherwise, it could make it more difficult to attract and retain personnel that are critical to the success of our business.

As we mature, or if our stock price declines, our equity awards may not be as effective an incentive to attract, retain, and motivate team members. ~~Additionally, many of~~Stock price declines may also cause us to offer additional equity awards to our ~~current~~existing team members ~~received substantial amounts of our capital stock, giving them a substantial amount of personal wealth, which can lead~~ to ~~an increase~~aid in ~~attrition. As a result, it may be difficult for us to continue to retain and motivate these team members, and this wealth could affect their decision about whether they continue to work for us.~~retention. Furthermore, if we issue significant equity to attract and retain team members, we would incur substantial additional stock-based compensation expense and the ownership of our existing stockholders would be further diluted. If we do not succeed in attracting, hiring, and integrating excellent personnel, or retaining and motivating existing personnel, we may be unable to grow or effectively manage our business and our business could be seriously harmed.

We have a continually evolving business model, which makes it difficult to evaluate our prospects and future financial results and increases the risk that we will not be successful.

We began commercial operations in 2011, ~~and~~ began meaningfully monetizing Snapchat in ~~2015. We started transitioning our advertising sales to~~2015, and we launched Snapchat+, a ~~self-serve platform~~paid subscription product, in ~~2017.~~2022. We have a continually evolving business model, ~~based on reinventing the camera to improve the way that people live and communicate,~~ which makes it difficult to effectively assess our future prospects. Accordingly, we believe that investors’ future perceptions and expectations, which can be idiosyncratic and vary widely, and which we do not control, will affect our stock price. For example, investors may believe our timing and path to increased monetization will be faster or more effective than our current plans or than actually takes place. You should consider our business and prospects in light of the many challenges we face, including the ones discussed in this report.

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If the security of our ~~security~~information technology systems or data is compromised or if our platform is subjected to attacks that frustrate or thwart our users’ ability to access our products and services, our users, advertisers, and partners may cut back on or stop using our products and services altogether, which could seriously harm our business.

In the ordinary course of business, we collect, store, use, and share personal data and other sensitive information, including proprietary and confidential business data, trade secrets, third-party sensitive information, and intellectual property (collectively, sensitive information). Our efforts to protect ~~the~~our sensitive information, including information that our users, advertisers, and ~~advertisers~~partners have shared with us, may be unsuccessful due to the actions of third parties, ~~software bugs~~including traditional “black hat” hackers, nation states, nation-state supported groups, organized criminal enterprises, hacktivists, and our personnel and contractors (through theft, misuse, or other ~~technical malfunctions, employee error or malfeasance, or other factors. In~~

~~addition,~~risk). We and the third parties ~~may attempt~~on which we rely are subject to a variety of evolving threats, including social-engineering attacks (for example by fraudulently ~~induce~~inducing employees, users, or advertisers to disclose information to gain access to our sensitive information, including data or our users’ or advertisers’ ~~data. If any~~data, such as through the use of deep fakes, which may be increasingly more difficult to identify as fake), malware, malicious code, hacking, credential stuffing, denial of service, and other threats, including attacks enhanced or facilitated by artificial intelligence. While certain of these ~~events~~threats have occurred in the past, they have become more prevalent and sophisticated in our industry, and may occur in the future. Because of our orprominence and value of our ~~users’ or advertisers’~~sensitive information, ~~could be accessed or disclosed improperly. We have previously suffered the loss of employee information related to an employee error. Our Privacy Policy governs how~~ we ~~may use and share the information that our users have provided us. Some advertisers and partners may store information~~believe that we ~~share with them. If~~are an attractive target for these third parties fail to implement adequate data-security practices or fail to comply with our terms and policies, our users’ data may be improperly accessed or disclosed. And even if these third parties take allsorts of ~~these steps, their networks may still suffer a breach, which could compromise our users’ data.~~

Any incidents where our users’ or advertisers’ information is accessed without authorization, or is improperly used, or incidents that violate our Terms of Service or policies, could damage our reputation and our brand and diminish our competitive position. attacks.

In addition, affected users or government authorities could initiate legal or regulatory action against us over those incidents, which could be time-consuming and cause us to incur significant expense and liability or result in orders or consent decrees forcing us to modify our business practices. Maintaining the trust of our users is important to sustain our growth, retention, and user engagement. Concerns over our privacy practices, whether actual or unfounded, could damage our reputation and brand and deter users, advertisers, and partners from using our products and services. Any of these occurrences could seriously harm our business.

~~Ransomware~~particular, severe ransomware attacks are becoming increasingly ~~prevalent and severe.~~prevalent. To alleviate the financial, operational, and reputational impact of ~~a ransomware attack,~~these attacks, it may be preferable to make extortion payments, but we may be unwilling or unable to do so, including, for example, if applicable laws or regulations prohibit such payments. ~~Similarly,~~And, even if we make such payments, cyber threat actors may still disclose data, engage in further extortion, or otherwise harm our systems or data. Moreover, for certain employees we permit a hybrid work environment, which has increased risks to our information technology systems and data, as our employees utilize network connections, computers, and devices outside our premises or network, including working at home, while in transit and in public locations.

In addition, cyber threat actors have also increased the complexity of their attempts to compromise user accounts, despite our defenses and detection mechanisms to prevent these account takeovers. User credentials may be obtained off-platform, including through breaches of third-party platforms and services, password stealing malware, social engineering, or other tactics and techniques like credential harvesting, and used to launch coordinated attacks. Some of these attacks may be hard to detect at scale and may result in cyber threat actors using our service to spam or abuse other users, access user personal data, further compromise additional user accounts, or to compromise employee account credentials or social engineer employees into granting further access to systems.

We rely on third-party service providers and technologies to operate critical business systems to process sensitive information in a variety of contexts, including cloud-based infrastructure, data center facilities, artificial intelligence, encryption and authentication technology, employee email, content delivery, and other functions. We may also rely on third-party service providers to provide other products or services to operate our business or enable features in our platform. Additionally, some advertisers and partners store sensitive information that we share with them. Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place despite their contractual representations to implement such measures and our third-party service provider vetting process. If these third parties fail to implement adequate data security practices or fail to comply with our terms, policies, or contractual obligations, our sensitive information may be improperly accessed or disclosed, and we may experience adverse consequences. And even if these third parties take all of these steps, their networks may still suffer a breach, which could compromise our sensitive information. We or our third-party providers may also experience failures or malfunctions of hardware or software, the loss of technology assets, or the loss of data that, while not caused by threat actors, may have a similar impact and risk to our business. While we may be entitled to damages if our third-party service providers fail to satisfy their privacy or security-related obligations to us, or cause the loss of our data or prolonged downtime, any award may be insufficient to cover our damages, or we may be unable to recover such award.

Moreover, supply chain attacks have increased in frequency and severity, and we cannot guarantee that third parties in our supply chain have not been compromised or that ~~they do not contain~~their systems, networks, or code are free from exploitable defects or bugs that could result in a breach of or disruption to our platform, systems, and networks or the systems and networks of third parties that support us and our services. ~~Any~~We are also reliant on third-party and open source software that may contain bugs, vulnerabilities, or errors that could be exploited or disclosed before a patch or fix is available.

While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective. We take steps designed to detect and remediate vulnerabilities in our

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information systems (such as our hardware and software, including that of third parties upon which we rely), and we work with security researchers through our bug bounty program to help us identify vulnerabilities. We may not, however, detect, become aware of, and remediate all such ~~attack,~~vulnerabilities including on a timely basis, and there is no guarantee security researchers will disclose all vulnerabilities they become aware of or ~~the perception that one has occurred,~~do so responsibly. Further, we may experience delays in developing or deploying remedial measures and patches designed to address identified vulnerabilities. Vulnerabilities could be exploited and result in a security or privacy incident.

If any of these or similar events occur, our or our third-party partners’ sensitive information and information technology systems could be accessed, acquired, modified, destroyed, lost, altered, encrypted, or disclosed in an unauthorized, unlawful, accidental, or other improper manner, resulting in a security incident or other interruption.

We may expend significant resources or modify our business activities to adopt additional measures designed to protect against security incidents. Certain data privacy and security obligations may require us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our systems and sensitive information. While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.

We have previously suffered the loss of sensitive information related to employee error, insider threats, and vendor breaches. Any security incident experienced by us or our ~~users’~~third-party partners could damage our reputation and our brand, and diminish our competitive position. Applicable privacy and security obligations may require us to notify relevant stakeholders, including affected individuals, customers, regulators, and investors, of security incidents. Such disclosures are costly and the failure to comply with these legal requirements could lead to adverse consequences. Governments and regulatory agencies (including the Securities and Exchange Commission, or ~~advertisers’~~the SEC) have and may continue to enact new disclosure requirements for cybersecurity events. In addition, affected users or government authorities could initiate legal or regulatory action against us, including class-action claims, mass arbitration demands, investigations, penalties, and audits, which could be time-consuming and cause us to incur significant expense and liability or result in orders or consent decrees forcing us to modify our business practices. We could also experience loss of user or advertiser confidence in the security of our platform, and damage to our brand, reduce the demand for our products and services, disrupt business operations, result in the exfiltration of proprietary data, including source code, require us to spend material resources to investigateadditional reporting requirements or ~~correct the breach and to prevent future security breaches and incidents, expose us to legal liabilities, including litigation, regulatory enforcement, and indemnity obligations,~~oversight, restrictions on processing sensitive information, claims by our ~~customers~~partners or other relevant parties that we have failed to comply with contractual obligations or our policies, and ~~seriously harm~~indemnification obligations. We could also spend material resources to investigate or correct the incident and to prevent future incidents. Maintaining the trust of our ~~business.~~

~~We also are~~users is important to sustain our growth, retention, and user engagement. Concerns over our privacy and security practices, whether actual or ~~may in the future be subject to many federal, state, local,~~unfounded, could damage our reputation and ~~foreign laws~~brand and ~~regulations, including those related to privacy, rights~~deter users, advertisers, and partners from using our products and services. Any of publicity, content, data protection, intellectual property, health and safety, competition, protection of minors, consumer protection, employment, money transmission, import and export restrictions, gift cards, electronic funds transfers, anti-money laundering, advertising, algorithms, encryption, and taxation. These laws and regulations are constantly evolving and may be interpreted, applied, created, or amended in a manner thatthese occurrences could seriously harm our business.

Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations. We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.

In addition ~~in December 2014, the U.S. Federal Trade Commission resolved an investigation into some of~~to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our ~~early practices by issuing a final order. That order requires, among other things, that we establish a robust privacy program~~organization and could be used to govern how we treat user data. During the 20-year term of the order, we must complete biennial independent privacy audits. In addition, in June 2014, we entered into a 10-year assurance of discontinuance with the Attorney General of Maryland implementing similar practices, including measures to prevent minors under the age of 13 from creating accounts and providing annual compliance reports. Violating existingundermine our competitive advantage or ~~future regulatory orders or consent decrees could subject us to substantial monetary fines and other penalties that could seriously harm our business.~~

market position.

Our user metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may seriously harm and negatively affect our reputation and our business.

We regularly review and share metrics, including our DAUs and ARPU metrics, with our investors, advertisers, and partners to evaluate growth trends, measure our performance, and make strategic decisions. These metrics are calculated using internal company data gathered on an analytics platform that we developed and operate and our methodologies have not in all instances been validated by an independent third party. In addition, we may change the way we measure and report metrics from time to time in connection with changes to our products, making comparisons to prior periods more difficult. While these metrics are 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.~~globally that may require significant judgment and are subject to technical errors. For example, there may be individuals ~~who have multiple Snapchat~~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

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to prevent, detect, and suppress that ~~behavior.~~behavior, although we have not determined the number of such accounts, or the effectiveness of such measures. Our user metrics are also affected by technology on certain mobile devices that automatically runs in the background of our Snapchat application when another phone function is used, and this activity can cause our system to miscount the user metrics associated with such account.

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 age demographics or estimate their ages based on a sample of the self-reported ages we do have. If our 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 or advertiser expectations.

Errors or inaccuracies in our metrics or data could also result in incorrect business decisions and inefficiencies. For instance, if a significant understatement or overstatement of active users were to occur, we may expend resources to implement unnecessary business measures or fail to take required actions to attract a sufficient number of users to satisfy our growth strategies. We count a DAU when a user opens the application, but only once per user per day. We have multiple pipelines of user data that we use to determine whether a user has opened the application during a particular day, 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. However, we believe that we do not capture all data regarding our active users, which may result in understated metrics. This generally occurs because of technical issues, for instance when our systems do not record data from a user’s application or when a user opens the Snapchat application and contacts our servers but is not recorded as an active user. We continually seek to address these technical issues and improve our measurement processes and accuracy, such as comparing our active users and other metrics with data received from other pipelines, including data recorded by our servers and systems. But given the complexity of the systems involved and the rapidly changing nature of mobile devices and systems, we expect these issues to continue, particularly if we continue to expand in parts of the world where mobile data systems and connections are less stable. If advertisers, partners, or investors do not perceive our user, geographic, or other demographic metrics, or measurements of advertising effectiveness to be accurate, ~~representations of our user base,~~ or if we discover material inaccuracies in our ~~user, geographic, or other demographic~~ metrics, our reputation may be seriously harmed. Our advertisers and partners may also be less willing to allocate their budgets or resources to Snapchat, which could seriously harm our business. In addition, 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. This calculation may mask any individual days or months within the quarter that are significantly higher or lower than the quarterly average.

~~Mobile malware, viruses, hacking and phishing attacks, spamming, and improper~~

Improper or illegal use of Snapchat could seriously harm our business and reputation.

Mobile malware, viruses, hacking, and phishing attacks have become more prevalent and sophisticated in our industry, have occurred on our systems in the past, and may occur on our systems in the future. Because of our prominence, we believe that we are an attractive target for these sorts of attacks. Although it is difficult to determine what, if any, harm may directly result from an interruption or attack, any failure to detect such attack and maintain performance, reliability, security, and availability of our products and technical infrastructure to the satisfaction of our users may seriously harm our reputation and our ability to retain existing users and attract new users.

~~In addition, spammers attempt to use our products to send targeted and untargeted spam messages to users, which may embarrass or annoy users and make our products less user friendly.~~

We cannot be certain that the technologies that we have developed to repel spamming attacks will be able to eliminate all spam messages from our products. Spammers attempt to use our products to send targeted and untargeted spam messages to users, which may embarrass, offend, threaten, or annoy users and make our products less user friendly. Our actions to combat spam may also ~~require diversion of~~divert significant time and focus from improving our products. As a result of spamming activities, our users may use our products less or stop using them altogether, and result in continuing operational cost to us.

Similarly, terrorists, criminals, and other bad actors may use our products to promote their goals and encourage users to engage in terror and other illegal ~~activities.~~activities discussed in our Transparency Report. We expect that as more people use our products, these bad actors will increasingly seek to misuse our products. Although we invest resources to combat these activities, including by suspending or terminating accounts we believe are violating our Terms of Service and Community Guidelines, we expect these bad actors will continue to seek ways to act inappropriately and illegally on Snapchat. ~~Combating~~Maintaining a safe platform, including by combating these bad actors, requires ~~our teams~~us to ~~divert significant time and focus from improving our products.~~incur costs, which may be significant. In addition, we may not be able to control or stop Snapchat from becoming the preferred application of use by these bad actors, which may ~~become public knowledge and~~ seriously harm our reputation or lead to lawsuits or attention from regulators. If these activities ~~increase~~continue on Snapchat, our reputation, user growth and user engagement, and operational cost structure could be seriously harmed.

Because we store, process, and use data, some of which contains personal data, we are subject to complex and evolving federal, state, local and foreign laws,regulations, ~~and~~ executive actions, rules, contractual obligations, policies, and other obligations regarding privacy, data protection, content, the use of artificial intelligence, and other matters. Many of these ~~laws, regulations, and executive actions~~obligations are subject to change and uncertain interpretation, and our actual or perceived failure to comply with

such obligations could result in investigations, claims (including class actions), mass arbitration demands, changes to our business practices, increased cost of operations, and declines in user growth, retention, or engagement, or other adverse consequences, any of which could seriously harm our business.

In the ordinary course of business, we collect, store, use, and share personal data and other sensitive information, including proprietary and confidential business data, trade secrets, third-party sensitive information, and intellectual property. Accordingly, we are subject to a variety of laws, regulations, industry standards, policies, contractual requirements, executive actions, and other obligations relating to privacy, security, and data protection. We also are or may in the future be subject to many federal, state, local, and foreign laws and regulations, including those related to privacy, rights of publicity, content, data protection, artificial intelligence, intellectual property, health and safety, competition, protection of minors, consumer protection, employment, money transmission, import and export restrictions, gift cards, electronic funds transfers, anti-money laundering, advertising, algorithms, encryption, and taxation.

Under certain of these laws, we could face temporary or definitive bans on data processing and other corrective actions, substantial monetary fines, or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized to represent their interests. The transfer of personal data continues to be under increased regulatory attention and scrutiny, and certain jurisdictions in which we operate have significantly limited the lawful basis on which personal data can be transferred to other jurisdictions and increased the assessments required to do so. We have attempted to structure our operations in a manner designed to help us partially avoid some of these concerns; however, we still transfer some data using mechanisms that comply with applicable law. Some of these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these mechanisms to lawfully transfer personal data in the future. If there is no lawful manner for us to transfer personal data, or if the requirements for a legally compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors, and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business. Regulators may seek to restrict our data processing activities if they believe we have violated cross-border data transfer limitations, which would seriously harm our business. Additionally, companies like us that transfer personal data between jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activist groups.

Legislation in certain of the countries in which we operate has imposed extensive obligations, and potential monetary fines, on certain online service providers, including us, who enable the sharing of user‑generated content, to identify, mitigate, and manage the risks of harm to users from illegal and harmful content, such as terrorism, child sexual exploitation and abuse, and harassment or stalking. In addition, the privacy of teens’ personal data collected online, and use of commercial websites, online services, or other interactive platforms, generally, are also becoming increasingly scrutinized. Regulations focused on online safety and protection of teens’ privacy online have and may in the future require us to change our services and incur costs to do so. Moreover, various laws to restrict or govern the use of commercial websites, online services, or other interactive platforms by teens have passed or have been proposed, including laws prohibiting showing teens advertising, requiring age verification, limiting the use of minors’ personal data, and requiring parental consent or providing for other parental rights. These laws may be, or in some cases already have been, subject to legal challenges and changing interpretations, which may further complicate our efforts to comply with laws applicable to us. These new laws may result in restrictions on the use of certain of our products or services by minors, decrease DAUs or user engagement in those jurisdictions, require changes to our products and services to achieve compliance, and increase legal risk and compliance costs for us and our third-party partners, any of which could seriously harm our business.

Laws and regulations focused on privacy, security, and data protection, including data breach notification laws, personal data privacy laws, consumer protection laws, wiretapping laws, and other similar laws have imposed obligations on companies that collect personal data from users, including providing specific disclosures in privacy notices, expanding the requirements for handling personal data, requiring consents to process personal data in certain circumstances, and affording residents with certain rights concerning their personal data. Such rights may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making. The exercise of these rights may impact our business and ability to provide our products and services, and our inability or failure to obtain consent for these practices where required could result in adverse consequences, including class-action litigation and mass arbitration demands. Certain of these laws also impose stricter requirements for processing certain personal data, including sensitive information, such as conducting data privacy impact assessments. These laws also allow for statutory fines for noncompliance and, in some instances, provide for civil penalties for violations and a private right of action for data breaches, which may increase the likelihood and cost of data breach litigation, and could seriously harm our business.

Additionally, several jurisdictions in which we operate have enacted statutes banning or restricting the collection of biometric information. Certain of these laws provide for substantial penalties and statutory damages and have generated significant class-action activity. Although we maintain the position that our technologies do not collect any biometric information, we have in the past, and may in the future, settle these disputes to avoid potentially costly litigation and have in certain instances made changes to our products in an abundance of caution.

We use artificial intelligence, or AI, in consumer-facing features of our products and services, including My AI. The development and use of AI presents various privacy and security risks that may impact our business. AI is subject to privacy and data security laws, as well as increasing regulation and scrutiny. Several countries in which we operate or have users have proposed or enacted, or are considering, laws governing AI, which we are or may be subject to. The legal landscape around intellectual property rights in AI, and the use, training, implementation, privacy, and safety of AI, is evolving, including ongoing litigation against our peers relating to the use of data protected by global intellectual property and privacy laws. These obligations may make it harder for us to use AI in our products or services, lead to regulatory fines or penalties, or require us to change our business practices, retrain our AI, or prevent or limit our use of AI. We are subject to ongoing investigations by the UK Information Commissioner’s Office, or ICO, and other regulatory agencies regarding the use and operation of My AI, and in October 2023 the ICO issued a preliminary enforcement notice regarding our data impact assessment of My AI. Given the current unsettled nature of the legal and regulatory environment surrounding AI, our or our partners’ AI features and use, training, and implementation of AI could subject us to regulatory action, product restrictions, fines, litigation, and reputational harm, and require us to expend significant resources, all of which may seriously harm our business. Additionally, if our AI products fail to perform as intended, or produce outputs that are harmful, misleading, inaccurate, or biased, in addition to the risks above, our reputation and user engagement may be harmed, and we may be required to change our business practices, retrain our AI, or limit our use of AI. Furthermore, certain proposed regulations related to AI could, if adopted, impose onerous obligations related to the use of AI-related systems and may require us to change our products or business practices to comply with such obligations.

Privacy advocates and industry groups have proposed, and may propose in the future, standards with which we are legally or contractually obligated to comply. Moreover, we are also bound by contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful. We also publish privacy policies, marketing materials, and other statements regarding data privacy and security. If these policies, materials, or statements are found to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other adverse consequences.

The implementation and enforcement, including through private rights of action, of these increasingly complex, onerous, or divergent laws and regulations, and the introduction, interpretation, or revision of any new such laws or regulations, with respect to privacy, security, data protection, and our industry are uncertain and may further complicate compliance efforts, lead to fragmentation of the service, and may increase legal risk and compliance costs for us and our third-party partners. Many of these obligations are becoming increasingly stringent and subject to rapid change and uncertain interpretation. Preparing for and complying with these obligations requires us to devote significant resources, and there is no guarantee that our compliance efforts to date, or in the future, will be deemed compliant or sufficient. These obligations may necessitate changes to our products and services, information technologies, systems, and practices and to those of any third parties that process personal data on our behalf. In addition, these obligations may require us to change our business model. Our business model materially depends on our ability to process personal data in connection with our advertising offerings, so we are particularly exposed to the risks associated with the rapidly changing legal landscape regarding privacy, security, and data protection. For example, privacy regulators have targeted us and some of our competitors, including by investigating data processing activities and in the past have issued large fines to our competitors. Such enforcement actions may cause us to revise our business plans and operations. Moreover, we believe a number of investigations into other technology companies are currently being conducted by federal, state, and foreign legislative and regulatory bodies. We therefore may be at heightened risk of regulatory scrutiny, as regulators focus their attention on data processing activities of companies like us, and any changes in the regulatory framework or enforcement actions, whether against us or our competitors, could require us to fundamentally change our business model, and seriously harm our business.

We may at times fail, or be perceived to have failed, in our efforts to comply with our privacy, security, and data protection obligations. Moreover, despite our efforts, our personnel or third parties on whom we rely may fail to comply with such obligations, which could negatively impact our business operations. If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable privacy, security, or data protection obligations, we could face significant consequences, including government enforcement actions (such as investigations, claims, audits, and penalties), litigation (including class-action litigation) and mass arbitration demands, additional reporting requirements

or oversight, bans on processing personal data, negative publicity, and orders to destroy or not use personal data. In particular, plaintiffs have become increasingly more active in bringing privacy-related claims against companies, including class claims and mass arbitration demands. Some of these claims allow for the recovery of statutory damages on a per violation basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations. Any of these events could have a material adverse effect on our business, including loss of users and advertisers, inability to process personal data or operate in certain jurisdictions, changes to our business practices, increased cost of operations, and declines in user growth, retention, or engagement, any of which could seriously harm our business.

We ~~are~~have in the past been subject to enforcement actions, investigations, proceedings, orders, or various government inquiries regarding our data privacy and security practices and processing. For example, in December 2014, the FTC resolved an investigation into some of our early practices by issuing a ~~variety~~final order. That order requires, among other things, that we establish a robust privacy program to govern how we treat user data. During the 20-year term of ~~laws, regulations,~~the order, we must complete biennial independent privacy audits. In addition, in June 2014, we entered into a 10-year assurance of discontinuance with the Attorney General of Maryland implementing similar practices, including measures to prevent minors under the age of 13 from creating accounts and ~~executive actions in the United States~~providing annual compliance reports. Violating existing or future regulatory orders or consent decrees could subject us to substantial monetary fines and other ~~countries~~penalties that involve matters central to our business, including user privacy, security, rights of publicity, data protection, content, intellectual property, distribution, electronic contracts and other communications, competition, protection of minors, consumer protection, taxation, and online-payment services. These laws, regulations, and executive actions can be particularly restrictive in countries outside the United States. Both in the United States and abroad, these laws, regulations, and executive actions constantly evolve, remain subject to significant change, and may be issued with limited advance notice. For example, an executive order under the prior U.S. administration was issued prohibiting certain transactions with a Chinese-owned company, with the prohibition becoming effective 45 days after the date of the order.In addition, the application and interpretation of these laws, regulations, and executive actions are often uncertain, particularly in the new and rapidly evolving industry in which we operate. Because we store, process, and use data, some of which contains personal data, we are subject to complex and evolving federal, state, and foreign laws and regulations regarding privacy, data protection, content, and other matters. Many of these laws, regulations, and executive actions are subject to change and uncertain interpretation, and could result in investigations, claims, changes to our business practices, increased cost of operations, and declines in user growth, retention, or engagement, any of which could seriously harm our business.

Several proposals have recently been adopted or are currently pending before, and we believe a number of investigations into other technology companies are currently being conducted by, federal, state, and foreign legislative and regulatory bodies that could significantly affect our business. GDPR in the European Union, which went into effect in May 2018, placed new data protection obligations and restrictions on organizations and may require us to further change our policies and procedures. If we are not compliant with GDPR requirements, we may be subject to significant fines and our business may be seriously harmed. In addition, the CCPA went into effect in January 2020 and the CPRA, which replaces the CCPA and goes into effect in January 2023, place additional requirements on the handling of personal data. The CCPA and CPRA also provide for civil penalties for violations, as well as a private right of action for data breaches, which may increase the likelihood and cost of data breach litigation. The potential effects of this or any other legislation, including any implementing regulations, are or may be far-reaching, uncertain, and evolving, and may require us, our partners, and advertisers to modify data processing practices and policies and to incur substantial costs and expenses in an effort to comply. Other state, federal, and foreign legislative and regulatory bodies have enacted or may enact similar legislation regarding the handling of personal data, or conduct additional investigations into specific companies or the industry as a whole that could alter the existing regulatory environment in a manner that would be adverse to us. Changes in the European Union’s Electronic Communications Code, which became effective in December 2020, may result in the expanded applicability of the European Union’s ePrivacy Directive over parts of our services, requiring us to make changes to how we process and store certain types of communications data of users in the European Union, which could have a material impact on the availability of data we rely on to improve and personalize our products and features. The U.K.’s Age Appropriate Design Code, or AADC, which focuses on online safety and protection of children’s privacy online became effective in September 2021. Noncompliance with the AADC may result in audits by the U.K.’s Information Commissioner Office, or ICO, the regulatory body set up to uphold information rights, and other EU regulators as noncompliance with the AADC may indicate noncompliance with the GDPR. The ICO continues to engage with industry leaders to interpret and maintain compliance with the AADC. Furthermore, in December 2018, the Australian government passed the Assistance and Access Bill 2018 that provides Australian law enforcement authorities with mechanisms to make requests for electronic communication, even if the data is end-to-end encrypted like some of the data in Snapchat, which may create new obligations for companies providing communication services and make their data less secure.

Our financial condition and results of operations will fluctuate from quarter to quarter, which makes them difficult to predict.

Our quarterly results of operations have fluctuated in the past and will fluctuate in the future. Additionally, we have a limited operating history with the current scale of our business, which makes it difficult to forecast our future results. As a result, you should not rely on our past quarterly results of operations as indicators of future performance. You should take into account the risks and uncertainties frequently encountered by companies in rapidly evolving market segments. Our financial condition and results of operations in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including:

●

~~our ability to maintain and grow our user base and user engagement;~~

●•our ability to maintain and grow our user base and user engagement;

~~the development and introduction of new or redesigned products or services by us or our competitors;~~

•the development and introduction of new or redesigned products or services by us or our competitors;

•the ability of our cloud service providers to scale effectively and timely provide the necessary technical infrastructure to offer our service;

●•our ability to attract and retain advertisers in a particular period;

~~the ability of our cloud service providers to scale effectively and timely provide the necessary technical infrastructure to offer our service;~~

●•seasonal or other fluctuations in spending by our advertisers and product usage by our users, each of which may change as our product offerings evolve or as our business grows or as a result of unpredictable events such as labor shortages and disruptions, supply chain disruptions, banking instability, inflationary pressures, or geo-political conflicts;

~~our ability to attract and retain advertisers in a particular period;~~

●•restructuring or other charges and unexpected costs or other operating expenses;

seasonal or other fluctuations in spending by our advertisers and product usage by our users, each of which may change as our product offerings evolve or as our business grows or as a result of unpredictable events such as the COVID-19 pandemic;

●

•the number of advertisements shown to users;

●

•the pricing of our advertisements and other products;

●

•the effectiveness, and our ability to demonstrate to advertisers the effectiveness, of our advertisements;

●

•the diversification and growth of revenue sources beyond current advertising;

●

•increases in marketing, sales, research and development, and other operating expenses that we may incur to grow and expand our operations and to remain competitive;

●

~~our ability to maintain operating margins, cash used in~~•our ability to maintain operating margins, cash provided by operating activities, and Free Cash Flow;

●

•our ability to accurately forecast consumer demand for our physical products and adequately manage inventory;

●

~~system failures or breaches of security or privacy, and the costs associated with such breaches~~•system failures or security incidents, and the costs associated with such incidents and remediations;

●

•inaccessibility of Snapchat, or certain features within Snapchat, due to third-party or governmental actions;

●

•stock-based compensation expense;

●

•our ability to effectively incentivize our workforce;

●

~~adverse litigation judgments, settlements, or other litigation-related costs, or product recalls;~~

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●•adverse litigation judgments, settlements, or other litigation-related costs, or product recalls;

changes in the legislative or regulatory environment, including with respect to privacy, rights of publicity, content, data protection, intellectual property, health and safety, competition, protection of minors, consumer protection, employment, money transmission, import and export restrictions, gift cards, electronic funds transfers, anti-money laundering, advertising, algorithms, encryption, and taxation, enforcement by government regulators, including fines, orders, or consent decrees, or the issuance of executive orders or other similar executive actions that may adversely affect our revenues or restrict our business;

●•changes in the legislative or regulatory environment, including with respect to privacy, rights of publicity, content, data protection, intellectual property, health and safety, competition, protection of minors, consumer protection, employment, money transmission, import and export restrictions, gift cards, electronic funds transfers, anti-money laundering, advertising, algorithms, encryption, and taxation, enforcement by government regulators, including fines, orders, sanctions, or consent decrees, or the issuance of executive orders or other similar executive actions that may adversely affect our revenues or restrict our business;

~~fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies;~~

●•new privacy, data protection, and security laws and other obligations and increased regulatory scrutiny on our or our competitors’ data processing activities and privacy and information security practices, including through enforcement actions potentially resulting in large penalties or other severe sanctions and increased restrictions on the data processing activities and personal data transfers critical to the operation of our current business model;

~~fluctuations in the market values of our portfolio investments and interest rates or impairments of any assets on our balance sheet;~~

●•fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies;

~~changes in our effective tax rate;~~

●•fluctuations in the market values of our portfolio investments and interest rates or impairments of any assets on our consolidated balance sheet;

~~announcements by competitors of significant new products, licenses, or acquisitions;~~

●•changes in our effective tax rate;

~~our ability to make accurate accounting estimates and appropriately recognize revenue for our products for which there are no relevant comparable products;~~

●•announcements by competitors of significant new products, licenses, or acquisitions;

~~our ability to meet minimum spending commitments in agreements with our infrastructure providers;~~

●•our ability to make accurate accounting estimates and appropriately recognize revenue for our products;

~~changes in accounting standards, policies, guidance, interpretations, or principles; and~~

●•our ability to meet minimum spending commitments in agreements with our infrastructure providers;

~~changes in domestic and global business or macroeconomic conditions, including as a result of the current COVID-19 pandemic and resulting labor shortages, supply chain disruptions, and inflation.~~

•changes in accounting standards, policies, guidance, interpretations, or principles;

•the effect of war or other armed conflict on our workforce, operations, or the global economy; and

•changes in domestic and global business or macroeconomic conditions, including as a result of inflationary pressures, banking instability, geo-political conflicts, terrorism, or responses to these events.

If we are unable to continue to maintain or successfully grow our user base and further monetize our products, our business will suffer.

We have made, and are continuing to make, investments to enable users, partners, and advertisers to create compelling content and deliver advertising to our users. Existing and prospective Snapchat users and advertisers may not be successful in creating content that leads to and maintains user engagement. We are continuously seeking to balance the objectives of our users and advertisers with our desire to provide an optimal user experience. We do not seek to monetize all of our products nor do we solely focus our efforts on users with higher ARPU, and we may not be successful in achieving a balance that continues to attract and retain users and advertisers. We focus on growing engagement across our service, and from time to time our efforts

may reduce user activity with certain monetizable products in favor of other products we do not currently monetize. If we are not successful in our efforts to grow or effectively and timely monetize our user base, or if we are unable to build and maintain good relations with our advertisers, our user growth and user engagement and our business may be seriously harmed. In addition, we may expend significant resources to launch new products that we are unable to monetize, which may seriously harm our business.

Additionally, we may not succeed in further monetizing Snapchat. We currently primarily monetize Snapchat by displaying ~~in the application advertisements that we sell and~~ advertisements sold by us and our partners. As a result, our financial performance and ability to grow revenue could be seriously harmed if:

●

~~we fail to increase or maintain DAUs;~~

●•we fail to increase or maintain DAUs, especially in regions where we have higher monetization;

~~our user growth outpaces our ability to monetize our users, including if we don’t attract sufficient advertisers or if our user growth occurs in markets that are not as monetizable;~~

●•our user growth outpaces our ability to monetize our users, including if we don’t attract sufficient advertisers or if our user growth occurs in markets that are not as monetizable;

~~we fail to increase or maintain the amount of time spent on Snapchat, the amount of content that our users share, or the usage of our Camera, Communication, Snap Map, Stories, and Spotlight platforms;~~

●•we fail to increase or maintain the amount of time spent on Snapchat, the amount of content that our users share, or the usage of our Camera, Visual Messaging, Map, Stories, and Spotlight platforms;

~~partners do not create engaging content for users or renew their agreements with us;~~

●•partners and users do not create sufficient engaging content for users or partners do not renew their agreements with us;

~~we fail to attract sufficient advertisers to utilize our self-serve platform to make the best use of our advertising inventory;~~

●

~~advertisers do not continue to introduce engaging advertisements;~~

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●•we fail to attract sufficient advertisers to utilize our self-serve platform to make the best use of our advertising inventory;

~~advertisers reduce their advertising on Snapchat;~~

●•advertisers do not continue to introduce engaging advertisements;

~~we fail to maintain good relationships with advertisers or attract new advertisers, or demonstrate to advertisers the effectiveness of advertising on Snapchat; or~~

●•advertisers reduce their advertising on Snapchat;

~~the content on Snapchat does not maintain or gain popularity.~~

•we fail to maintain good relationships with advertisers or attract new advertisers, or demonstrate to advertisers the effectiveness of advertising on Snapchat; or

•the content on Snapchat does not maintain or gain popularity.

We cannot assure you that we will effectively manage our ~~growth.~~

growth or changes to our business.

The growth and expansion of our business, headcount, and products create significant challenges for our management, including managing multiple relationships with users, advertisers, partners, and other third parties, and constrain operational and financial resources. If our operations or the number of third-party relationships continues to grow, our information-technology systems and our internal controls and procedures may not adequately support our ~~operations.~~operations and may require significant investments of time and capital to improve. In addition, some members of our management do not have significant experience managing large global business operations, so our management may not be able to manage such growth effectively. To effectively manage our growth, we must continue to improve our operational, financial, and management processes and systems and effectively expand, train, and manage our employee base. However, the actions we take to achieve such improvements may not have the intended effect and may instead result in disruptions, delays in new products, employee turnover, declines in revenue, and other adverse effects.

As our organization continues to mature and we are required to implement more complex organizational management structures, we may also find it increasingly difficult to maintain the benefits of our corporate culture, including our ability to quickly develop and launch new and innovative products. This could negatively affect our business performance and seriously harm our business.

In August 2022, we undertook a broad strategic reprioritization to focus on our top priorities, improve cost efficiencies, and drive toward profitability and positive free cash flow. As a result of the strategic reprioritization, in the year ended December 31, 2022, we incurred pre-tax charges of $188.9 million, primarily consisting of severance and related charges, stock-based compensation expense, lease exit and related charges, impairment charges, contract termination charges, and intangible asset amortization. As we continue to adapt and update our business model and priorities, we may make additional restructurings, reprioritizations, or reductions in the future. Any such changes could disrupt our operations, increase costs, make it harder to service our users or customers, adversely impact employee retention, hiring, and morale, negatively impact our reputation, or distract management, any of which could seriously harm our business.

Our costs may increase faster than our revenue, which could seriously harm our business or increase our losses.

Providing our products to our users is costly, and we expect our expenses, including those related to people, research and development, and hosting, to grow in the future. This expense growth will continue as we broaden our user base, as users increase the number of connections and amount of content they consume and share, as we develop and implement new product features that require more computing infrastructure or products that are not revenue generating, and as we grow our business. Historically, our costs have increased each year due to these factors, and we expect to continue to incur increasing costs. Our costs are based on development and release of new products and the addition of users and may not be offset by a corresponding growth in our revenue. We will continue to invest in our global infrastructure to provide our products quickly and reliably to all users around the world, including in countries where we do not expect significant short-term monetization, if any. Our expenses may be greater than we anticipate, and our investments to make our business and our technical infrastructure more efficient may not succeed and may outpace monetization efforts. In addition, we expect to increase marketing, sales, and other operating expenses to grow and expand our operations and to remain competitive. Increases in our costs without a corresponding increase in our revenue would increase our losses and could seriously harm our business and financial performance.

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Our business depends on our ability to maintain and scale our technology infrastructure. Any significant disruption to our service could damage our reputation, result in a potential loss of users and decrease in user engagement, and seriously harm our business.

Our reputation and ability to attract, retain, and serve users depends on the reliable performance of Snapchat and our underlying technology infrastructure. We have in the past experienced, and may in the future experience, interruptions in the availability or performance of our products and services from time to time. Our systems may not be adequately designed with the necessary reliability and redundancy to avoid performance delays or outages that could seriously harm our business. If Snapchat is unavailable when users attempt to access it, or if it does not load as quickly as they expect, users may not return to Snapchat as often in the future, or at all. As our user base and the volume and types of information shared on Snapchat grow, we will need an increasing amount of technology infrastructure, including network capacity and computing power, to continue to satisfy our users’ ~~needs.~~needs which could significantly increase our costs. It is possible that we may fail to effectively scale and grow our technology infrastructure to accommodate these increased ~~demands.~~demands, or that improving our current technology infrastructure will require significant resources and delay or hinder the development of other products or services. In addition, our business is subject to interruptions, delays, and failures resulting from earthquakes, other natural disasters, geo-political conflicts, terrorism, pandemics, and other catastrophic events. Global climate change could also result in natural disasters occurring more frequently or with more intense effects, which could cause business interruptions.

~~Substantially~~ Wars or other armed conflicts could damage or diminish our access to our technology infrastructure or regional networks and disrupt our services, which could seriously harm our business and financial performance.

As discussed in these risk factors, substantially all of our network infrastructure is provided by third parties, including Google Cloud and AWS. We also rely on third parties for other technology related services, including certain artificial intelligence functions. Any disruption or failure in the services we receive from these providers could harm our ability to handle existing or increased traffic and could seriously harm our business. Any financial or other difficulties these providers face may seriously harm our business. And because we exercise little control over these providers, we are vulnerable to problems with the services they ~~provide.~~

~~During~~provide and increases in the ~~first quarter~~costs of ~~2021, we completed the initial phase of~~these services.

We periodically augment and enhance our ~~new enterprise resource planning, or ERP, system implementation~~financial systems and migrated our general ledger, consolidation, and planning processes onto the new system. In connection with this implementation, we modified the design and documentation of our internal control processes and procedures relating to the new system. ~~As part of this implementation,~~ we may experience difficulties in managing our ~~existing~~ systems and processes, which could disrupt our operations, the management of our finances, and the reporting of our financial results, which in turn, may result in our inability to manage the growth of our business and to accurately forecast and report our results, each of which could seriously harm our business.

Our business emphasizes rapid innovation and prioritizes long-term user engagement over short-term financial condition or results of operations. That strategy may yield results that sometimes don’t align with the market’s expectations. If that happens, our stock price may be negatively affected.

Our business is growing and becoming more complex, and our success depends on our ability to quickly develop and launch new and innovative products. We believe our culture fosters this goal. Our focus on innovations and quick reactions could result in unintended outcomes or decisions that are poorly received by our users, advertisers, or partners. We have made, and expect to continue to make, significant investments to develop and launch new products and services and we cannot assure you that users will purchase or use such new products and services in the future. We will also continue to attempt to find effective ways to show our community new and existing products and alert them to events, holidays, relevant content, and meaningful opportunities to connect with their friends. These methods may provide temporary increases in engagement that may ultimately fail to attract and retain users. Our culture also prioritizes our long-term user engagement over short-term financial condition or results of operations. We frequently make decisions that may reduce our short-term revenue or profitability if we believe that the decisions benefit the aggregate user experience and improve our financial performance over the long term. For example, we monitor how advertising on Snapchat affects our users’ experiences to attempt to ensure we do not deliver too many advertisements to our users, and we may decide to decrease the number of advertisements to ~~ensure~~increase our users’ satisfaction in the product. In addition, we improve Snapchat based on feedback provided by our users, advertisers, and partners. These decisions may not produce the long-term benefits that we expect, in which case our user growth, retention and engagement on our service or on certain platforms, our relationships with advertisers and partners, and our business could be seriously harmed.

~~If we are unable to protect our intellectual property, the value~~

Some of our ~~brand~~software and ~~other intangible assets~~systems contain open source software, which may ~~be diminished, and our business may be seriously harmed. If we need to license or acquire new intellectual property, we may incur substantial costs.~~

We use software licensed to us by third-party developers under “open source” licenses in connection with the development or technology. We also rely on trademark, copyright, patent, trade secret, and domain-name-protection laws to protect our proprietary rights. In the United States and internationally, we have filed various applications to protect aspectsdeployment of our products and expect to continue to use open source software in the future. Some open

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source licenses contain express requirements or impose conditions, which may be triggered under certain circumstances, with respect to the exploitation of proprietary source code or other intellectual property by users of open source software. While we employ practices designed to monitor our compliance with the licenses of third-party open source software and to avoid using the open source software in a manner that would put our valuable proprietary source code at risk, there is a risk that we ~~currently hold a number of issued patents, trademarks, and~~

~~copyrights~~could have used, or may in ~~multiple jurisdictions. In~~ the future ~~we may acquire additional patents or patent portfolios,~~use, open source software in a manner which could require ~~significant cash expenditures. However, third parties may knowingly or unknowingly infringe~~us to release our proprietary ~~rights, third parties may challenge~~source code to users of our software or to the public, require us to license our proprietary ~~rights held by~~software for purposes of making modifications or derivative works, or prohibit us ~~and pending and future trademark, copyright, and patent applications may not be approved. Further,~~from charging fees for the laws of certain foreign countries do not provide the same level of protection of corporate proprietary information and assets such as intellectual property, trade secrets, know-how, and records as the laws of the United States. For instance, the legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection. As a result, we may be exposed to material risks of theftuse of our proprietary ~~information~~software. This could result in loss of revenue, and ~~other intellectual property, including technical data, manufacturing processes, data sets,~~allow our competitors to create similar offerings with lower development costs, and ultimately could result in a loss of our competitive advantages. Furthermore, there is an increasing number of open source software license types, almost none of which have been tested in a court of law, resulting in guidance regarding the proper legal interpretation of such licenses and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or ~~other sensitive information, and~~restrictions on our ability to provide or distribute our products. If we ~~may also encounter significant problems in protecting and defending our intellectual property or proprietary rights abroad. In~~were to receive a claim of non-compliance with the terms of any of ~~these cases,~~our open source licenses, we may be required to expend significant time and expense to prevent infringement or to enforce our rights. Although we have taken measures to protect our proprietary rights, there can be no assurance that others will not offer products or concepts that are substantially similar to ours and compete with our business. If we are unable to protect our proprietary rights or prevent unauthorized use or appropriation by third parties, the valuepublicly release certain portions of our brand and other intangible assets may be diminished, and competitors may be able to more effectively mimic our service and methods of operations. Any of these events could seriously harm our business.

In addition, we have contributed software source code under open-source licenses, have made other technology we developed available under other open licenses, and include open-source software in our products. From time to time, we may face claims from third parties claiming ownership of, or demanding release of, the open-source software or derivative works that we have developed using such software, which could include our proprietary source code or ~~otherwise seeking~~expend substantial time and resources to ~~enforce the terms~~re-engineer some or all of ~~the applicable open-source license. These claims could result in litigation and could require us to make~~ our software, ~~source code freely available,~~which may divert resources away from our product development efforts and, as a result, adversely affect our business. In addition, we could be required to seek licenses from third parties to continue offering our products for certain uses, or cease offering the products associated with such software, ~~unless and until we can re-engineer them to avoid infringement,~~ which may be ~~very~~ costly.

In addition, our use of open source software may present greater risks than use of other third-party commercial software, as open source licensors generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code. To the extent that our e-commerce capabilities and other business operations depend on the successful and secure operation of open source software, any undetected or unremediated vulnerabilities, errors, or defects in open source software that we use could prevent the deployment or impair the functionality of our systems and injure our reputation. In addition, the public availability of such software may make it easier for others to compromise our systems. Any of these risks could be difficult to eliminate or manage and, if not addressed, could have an adverse effect on our business.

If our users do not continue to contribute content or their contributions are not perceived as valuable to other users, we may experience a decline in user growth, retention, and engagement on Snapchat, which could result in the loss of advertisers and revenue.

Our success depends on our ability to provide Snapchat users with engaging content, which in part depends on the content contributed by our users. If users, including influential users such as world leaders, government officials, celebrities, athletes, journalists, sports teams, media outlets, and brands, do not continue to contribute engaging content to Snapchat, our user growth, retention, and engagement may decline. That, in turn, may impair our ability to maintain good relationships with our advertisers or attract new advertisers, which may seriously harm our business.

~~Foreign~~

Differing government initiatives and restrictions in regions in which our products and services are offered could seriously harm our business.

Foreign data protection, privacy, consumer protection, content regulation, and other laws and regulations are often more restrictive than those in the United States. In addition, federal, state, and local governments in the United States have taken increasingly divergent approaches to legislating, regulating, and taking enforcement action with respect to technologies that are related to our products and services, including considering or passing laws and regulations that are different than those applicable to other regions in the United States. Foreign governments may censor Snapchat in their countries, restrict access to Snapchat from their countries entirely, impose age-based restrictions on access to Snapchat, impose other restrictions that may affect their citizens’ ability to access Snapchat for an extended period of time or even indefinitely, require data localization, or impose other laws or regulations that we cannot comply with, would be difficult for us to comply with, or would require us to rebuild our products or the infrastructure for our products. Federal, state, or local governments in the United States may take, or attempt, similar steps. Such restrictions may also be implemented or lifted selectively to target or benefit other companies or products, which may result in sudden or unexpected fluctuations in competition in regions where we operate. In addition, geo-political conflicts may cause countries to target and restrict our operations, or to promote other companies’ products in place of ours. Any restriction on access to Snapchat due to ~~foreign~~ government actions or initiatives, or any withdrawal by us from certain countries or regions because of such actions or initiatives, or any increased competition due to actions and initiatives of ~~foreign~~ governments would adversely affect our DAUs, including by giving our competitors an opportunity to penetrate geographic markets that we cannot access or to which they previously did not have access. As a result, our user growth, retention, and engagement may be seriously harmed, and we may not be able to maintain or grow our revenue as anticipated and our business could be seriously harmed.

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Our users may increasingly engage directly with our partners and advertisers instead of through Snapchat, which may negatively affect our revenue and seriously harm our business.

Using our products, some partners and advertisers not only can interact directly with our users but can also direct our users to content ~~with~~on third-party websites ~~and products and~~or downloads of third-party applications. In addition, our users may generate content by using Snapchat features, but then share, use, or post itthe content on a different platform. The more our users engage with third-party websites and applications, the less engagement we may get from them, which would adversely affect the revenue we could earn from them. Although we believe that Snapchat reaps significant long-term benefits from increased user engagement with content on Snapchat provided by our partners, these benefits may not offset the possible loss of advertising revenue, in which case our business could be seriously harmed.

If events occur that damage our brand or reputation, our business may be seriously harmed.

We have developed a brand that we believe has contributed to our success. We also believe that maintaining and enhancing our brand is critical to expanding our user base, advertisers, and partners. Because many of our users join Snapchat on the invitation or recommendation of a friend or family member, one of our primary focuses is on ensuring that our users continue to view Snapchat and our brand favorably so that these referrals continue. Maintaining and enhancing our brand will depend largely on our ability to continue to provide useful, novel, fun, reliable, trustworthy, and innovative products, which we may not do successfully. We may introduce new products, make changes to existing products and services, or require our users to agree to new terms of service related to new and existing products that users do not like, which may negatively affect our brand in the short term, long term, or both. Additionally, our partners’ actions may affect our brand if users do not appreciate what those partners do on Snapchat. We may also fail to adequately support the needs of our users, advertisers, or partners, which could erode confidence in our brand. Maintaining and enhancing our brand may require us to make substantial investments and these investments may not be successful. If we fail to successfully promote and maintain our brand or if we incur excessive expenses in this effort, our business may be seriously harmed.

~~We and our founders also receive a high degree of media coverage globally.~~

In the past, we have experienced, and we expect that we will continue to experience, media, legislative, and regulatory scrutiny. Unfavorable publicity regarding us, our privacy or security practices, product changes, product quality, illicit use of our product, litigation, employee matters, or regulatory activity, or regarding the actions of our founders, our partners, our users, or other companies in our industry, could seriously harm our reputation and brand. Negative publicity and scrutiny could also adversely affect the size, demographics, engagement, and loyalty of our user base, as well as parental perception of our industry or Snapchat in particular, and result in decreased revenue, fewer ~~app~~application installs (or increased ~~app~~application un-installs), or declining ~~user base~~engagement or growth rates, including among teens who need parental approval for use of our products, any of which could seriously harm our business.

Expanding and operating in international markets requires significant resources and management attention. If we are not successful in expanding and operating our business in international markets, we may incur significant costs, damage our brand, or need to lay off team members in those markets, any of which may seriously harm our business.

We have expanded to new international markets and are growing our operations in existing international markets, which may have very different cultures and commercial, legal, and regulatory systems than where we ~~predominately~~predominantly operate. In connection with our international expansion and growth, we ~~have~~ also ~~hired~~hire new team members in many of these markets. This international expansion may:

●

~~impede our ability to continuously monitor the performance of all of our team members;~~

●•impede our ability to continuously monitor the performance of all of our team members;

~~result in hiring of team members who may not yet fully understand our business, products, and culture; or~~

●•result in hiring of team members who may not yet fully understand our business, products, and culture; or

~~cause us to expand in markets that may lack the culture and infrastructure needed to adopt our products.~~

•cause us to expand in markets that may lack the culture and infrastructure needed to adopt our products.

These issues may eventually lead to turnover or layoffs of team members in these markets and may harm our ability to grow our business in these markets. In addition, scaling our business to international markets imposes complexity on our business, and requires additional financial, legal, and management resources. We may not be able to manage growth and expansion effectively, which could damage our brand, result in significant costs, and seriously harm our business.

For example, in August 2022, we undertook a broad strategic reprioritization to focus on our top priorities, improve cost efficiencies, and drive toward profitability and positive free cash flow. As a result of the strategic reprioritization, in the year ended December 31, 2022, we incurred pre-tax charges of $188.9 million, primarily consisting of severance and related charges, stock-based compensation expense, lease exit and related charges, impairment charges, contract termination charges, and intangible asset amortization. As we continue to adapt and update our business model and priorities, we may make additional restructurings, reprioritizations, or reductions in the future. Any such changes could

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disrupt our operations, increase costs, make it harder to service our users or customers, adversely impact employee retention, hiring and morale, negatively impact our reputation, or distract management, any of which could seriously harm our business.

Additionally, asbecause we ~~increase the number of our~~have team members internationally, we are exposed to political, social, and economic instability in additional countries and regions. ~~For example, we have team members in Ukraine, and any political instability in the region may disrupt our operations and negatively impact our business.~~

Our products are highly technical and may contain undetected software vulnerabilities, bugs, or hardware errors, which could manifest in ways that could seriously harm our reputation and our business.

Our products are highly technical and complex. Snapchat, our other products, or ~~any other~~ products we may introduce in the future, may contain undetected software bugs, hardware errors, and other vulnerabilities. These bugs and errors can manifest in any number of ways in our products, including through diminished performance, security vulnerabilities, malfunctions, or even permanently disabled products. We have a practice of ~~rapidly~~ updating our products, ~~and~~but some errors in our products may be discovered only after a product has been released or shipped and used by users, and may in some cases be detected only under certain circumstances or after extended use. While we maintain an application security program designed to detect and remediate bugs and vulnerabilities in our products prior to their launch and a bug bounty program to allow security researchers to assist us in identifying vulnerabilities in our products before they are exploited by malicious threat actors, there is no guarantee that we will be able to discover and remediate vulnerabilities or threats to our products, including in a timely manner. We may be unable to detect bugs, vulnerabilities or threats because no testing can reveal all bugs and vulnerabilities in highly technical and complex products that are constantly evolving, cyber threat actors are developing sophisticated and often undisclosed exploit development tools and techniques, and vulnerabilities in open source and third-party software that may be included in our products are disclosed daily. Any errors, bugs, or vulnerabilities discovered in our products or code (particularly after release) could damage our reputation, result in a security incident (and attendant consequences), drive away users, lower revenue, and expose us to litigation claims or regulatory investigations or enforcement actions, any of which could seriously harm our business. We may also experience delays in developing and deploying remedial measures and patches designed to address identified vulnerabilities.

Spectacles, as an eyewear product, is regulated by the U.S. Food and Drug Administration, or the FDA, and may malfunction in a way that results in physical harm to a user or others around the user. We offer a limited one-year warranty in the United States and a limited two-year warranty in Europe, and any such defects discovered in our products after commercial release could result in a loss of sales and users, which could seriously harm our business. ~~Any errors, bugs,~~Moreover, certain jurisdictions in which we operate require manufacturers of connected devices to comply with legal and contractual obligations that govern the way data generated by such connected devices is shared and used. If we are unable to comply with these requirements in a timely manner, or ~~vulnerabilities discovered~~if we face technical difficulties in ~~our code after release~~the implementation of some requirements, we could ~~damage our reputation, drive away users, lower revenue,~~become subject to investigations and ~~expose us to damages claims, any of~~enforcement actions, which could ~~seriously harm our business.~~

require additional financial and management resources.

We ~~could also~~may face claims for product liability, tort, or breach of ~~warranty. In addition,~~warranty, or experience product recalls. For example, in the first quarter of 2024, we voluntarily decided to recall our Pixy drone product and refund consumers after determining that, in a very small number of cases, the batteries overheated. The product had been discontinued in August 2022. Our product contracts with users contain provisions relating to warranty disclaimers and liability limitations, which may not be upheld. ~~Defending a lawsuit, regardless~~In addition, our liability insurance coverage may prove inadequate or future coverage may be unavailable on acceptable terms or at all. The occurrence of ~~its merit, is costly and may~~any of these events could increase our costs, divert ~~management’s~~management attention, and seriously harm our reputation and our business. ~~In addition, if our liability insurance coverage proves inadequate or future coverage is unavailable on acceptable terms or at all, our business could be seriously harmed.~~

We have been, are currently, and may in the future be subject to regulatory inquiries, investigations, and proceedings ~~in the future,~~ which could cause us to incur substantial costs or require us to change our business practices in a way that could seriously harm our business.

We have been, are currently, and may in the future be subject to inquiries, investigations, and ~~inquiries from~~proceedings instituted by government entities. We regularly report information about our business to federal, state, and foreign regulators in the ordinary course of operations. For example, many companies in our industry have received additional information requests from the U.S. Equal Employment Opportunity Commission, and companies with operations in California, including us, have received additional information requests and notices of cause from the California Civil Rights Department (formerly the California Department of Fair Employment and Housing) regarding employment practices, including pay equity. These ~~investigations and inquiries,~~actions, including any potential unfavorable outcomes, and our compliance with any associated regulatory orders, or consent decrees, or settlements, may require us to change our policies or practices, subject us to substantial monetary fines or other penalties or sanctions, result in increased operating costs, divert management’s

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attention, harm our reputation, and require us to incur significant legal and other expenses, any of which could seriously harm our business.

We are currently, and expect to be in the future, party to patent lawsuits and other intellectual property claims that are expensive and time-consuming. If resolved adversely, these lawsuits and claims could seriously harm our business.

Companies in the mobile, camera, communication, media, internet, and other technology-related industries own large numbers of patents, copyrights, trademarks, trade secrets, and other intellectual property rights, and frequently enter into litigation based on allegations of infringement, misappropriation, or other violations of intellectual property or other rights. In addition, various “non-practicing entities” and other entities that own patents, copyrights, trademarks, trade secrets, and other intellectual property rights often attempt to aggressively assert their rights to extract value from technology companies. Furthermore, from time to time we may introduce new products or make other business changes, including in areas where we currently do not compete, which could increase our exposure to patent, copyright, trademark, trade secret, and other intellectual property rights claims from competitors and non-practicing entities. We have been subject to, and expect to continue to be subject to, claims and legal proceedings from holders of patents, trademarks, copyrights, trade secrets, and other intellectual property rights alleging that some of our products or content infringe their rights. For example, in January 2020, You Map, Inc. filed a lawsuit in the U.S. District Court for the District of Delaware against us, our subsidiary Zenly, and certain of our respective employees alleging that we misappropriated various trade secrets regarding map technology used in Snapchat’s and Zenly’s map products and that the Snapchat and Zenly applications infringe a You Map patent. While we believe we have meritorious defenses to these claims, anAn unfavorable outcome in any of these ~~and other similar~~ lawsuits could seriously harm our business. If these or other matters continue in the future or we need to enter into licensing arrangements, which may not be available to us or on terms favorable to us, it may increase our costs and decrease the value of our products, and our business could be seriously harmed.

If a third party does not offer us a license to its intellectual property on commercially reasonable terms, or at all, we may be required to develop, acquire or license alternative, non-infringing technology, which could require significant time, effort, and expense, and may ultimately not be successful. Any of these events would adversely affect our business.

Moreover, we may not be aware if our platform is infringing, misappropriating, or otherwise violating third-party intellectual property rights, and third parties may bring claims alleging such infringement, misappropriation, or violation. Because patent applications can take years to issue and are often afforded confidentiality for some period of time, there may currently be pending applications, unknown to us, that later result in issued patents that could cover one or more of our products and there is also a risk that we could adopt a technology without knowledge of a pending patent application, which technology would infringe a third-party patent once that patent is issued. Moreover, the law continues to evolve and be applied and interpreted by courts in novel ways that we may not be able to adequately anticipate, and such changes may subject us to additional claims and liabilities. In a patent infringement claim against us, we may assert, as a defense, that we do not infringe the relevant patent claims, that the patent is invalid or both. The strength of our defenses will depend on the patents asserted, the interpretation of these patents and our ability to invalidate the asserted patents. However, we could be unsuccessful in advancing non-infringement or invalidity arguments in our defense. In the United States, issued patents enjoy a presumption of validity, and the party challenging the validity of a patent claim must present clear and convincing evidence of invalidity, which is a high burden of proof. Conversely, the patent owner need only prove infringement by a preponderance of the evidence, which is a lower burden of proof. Intellectual property claims, whether or not successful, could divert management time and attention away from our business and harm our reputation and financial condition. Moreover, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on our business.

We are currently, and expect to be in the future, party to lawsuits contending that we should be legally responsible to content created by our users or harms experienced by our users. These lawsuits can be expensive and time-consuming. If resolved adversely, these lawsuits and claims could seriously harm our business.

We rely on a variety of Constitutional, statutory, and common-law frameworks that provide that we are not legally responsible for ~~the~~ content ~~we host and provide~~created by our users, including the Digital Millennium Copyright Act, the Communications Decency Act, or CDA, the First Amendment, and the fair-use doctrine. However, ~~each of~~ these provisions, statutes, and doctrines isare subject to uncertain judicial interpretation and regulatory and legislative amendments. For example, the U.S. Congress amended the CDA in 2018 in ways that could expose some Internet platforms to an increased risk of litigation. In addition, the U.S. Congress and the Executive branch have proposed further changes or amendments each year since 2019 including, among other things, proposals that would narrow the CDA immunity, expand government enforcement power relating to content moderation concerns, or repeal the CDA altogether. Some U.S. states have also enacted or proposed

legislation that would undercut, or conflict with, the CDA’s protections. Some of these state-specific laws grant individuals a private right of action to sue to enforce these laws, with statutory damages. Although such state laws have been or can be expected to be challenged in court, if these laws were upheld or if additional similar laws or the changes or amendments to the CDA proposed by the U.S. Congress and the Executive branch were enacted, such changes may decrease the protections

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provided by the CDA and expose us to lawsuits, penalties, and additional compliance obligations. If courts begin to interpret the CDA more narrowly than they have historically done, this could expose us to additional lawsuits and potential judgments and seriously harm our business. Moreover, some of these statutes and doctrines that we rely on provide protection only or primarily in the United States. If the rules around these doctrines change, if international jurisdictions refuse to apply similar protections, or if a court were to disagree with our application of those rules to our service, we could incur liability or be required to make significant changes to our products, business practices, or operations, and our business could be seriously harmed.

Notwithstanding these Constitutional, statutory, and common-law protections, we have faced, currently face, and will continue to face claims relating to information that is published or made available on our products, including Snapchat. In particular, the nature of our business exposes us to claims related to defamation, intellectual property rights, rights of publicity and privacy, and personal injury torts. For example, we do not monitor or edit the vast majority of content that is communicated through Snapchat, and such content has, and may in the future, expose us to lawsuits. Specifically, we are currently facing several lawsuits alleging that we are liable for allowing users to communicate with each other, and that those communications sometimes result in harm. In addition, other lawsuits allege that the design of our platform and those of our competitors is addictive and harmful to minor users’ mental health. Other plaintiffs have argued that we should be legally responsible for fentanyl overdoses or poisoning if communications about a drug transaction occurred on our platform. We believe we have meritorious defenses to these lawsuits, but litigation is inherently uncertain. Unfavorable outcomes could seriously harm our business. These actions, including any potential unfavorable outcomes, and our compliance with any associated court orders or settlements, may require us to change our policies or practices, subject us to substantial monetary judgments, fines, penalties, or sanctions, result in increased operating costs, divert management’s attention, harm our reputation, and require us to incur significant legal and other expenses, any of which could seriously harm our business. Even if the outcome of any such litigation or claim is favorable, defending against such lawsuits is costly and can impose a significant burden on management and employees. We may also receive unfavorable preliminary, interim, or final rulings in the course of litigation.

This risk is enhanced in certain jurisdictions outside the United States where our protection from liability for third-party actions may be less than the protection that exists in the United States. For example, in April 2019, the European Union passed a directive expanding online platform liability for copyright infringement and regulating certain uses of news content online, which member states were required to implement by June 2021. In addition, legislation in Germany may impose significant fines for failure to comply with certain content removal and disclosure obligations. Numerous other countries in Europe, the Middle East, Asia-Pacific, and Latin America are considering or have implemented similar legislation imposing penalties for failure to remove certain types of content or follow certain processes.

We could incur significant costs investigating and defending such claims and, if we are found liable, significant damages, or license costs. We could also face fines or orders restricting or blocking our services in particular geographies as a result of content hosted on our services. If any of these events occur, we may incur significant costs or be required to make significant changes to our products, business practices, or operations and our business could be seriously harmed.

From time to time, we are involved in class-action lawsuits and other litigation matters that are expensive and time-consuming and could seriously harm our business.

We are involved in numerous lawsuits, including putative class-action lawsuits brought by users and investors, some of which may claim statutory damages. We anticipate that we will continue to be a target for lawsuits in the future. Because we have millions of users, class-action lawsuits against us that are purportedly filed by or on behalf of users typically claim enormous monetary damages in the aggregate even if the alleged per-user harm is small or non-existent. For example, in November 2020, a putative class filed an action against us in Illinois, alleging that we violated ~~Illinois’ Biometric Information Privacy Act, or BIPA,~~an Illinois statute concerning the handling of biometric data, which we settled. Other plaintiffs have chosen to pursue a strategy of joining with ~~respect~~other plaintiffs to ~~many Illinois users~~bring a large number of Snapchat and that we are liable to those users for statutory damages. We compelled arbitration, which the court granted, dismissing the case and ordering the parties to arbitrate the matter; that ruling compelling arbitration is currently being appealed. Some plaintiffs’ attorneys have also indicatedindividual claims, rather than pursuing a desire to initiate arbitrations against us, arguing that we violated BIPA, in some cases on behalf of large numbers of Illinois users. We believe we have meritorious defenses to these lawsuits and arbitrations, but an unfavorable outcome in these lawsuits or arbitrations could seriously harm our business. class action.

Similarly, because we have a large number of stockholders, class-action lawsuits on securities theories typically claim enormous monetary damages in the aggregate even if the alleged loss per stockholder is small. For example, in November 2021, we, and certain of our officers, were named as defendants in a securities class-action lawsuit in federal court purportedly brought on behalf of purchasers of our Class A common stock. The lawsuit alleges that we and certain of our officers made false or misleading statements and omissions concerning the impact that Apple’s App Tracking Transparency, or ATT, framework would have on our business. In August 2022, we, and certain of our directors, were named as defendants in a class-action lawsuit in Delaware Chancery Court purportedly brought on behalf of Class A stockholders, alleging that a transaction between the company’s co-founders and the company, in which the co-founders

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agreed to employment agreements and we agreed to amend our certificate of incorporation and issue a stock dividend if certain conditions were met, was not advantageous to the stockholders and constituted a breach of fiduciary duty. In December 2023, we entered into an Amended Stipulation of Compromise and Settlement to settle and dismiss the lawsuit, subject to approval by the court and the satisfaction of various conditions.

We believe we have meritorious defenses to these lawsuits, but litigation is inherently uncertain and an unfavorable outcome could seriously harm our business. Any litigation to which we are a party may result in an onerous or unfavorable judgment that might not be reversed on appeal, or we may decide to settle lawsuits on adverse terms. Any such negative outcome could result in payments of substantial monetary damages or fines, or changes to our products or business practices, and seriously harm our business. Even if the outcome of any such litigation or claim is favorable, defending ~~them~~against such lawsuits is costly and can impose a significant burden on management and employees. We may also receive unfavorable preliminary, interim, or final rulings in the course of litigation. For example, in November 2021, we, and certain of our officers, were named as defendants in a securities class action lawsuit in federal court purportedly brought on behalf of purchasers of our Class A common stock. The lawsuit alleges 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, but an unfavorable outcome could seriously harm our business.

~~We may face lawsuits, incur liability, or need to seek licenses based on information posted to our products.~~

We have faced, currently face, and will continue to face claims relating to information that is published or made available on our products, including Snapchat. In particular, the nature of our business exposes us to claims related to defamation, intellectual property rights, rights of publicity and privacy, and personal injury torts. For example, we do not monitor or edit the vast majority of content that is communicated through Snapchat, and such content may expose us to lawsuits. This risk is enhanced in certain jurisdictions outside the United States where our protection from liability for third-party actions may be unclear or evolving and where we may be less protected under local laws than we are in the United States. For example, in April 2019, the European Union passed a directive expanding online platform liability for copyright infringement and regulating certain uses of news content online, which member states ~~were~~ required to implement by June 2021. In addition, legislation in Germany may impose significant fines for failure to comply with certain content removal and disclosure obligations. Numerous other countries in Europe, the Middle East, Asia-Pacific, and Latin America are considering or have implemented similar legislation imposing penalties for failure to remove certain types of content or follow certain processes. In the United States, there have been various Congressional and Executive branch efforts to remove or restrict the scope of the protections available to online platforms under Section 230 of the CDA. For example, the CDA was amended in 2018, and the U.S. Congress and the Executive branch have proposed further changes or amendments each year since 2019, including among other things proposals that would narrow CDA immunity, expand government enforcement power relating to content moderation concerns, or repeal the CDA altogether. Such changes could decrease or change our protections from liability for third-party content in the United States. We could incur significant costs investigating and defending such claims and, if we are found liable, significant damages, or license costs. We could also face fines or orders restricting or blocking our services in particular geographies as a result of content hosted on our services. If any of these events occur, we may incur significant costs or be required to make significant changes to our products, business practices, or operations and our business could be seriously harmed.

We plan to continue expanding our international operations, including in markets where we have limited operating experience and may be subject to increased business and economic risks that could seriously harm our business.

We plan to continue expanding our business operations abroad and ~~translating our products into other languages. Snapchat is currently available in more than 40 languages, and we have offices in more than 15 countries. We plan~~ to enter new international markets and expand our operations in existing international markets, where in some cases we have limited or no experience in marketing, selling, and deploying our products and advertisements. Our limited experience and infrastructure in such markets, or the lack of a critical mass of users in such markets, may make it more difficult for us to effectively monetize any increase in DAUs in those markets, and may increase our costs without a corresponding increase in revenue. If we fail to deploy or manage our operations in international markets successfully, our business may suffer. ~~In the future, as~~We do not currently enter into foreign currency exchange contracts, which means our ~~international operations increase, or more of our expenses are denominated in currencies other than the U.S. dollar, our~~business, financial condition, and operating results may be ~~more greatly affected~~impacted by fluctuations in the exchange rates of the currencies in which we do business. In the future, as our international operations increase, or more of our revenue agreements or operating expenses are denominated in currencies other than the U.S. dollar, these impacts may become material. In addition, as our international operations and sales continue to grow, we are subject to a variety of risks inherent in doing business internationally, including:

●

~~political, social, and economic instability;~~

●•political, social, and economic instability, including war and other armed conflict, and significant political developments or disruptions in foreign jurisdictions, such as the ongoing legal and regulatory changes in the United Kingdom as a result of the withdrawal of the United Kingdom from the European Union;

risks related to the legal and regulatory environment in foreign jurisdictions, including with respect to privacy, rights of publicity, content, data protection, intellectual property, health and safety, competition, protection of minors, consumer protection, employment, money transmission, import and export restrictions, gift cards, electronic funds transfers, anti-money laundering, advertising, algorithms, encryption, and taxation, and unexpected changes in laws, regulatory requirements, and enforcement;

●•risks related to the legal and regulatory environment in foreign jurisdictions, including with respect to privacy, rights of publicity, content, data protection, cybersecurity, intellectual property, health and safety, competition, protection of minors, consumer protection, employment, money transmission, import and export restrictions, gift cards, electronic funds transfers, anti-money laundering, advertising, algorithms, encryption, and taxation, and unexpected changes in laws, regulatory requirements, and enforcement;

~~potential damage to our brand and reputation due to compliance with local laws, including potential censorship and requirements to provide user information to local authorities;~~

●•potential damage to our brand and reputation due to compliance with local laws, including potential censorship and requirements to provide user information to local authorities;

~~fluctuations in currency exchange rates;~~

●•fluctuations in currency exchange rates;

~~higher levels of credit risk and payment fraud;~~

●•higher levels of credit risk and payment fraud;

~~complying with tax requirements of multiple jurisdictions;~~

●•complying with tax requirements of multiple jurisdictions;

~~enhanced difficulties of integrating any foreign acquisitions;~~

●•enhanced difficulties of integrating any foreign acquisitions;

complying with a variety of foreign laws, including certain employment laws requiring national collective bargaining agreements that set minimum salaries, benefits, working conditions, and termination requirements;

●•complying with a variety of foreign laws, including certain employment laws requiring national collective bargaining agreements that set minimum salaries, benefits, working conditions, and termination requirements;

~~reduced protection for intellectual-property rights in some countries;~~

●•complying with a variety of foreign disclosure and reporting obligations, including those related to environmental, social, and corporate governance impacts and security breaches;

~~difficulties in staffing and managing global operations and the increased travel, infrastructure, and compliance costs associated with multiple international locations;~~

●•reduced protection for intellectual-property rights in some countries;

~~regulations that might add difficulties in repatriating cash earned outside the United States and otherwise preventing us from freely moving cash;~~

●•difficulties in staffing and managing global operations and the increased travel, infrastructure, and compliance costs associated with multiple international locations;

~~import and export restrictions and changes in trade regulation;~~

●•regulations that might add difficulties in repatriating cash earned outside the United States and otherwise preventing us from freely moving cash;

~~complying with statutory equity requirements;~~

●•import and export restrictions and changes in trade regulation;

~~complying with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and similar laws in other jurisdictions; and~~

●

~~export controls and economic sanctions administered by the Department of Commerce Bureau of Industry and Security and the Treasury Department’s Office of Foreign Assets Control.~~

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•complying with statutory equity requirements;

•complying with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and similar laws in other jurisdictions; and

•export controls and economic sanctions administered by the Department of Commerce Bureau of Industry and Security, the Treasury Department’s Office of Foreign Assets Control, or other similar foreign regulatory bodies.

If we are unable to expand internationally and manage the complexity of our global operations successfully, our business could be seriously harmed.

~~Exposure to United Kingdom political developments, including the effect of its withdrawal from the European Union, could be costly and difficult to comply with and could harm our business.~~

We have based a significant portion of our European operations in the United Kingdom and have licensed a portion of our intellectual property to one of our United Kingdom subsidiaries. These operations continue to face risks and potential disruptions related to the withdrawal of the United Kingdom from the European Union, commonly referred to as “Brexit.” Although the United Kingdom and the European Union have entered into a trade and cooperation agreement, the long-term nature of the United Kingdom’s relationship with the European Union remains unclear. For example, Brexit could lead to potentially divergent laws and regulations, such as with respect to data protection and data transfer laws, that could be costly

and difficult to comply with. While we continue to monitor these developments, the full effect of Brexit on our operations is uncertain and our business could be harmed by trade disputes or political differences between the United Kingdom and the European Union in the future.

We plan to continue to make acquisitions and strategic investments in other companies, which could require significant management attention, disrupt our business, dilute our stockholders, and seriously harm our business.

As part of our business strategy, we have made and intend to make acquisitions to add specialized team members and complementary companies, products, and technologies, as well as investments in public and private companies in furtherance of our strategic objectives. Our ability to acquire and successfully integrate larger or more complex companies, products, and technologies is unproven. In the future, we may not be able to find other suitable acquisition or investment candidates, and we may not be able to complete acquisitions or investments on favorable terms, if at all. Our previous and future acquisitions and investments may not achieve our goals, and any future acquisitions or investments we complete could be viewed negatively by users, advertisers, partners, or investors. In addition, if we fail to successfully close transactions, integrate new teams, or integrate the products, technologies, and ~~technologies~~systems associated with these acquisitions into our company, our business could be seriously harmed. Any integration process may require significant time and resources, and we may not be able to manage the process successfully. For example, future or past business transactions could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies. We may not successfully evaluate or use the acquired products, technology, and personnel, or accurately forecast the financial impact of an acquisition or investment transaction, including accounting charges. We may also incur unanticipated liabilities and litigation exposure that we assume as a result of acquiring companies. We may have to pay cash, incur debt, or issue equity securities to pay for any acquisition or investment, any of which could seriously harm our business. Selling or issuing equity to finance or carry out any such acquisition or investment would also dilute our existing stockholders. Incurring debt would increase our fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.

In addition, it generally takes several months after the closing of an acquisition to finalize the purchase price allocation. Therefore, it is possible that our valuation of an acquisition may change and result in unanticipated write-offs or charges, impairment of our goodwill, or a material change to the fair value of the assets and liabilities associated with a particular acquisition, any of which could seriously harm our business.

The strategic investments we make in public and private companies around the world range from early-stage companies still defining their strategic direction to mature companies with established revenue streams and business models. Many of the instruments in which we invest are non-marketable and illiquid at the time of our initial investment, and ~~we are not always able to achieve a return in a timely fashion, if at all. Our~~our ability to realize a return on our investment, ~~in a private company,~~ if any, is typically dependent on the ~~company~~issuer participating in a liquidity event, such as a public offering or acquisition. We are not always able to achieve a return on our investments in a timely fashion, if at all, even for those companies that have achieved a liquidity event. To the extent any of the companies in which we invest are not successful, which can include failures to achieve business objectives as well as bankruptcy, we could recognize an impairment or lose all or part of our investment.

Our acquisition and investment strategy may not succeed if we are unable to remain attractive to target companies or expeditiously close transactions. For example, if we develop a reputation for being a difficult acquirer or having an unfavorable work environment, or target companies view our non-voting Class A common stock unfavorably, we may be unable to source and close acquisition targets. In addition, members of the U.S. administration and Congress have proposed new legislation, and the U.S. Federal Trade Commission and Department of Justice have adopted new procedures, that could limit, hinder, or delay the acquisition process and target opportunities. If we are unable to consummate key acquisition transactions essential to our corporate strategy, it may limit our ability to grow or compete effectively and our business may be seriously harmed.

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If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings, which could seriously harm our business.

Under U.S. generally accepted accounting principles, or GAAP, we review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. As of December 31, ~~2021,~~2023, we had recorded a total of ~~$1.9~~$1.8 billion of goodwill and intangible assets, net related to our acquisitions. An adverse change in market conditions, particularly if such change has the effect of changing one of our critical assumptions or estimates, could result in a change to the estimation of fair value that could result in an impairment charge to our goodwill or intangible assets. Any such material charges may seriously harm our business.

~~We have spent and may continue to spend substantial funds in connection with the tax liabilities on the settlement~~Our use of equity ~~awards. The manner in which~~awards to compensate and motivate our employees causes dilution to existing stockholders. Efforts to manage this dilution are likely to reduce the amount of cash we ~~fund these tax liabilities may cause us~~have available for other purposes.

We use equity awards that vest over multiple years to ~~spend substantial funds or dilute stockholders, either of which may have an adverse effect on~~compensate and motivate our ~~financial condition.~~

employees. When our employee equity awards vest, we typically withhold taxes and remit them, along with any employee and employer social security contributions, to relevant taxing authorities on behalf of team ~~members.~~members and, where applicable, their employers.

While the issuance of stock-based compensation to our employees does not deplete our cash balance, it is dilutive to existing stockholders. To ~~fund the withholding~~help manage and ~~remittance obligations for equity awards,~~mitigate this dilution, we ~~have either used~~can choose to use our existing cash or sold a portion of vested equity awards on behalf of our team members near the applicable settlement dates in an amount that is substantially equivalent to the number of shares of common stock that we would withhold in connection with these settlements. In the future, we may also sell equity on our behalf and use the proceeds to fund the withholding and remittance obligations ~~for~~on equity ~~awards. Any~~awards when they vest (instead of ~~these methods may have an adverse effect on our financial condition.~~

~~If we sell shares~~selling a portion of the vested equity award on behalf of our ~~team members, although those newly issued shares should not be dilutive, such sales~~employees), or engage in stock repurchases. However, doing so would reduce the amount of cash we have available to ~~the market could result in a decline to our~~fund working capital, capital expenditures, strategic acquisitions or business opportunities, and other general corporate purposes and may increase stock ~~price.~~price volatility. If we ~~use our existing cash, or if our cash reserves are not sufficient, we may choose~~were to issue equity securities or borrow funds under our revolving credit facility. In such an event, we cannot assure you that we will be able to successfully match the proceeds of any such equity financing to the then applicable tax liability, and any such equity financing could result in a decline in our stock price and be dilutive to existing stockholders. If we elect to satisfy tax withholding and remittance obligations in whole or in part by drawing on our revolving credit facility, our interest expense and principal repayment requirements could increase significantly, which could seriously harm our business.

There are numerous risks associated with our internal and contract manufacturing of our physical products and components. If we encounter problems with either our internal or contract manufacturing, we may not deliver our products within specifications or on time, which may seriously harm our business.

Manufacturing processes are highly complex, require advanced and costly equipment, and must be continuously modified to improve yields and performance. We largely rely on third-party suppliers and contract manufacturers in connection with the production of our own physical products and components. We and our contract manufacturers are all vulnerable to capacity constraints and reduced component availability, and have limited control over delivery schedules, manufacturing yields, and costs, particularly when components are in short supply, or if we introduce a new product or feature. In addition, we have limited control over our suppliers’ and manufacturers’ quality systems and controls, and therefore must rely on them to meet our quality and performance standards and specifications. Delays, component shortages, including custom components that are manufactured for us at our direction, global trade conditions and agreements, and other manufacturing and supply problems could impair the distribution of our products and ultimately our brand. For example, the United States has threatened tougher trade terms with China and other countries, leading to the imposition, or potential future imposition, of substantially higher U.S. Section 301 tariffs on certain imports from China, which may adversely affect our products and seriously harm our business.

Furthermore, any adverse change in our suppliers’ or contract manufacturers’ financial or business condition or our relationship with them could disrupt our ability to supply our products. If we change our suppliers or contract manufacturers, or shift to more internal manufacturing operations, we may lose revenue, incur increased costs, and damage our reputation and brand. Qualifying and commencing operations with a new supplier or contract manufacturer is expensive and time-consuming. In addition, if we experience increased demand for our products, we may need to increase our material or component purchases, internal or contract-manufacturing capacity, and internal test and quality functions. The inability of our suppliers or contract manufacturers to provide us with adequate high-quality materials and products could delay our order fulfillment, and may require us to change the design of our products to meet this increased demand. Any redesign may require us to re-qualify our products with any applicable regulatory bodies or customers, which would be costly and time-consuming. This may lead to unsatisfied customers and users and increase costs to us, which could seriously harm our business. As we increase or acquire additional manufacturing capacity, we are subject to many complex and evolving environmental, health, and safety laws, regulations, and rules in each jurisdiction in which we operate. If we fail to comply with any such laws and regulations, then we could incur regulatory penalties, fines, and legal liabilities, suspension of production, significant compliance requirements, alteration of our manufacturing processes, or restrictions on our ability to modify or expand our facilities, any of which could seriously harm our business.

In addition, any errors or defects in any parts or technology incorporated into our products could result in product failures or recalls that could seriously harm our business. Further, any defect in manufacturing, design, or other could cause our products to fail or render them permanently inoperable. For example, the typical means by which our Spectacles product connects to mobile devices is by way of a Bluetooth transceiver located in the Spectacles product. If the Bluetooth transceiver in our Spectacles product were to fail, it would not be able to connect to a user’s mobile device and Spectacles would not be able to deliver any content to the mobile device and the Snapchat application. As a result of such product failures or recalls, we may have to replace or offer refunds for these products at our sole cost and expense, face litigation, including class-action lawsuits, or be subject to other liabilities. Should we have a widespread problem of this kind, the reputational damage and the cost of replacing these products, or other liabilities, could seriously harm our business.

The FDA and other state and foreign regulatory agencies regulate Spectacles. We may develop future products that are regulated as medical devices by the FDA or regulated by other governmental agencies. Government authorities, primarily the FDA and corresponding regulatory agencies, regulate the medical device industry. Unless there is an exemption, we must obtain regulatory approval from the FDA and corresponding agencies, or other applicable governmental authorities, before we can market or sell a new regulated product or make a significant modification to an existing product. Obtaining regulatory clearances to market a medical device or other regulated products can be costly and time-consuming, and we may not be able to obtain these clearances or approvals on a timely basis, or at all, for future products. Any delay in, or failure to receive or maintain, clearance or approval for any products under development could prevent us from launching new products. We could seriously harm our business and the ability to sell our products if we experience any product problems requiring reporting to governmental authorities, if we fail to comply with applicable federal, state, or foreign agency regulations, or if we are subject to enforcement actions such as fines, civil penalties, injunctions, product recalls, or failure to obtain regulatory clearances or approvals.

We have faced inventory risk with respect to our physical ~~products, such as Spectacles.~~

products.

We have been and may in the future be exposed to inventory risks related to our physical products ~~such as Spectacles,~~ as a result of rapid changes in product cycles and pricing, defective merchandise, changes in consumer demand and consumer spending patterns, changes in consumer tastes with respect to our products, and other factors. We try to accurately predict these trends and avoid overstocking or understocking inventory. Demand for products, however, can change significantly between the time inventory or components are ordered and the date of sale. The acquisition of certain types of inventory or components may require significant lead-time and prepayment and they may not be returnable. Failure to manage our inventory, supplier commitments, or customer expectations could seriously harm our business.

We have offered and may continue to offer credit to our partners to stay competitive, and as a result we may be exposed to credit risk of some of our partners, which may seriously harm our business.

We engage in business with some of our partners on an open credit basis. While we attempt to monitor individual partner payment capability when we grant open credit arrangements and maintain allowances we believe are adequate to cover exposure for doubtful accounts, we cannot assure investors these programs will be effective in managing our credit risks in the future. This may be especially true as our business grows and expands, we engage with partners that have limited operating history, or we engage with partners that we may not be familiar with. If we are unable to adequately control these risks, our business could be seriously harmed.

Operating our business requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay the Convertible Notes, and any other debt when due, which may seriously harm our business.

Our ability to make principal or interest payments on, or to refinance, the Convertible Notes or other indebtedness depends on our future performance, which is subject to many factors beyond our control. Our business may not generate sufficient cash flow from operations in the future to service our debt and business. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, obtaining additional debt financing, or issuing additional equity securities, any of which may be on terms that are not favorable to us or, in the case of equity securities, highly dilutive to our stockholders. The Convertible Notes will mature beginning in May 2025, unless earlier converted, redeemed, or repurchased. Our ability to repay or refinance the Convertible Notes or our other indebtedness will depend on various factors, including the ~~available~~accessibility of capital markets, our business, and our financial condition at such time. We may not be able to engage in any of these activities or on desirable terms, which could result in a default on our debt obligations. In addition, our existing and future debt agreements, including the Convertible Notes and

Credit Facility, may contain restrictive covenants that may prohibit us from adopting any of these alternatives. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of our debt, and would seriously harm our business.

In addition, holders of the Convertible Notes have the right to require us to repurchase all or a portion of the Convertible Notes on the occurrence of a fundamental change at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. Further, if a make-whole fundamental change as defined in each of the indentures governing the Convertible Notes, or the Indentures, occurs prior to the maturity date of the Convertible Notes, we will in some cases be required to increase the conversion rate for a holder that elects to convert its Convertible Notes in connection with such make-whole fundamental change. On the conversion of the Convertible Notes, unless we elect to deliver solely shares of our Class A common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments for the Convertible Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make such repurchases of the Convertible Notes surrendered or pay cash with respect to the Convertible Notes being converted.

If we default on our credit obligations, our operations may be interrupted and our business could be seriously harmed.

We have a Credit Facility that we may draw on to finance our operations, acquisitions, and other corporate purposes. If we default on these credit obligations, our lenders may:

●

~~require repayment of any outstanding amounts drawn on our Credit Facility;~~

●•require repayment of any outstanding amounts drawn on our Credit Facility;

~~terminate our Credit Facility; or~~

●•terminate our Credit Facility; or

~~require us to pay significant damages.~~

•require us to pay significant damages.

If any of these events occur, our operations may be interrupted and our ability to fund our operations or obligations, as well as our business, could be seriously harmed. In addition, our Credit Facility contains operating covenants, including customary limitations on the incurrence of certain indebtedness and liens, restrictions on certain intercompany transactions, and limitations on the amount of dividends and stock repurchases. Our ability to comply with these covenants may be affected by events beyond our control, and breaches of these covenants could result in a default under the Credit Facility and any future financial agreements into which we may enter. If not waived, defaults could cause our outstanding indebtedness under our outstanding Convertible Notes or our Credit Facility, including any future financing agreements that we may enter into, to

become immediately due and payable. For more information on our Credit Facility, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

We cannot be certain that additional financing will be available on reasonable terms when needed, or at all, which could seriously harm our business.

We have historically incurred net losses and negative cash flow from operations, ~~in prior periods,~~ and we may not ~~achieve or maintain profitability.~~attain and sustain profitability in future periods. As a result, we may need additional financing. Our ability to obtain additional financing, if and when required, will depend on investor demand, our operating performance, our credit rating, the condition of the capital markets, and other factors. To the extent we use available funds or draw on our Credit Facility, we may need to raise additional funds and we cannot assure investors that additional financing will be available to us on favorable terms when required, or at all. If we raise additional funds through the issuance of equity, equity-linked, or debt securities, those securities may have rights, preferences, or privileges senior to the rights of our Class A common stock, and our existing stockholders may experience dilution. In the event that we are unable to obtain additional financing on favorable terms, our interest expense and principal repayment requirements could increase significantly, which could seriously harm our business.

In addition, our ability to draw on our Credit Facility relies on our lenders under that facility’s continued operation and ability to fund.

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Risks Related to Taxes

~~New legislation~~

Existing, new, and proposed tax laws and regulations that would ~~change~~affect the U.S. or foreign taxation of business activities, including the imposition of, or increase in, tax based on gross revenue, could seriously harm our business, or thefinancial markets and the market price of our Class A common stock.

Reforming the taxation of international businesses has been a priority for politicians at a global level, and a wide variety of changes have been proposed or enacted. Due to the large and expanding scale of our international business activities, any changes in the taxation of such activities may increase our tax expense, the amount of taxes we pay, or both, and seriously harm our business. For example, legislation commonly referred to as the Tax Cuts and Jobs Act, ~~or the Tax Act,~~which was enacted in December 2017, ~~and~~ significantly reformed the U.S. Internal Revenue Code of 1986, as amended, or the Code. The Tax Cuts and Jobs Act ~~lowered~~put into effect significant changes to U.S. taxation of international business activities, including lowering U.S. federal corporate income tax rates, ~~changed~~changing the utilization of future net operating loss carryforwards, ~~allowed for the expensing of~~allowing certain capital expenditures to be expensed, eliminating the option to currently deduct research and ~~put into effect sweeping~~development expenditures and requiring taxpayers to capitalize and amortize U.S.-based and non-U.S.-based research and development expenditures over five and fifteen years, respectively. In August 2022, the Inflation Reduction Act, or the IRA, was enacted, the provisions of which include a minimum tax equal to 15% of the adjusted financial statement income of certain large corporations, as well as a 1% excise tax on certain share buybacks by public corporations that would be imposed on such corporations. It is possible that changes ~~to U.S. taxation of international business activities. However,~~or interpretations under the ~~current U.S. administration has indicated a desire to reform~~Tax Cuts and Jobs Act, the ~~Code, including by potentially increasing U.S. federal corporate income~~IRA, or other tax ~~rates, and it is currently unclear what, if any, changes to the Code will be enacted and how that may affect~~legislation could increase our future tax liability, which could in turn adversely impact our business ~~or the financial markets~~ and ~~the market price of our Class A common stock.~~

future profitability.

In addition, many jurisdictions and intergovernmental organizations have ~~been discussing~~implemented or are in the process of implementing proposals that ~~may change~~have changed (or are likely to change) various aspects of the existing framework under which our tax obligations are determined in many of the jurisdictions in which we do business and in which our users are located. Some jurisdictions have enacted, and others have proposed, in each case potentially on a temporary basis pending the implementation of the “two-pillar solution” described below, taxes based on gross receipts applicable to digital services regardless of profitability. ~~The~~In addition, the Organisation for Economic Co-operation and Development, or the OECD, has ~~been working~~led international efforts to devise, and to implement on a ~~proposal that may change how taxable presence~~permanent basis, a two-pillar solution to address the tax challenges arising from the digitalization of the economy. Pillar One focuses on nexus and profit allocation, and Pillar Two provides for ~~digital services is defined~~a global minimum effective corporate tax rate of 15%. Pillar One would apply to multinational enterprises with annual global revenue above 20 billion euros and ~~result~~profitability above 10%, with the revenue threshold potentially reduced to 10 billion euros in the ~~imposition of taxes~~future. While it remains uncertain whether Pillar One will be adopted, based on ~~net income~~these thresholds, we currently expect to be outside the scope of the Pillar One proposals, though we anticipate that we will be subject to Pillar One in the future if it is ultimately adopted and if our global revenue exceeds the Pillar One thresholds. A number of countries, ~~where~~including the United Kingdom, have enacted legislation to implement core elements of the Pillar Two proposal from the start of 2024. Based on our current understanding of the minimum revenue thresholds contained in the proposed Pillar Two rules, we expect that we may be within their scope and so their implementation could impact the amount of tax we have ~~no physical presence.~~

to pay and we may be required to incur additional material costs and expenditures to ensure compliance with any such rules in each of the relevant jurisdictions within which we carry on our business.

We continue to examine the impact these and other tax reforms may have on our business. The impact of these and other tax reforms is uncertain and one or more of these or similar measures could seriously harm our business.

We may have exposure to greater-than-anticipated tax liabilities, which could seriously harm our business.

Our income tax obligations are based on our corporate operating structure and third-party and intercompany arrangements, including the manner in which we develop, value, and use our intellectual property and the valuations of our intercompany transactions. The tax laws applicable to our international business activities, including the laws of the United States and other jurisdictions, are subject to change and uncertain interpretation. The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology, intercompany arrangements, or transfer pricing, which could increase our worldwide effective tax rate and the amount of taxes we pay and seriously harm our business. Taxing authorities may also determine that the manner in which we operate our business is not consistent with how we report our income, which could increase our effective tax rate and the amount of taxes we pay and seriously harm our business. In addition, our future income taxes could fluctuate because of earnings being lower than anticipated in jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have higher statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws, regulations, or accounting principles. We are subject to regular review and audit by U.S. federal and state and foreign tax authorities. Any adverse outcome from a review or audit could seriously harm our business. In addition, determining our worldwide provision for income taxes and other tax liabilities

requires significant judgment by management, and there are many

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transactions where the ultimate tax determination is uncertain. Although we believe that our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements for such ~~period or~~ periods and may seriously harm our business.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited, each of which could seriously harm our business.

As of December 31, ~~2021,~~2023, we had U.S. federal net operating loss carryforwards of approximately ~~$7.5~~$6.7 billion and state net operating loss carryforwards of approximately ~~$4.4~~$4.5 billion, as well as U.K. net operating loss carryforwards of approximately ~~$3.2~~$4.5 billion. We also accumulated U.S. federal and state research tax credits of ~~$476.6~~$816.6 million and ~~$292.8~~$478.9 million, respectively, as of December 31, ~~2021.~~2023. Under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income and taxes may be limited. In general, an “ownership change” occurs if there is a cumulative change in our ownership by “5% shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. In the event that we experience one or more ownership changes as a result of ~~future~~ transactions in our stock, then we may be limited in our ability to use our net operating loss carryforwards and other tax assets to reduce taxes owed on the net taxable income that we earn.

~~In the United States,~~

For U.S. federal income tax purposes, net operating ~~loss carryforwards~~losses arising in tax years beginning before January 1, 2018 can be carried forward to the earlier of the next subsequent twenty tax years or until such losses are fully utilized. Net operating losses arising in tax years beginning after December 31, 2017 are not subject to the twenty-year limitation, but our use of such net operating losses in a tax year may not exceed 80% of such year’s taxable income. U.S. federal research tax credits can be carried forward ~~indefinitely but~~to the earlier of the next subsequent twenty tax years or until such credits are fully utilized, and use of those credits generally cannot exceed 75% of the net income tax liability for such carryforwards is limited to 80% of taxable income. Net operating loss carryforwards generated by us before January 1, 2018 will not be subject to the taxable income limitation and will continue to have a twenty-year carryforward period.tax year. In the ~~U.K.,~~United Kingdom, net operating loss carryforwards can be carried forward indefinitely; however, use of such carryforwards in a given year is generally limited to 50% of such year’s taxable income and may be subject to ownership change rules that restrict the use of net operating loss carryforwards.

Any limitations on the ability to use our net operating loss carryforwards and other tax assets, as well as the timing of any such use, could seriously harm our business.

Our operating results may be negatively affected if we are required to pay additional sales and use tax, value added tax, or other transaction taxes, and we could be subject to liability with respect to all or a portion of past or future sales.

We currently collect and remit sales and use, value added and other transaction taxes in certain of the jurisdictions where we do business based on our assessment of the amount of taxes owed by us in such jurisdictions. However, in some jurisdictions in which we do business, we do not believe that we owe such taxes, and therefore we currently do not collect and remit such taxes in those jurisdictions or record contingent tax liabilities in respect of those jurisdictions. A successful assertion that we are required to pay additional taxes in connection with sales of our products and solutions, or the imposition of new laws or regulations or the interpretation of existing laws and regulations requiring the payment of additional taxes, would result in increased costs and administrative burdens for us. If we are subject to additional taxes and determine to offset such increased costs by collecting and remitting such taxes from our customers, or otherwise passing those costs through to our customers, companies may be discouraged from purchasing our products and solutions. Any increased tax burden may decrease our ability or willingness to compete in relatively burdensome tax jurisdictions, result in substantial tax liabilities related to past or future sales or otherwise seriously harm our business.

Risks Related to Ownership of Our Class A Common Stock

Holders of Class A common stock have no voting rights. As a result, holders of Class A common stock will not have any ability to influence stockholder decisions.

Class A common stockholders have no voting rights, unless required by Delaware law. As a result, all matters submitted to stockholders will be decided by the vote of holders of Class B common stock and Class C common stock. As of December 31, ~~2021,~~2023, Mr. Spiegel and Mr. Murphy control over 99% of the voting power of our capital stock, and Mr. Spiegel alone may exercise voting control over our outstanding capital stock. Mr. Spiegel and Mr. Murphy voting together, or in many instances, Mr. Spiegel acting alone, will have control over all matters submitted to our stockholders for approval. In addition, because our Class A common stock carries no voting rights (except as required by Delaware law), the issuance of the Class A common stock in future offerings, in future stock-based acquisition transactions, or to fund employee equity incentive programs could prolong the duration of Mr. Spiegel’s and Mr. Murphy’s current relative

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ownership of our voting power and their ability to elect certain directors and to determine the outcome of all matters submitted to a vote of our stockholders. This concentrated control eliminates other stockholders’ ability to influence corporate matters and, as a result, we may take actions that our stockholders do not view as beneficial. As a result, the market price of our Class A common stock could be adversely affected.

~~We cannot predict the~~

Our capital structure may adversely impact our ~~capital structure and the concentrated control by our founders may have on our~~ stock ~~price or our business.~~

price.

Although other U.S.-based companies have publicly traded classes of non-voting stock, to our knowledge, we were the first company to only list non-voting stock on a U.S. stock exchange. We cannot predict whether this structure, combined with the concentrated control by Mr. Spiegel and Mr. Murphy, will result in a lower trading price or greater fluctuations in the trading price of our Class A common stock, or will result in adverse publicity or other adverse consequences. In addition, someSome indexes have ~~indicated~~since determined that they will exclude non-voting stock, like our Class A common stock, from their membership. For example, FTSE Russell, a provider of widely followed stock indexes, requires new constituents of its indexes to have at least five percent of their voting rights in the hands of public stockholders. ~~In addition,~~The S&P Dow Jones, another provider of widely followed stock indexes, ~~has stated that~~previously excluded companies with multiple share classes, ~~will not be eligible for certain of their indexes.~~but subsequently reversed course to remove that exclusion. As a result, our Class A common stock is ~~likely~~ not eligible for stock indexes with these ~~stock indexes.~~or similar restrictions. We cannot assure you that other stock indexes will not take a similar approach to FTSE Russell ~~or S&P Dow Jones~~ in the future. Exclusion from indexes could make

our Class A common stock less attractive to investors and, as a result, the market price of our Class A common stock could be adversely affected. Additionally, the exclusion of our Class A common stock from these indexes may limit the types of investors who invest in our Class A common stock and could make the trading price of our Class A common stock more ~~volatile.~~

volatile

Because our Class A common stock is non-voting, we and our stockholders are exempt from certain provisions of U.S. securities laws. This may limit the information available to holders of our Class A common stock.

Because our Class A common stock is non-voting, significant holders of our common stock are exempt from the obligation to file reports under Sections 13(d), 13(g), and 16 of the Exchange Act. These provisions generally require periodic reporting of beneficial ownership by significant stockholders, including changes in that ownership. For example, we believe that Tencent Holdings Limited, together with its affiliates, ~~holds~~may hold greater than 10% of our Class A common stock based in part on Tencent Holdings Limited’s public reporting. As a result of our capital structure, holders are not obligated to disclose changes in ownership of our Class A common stock, so there can be no assurance that you, or we, will be notified of any such changes. Our directors and officers are required to file reports under Section 16 of the Exchange Act. Our significant stockholders, other than directors and officers, are exempt from the “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. As such, stockholders will be unable to bring derivative claims for disgorgement of profits for trades by significant stockholders under Section 16(b) of the Exchange Act unless the significant stockholders are also directors or officers.

Since our Class A common stock is our only class of stock registered under Section 12 of the Exchange Act and that class is non-voting, we are not required to file proxy statements or information statements under Section 14 of the Exchange Act, unless a vote of the Class A common stock is required by applicable law. Accordingly, legal causes of action and remedies under Section 14 of the Exchange Act for inadequate or misleading information in proxy statements may not be available to holders of our Class A common stock. If we do not deliver any proxy statements, information statements, annual reports, and other information and reports to the holders of our Class B common stock and Class C common stock, then we will similarly not provide any of this information to holders of our Class A common stock. Because we are not required to file proxy statements or information statements under Section 14 of the Exchange Act, any proxy statement, information statement, or notice of our annual meeting may not include all information under Section 14 of the Exchange Act that a public company with voting securities registered under Section 12 of the Exchange Act would be required to provide to its stockholders. Most of that information, however, will be reported in other public filings. For example, any disclosures required by Part III of Form 10-K as well as disclosures required by the NYSE for the year ended December 31, ~~2021~~2023 that are customarily included in a proxy statement are instead included in our Annual ~~Report, rather than a proxy statement.~~Report. But some information required in a proxy statement or information statement is not required in any other public filing. For example, we ~~will~~are not be required to comply with the proxy access rules or the “pay versus performance” disclosure rules under Section 14 of the Exchange Act. If we take any action in an extraordinary meeting of stockholders where the holders of Class A common stock are not entitled to vote, we will not be required to provide the information required under Section 14 of the Exchange Act. Nor will we be required to file a preliminary proxy statement under Section 14 of the Exchange Act. Since that information is also not required in a Form 10-K, holders of Class A common stock may not receive the information required under Section 14 of the Exchange Act with respect to extraordinary meetings of stockholders. In addition, we are not subject to the “say-on-pay” and “say-on-frequency” provisions of the Dodd–Frank Act. As a result, our stockholders do not have an opportunity to provide a non-binding vote on the compensation of our executive officers. Moreover, holders of

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our Class A common stock will be unable to bring matters before our annual meeting of stockholders or nominate directors at such meeting, nor can they submit stockholder proposals under Rule 14a-8 of the Exchange Act.

The trading price of our Class A common stock has been and will likely continue to be volatile.

The trading price of our Class A common stock has been and is likely to continue to be volatile. ~~Shares of Class A common stock were sold in our IPO in March 2017 at a price of $17.00 per share. Since then,~~From January 1, 2022 to December 31, 2023, the trading price of our Class A common stock ~~has~~ ranged from ~~$4.82~~$7.33 to ~~$83.34 through December 31, 2021.~~$47.71. Declines or volatility in our trading price could make it more difficult to attract and retain talent, adversely impact employee retention and morale, and has required, and may continue to require, us to issue more equity to incentivize team members which ~~could~~is likely to dilute stockholders. The market price of our Class A common stock may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including:

●

~~actual or anticipated fluctuations in our user growth, retention, engagement, revenue, or other operating results;~~

●•actual or anticipated fluctuations in our user growth, retention, engagement, revenue, or other operating results;

~~variations between our actual operating results and the expectations of investors and the financial community;~~

●•variations between our actual operating results and the expectations of investors and the financial community;

~~the accuracy of our financial guidance or projections;~~

•the accuracy of our financial guidance or projections;

•any forward-looking financial or operating information we may provide, any changes in this information, or our failure to meet expectations based on this information;

●•actions of investors who initiate or maintain coverage of us, changes in financial estimates by any investors who follow our company, or our failure to meet these estimates or the expectations of investors;

~~any forward-looking financial or operating information we may provide, any changes in this information, or our failure to meet expectations based on this information;~~

●•significant acquisitions or divestitures of our stock by investors, whether voluntarily or to comply with regulatory or other requirements;

actions of investors who initiate or maintain coverage of us, changes in financial estimates by any investors who follow our company, or our failure to meet these estimates or the expectations of investors;

●

•whether our capital structure is viewed unfavorably, particularly our non-voting Class A common stock and the significant voting control of our co-founders;

●

•additional shares of our common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales, including if we issue shares to satisfy equity-related tax obligations;

●

•stock repurchase programs undertaken by us;

●

•announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;

●

•announcements by us or estimates by third parties of actual or anticipated changes in the size of our user base or the level of user engagement;

●

•changes in operating performance and stock market valuations of technology companies in our industry segment, including our partners and competitors;

●•price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole, inflationary pressures, banking instability, war or other armed conflict, terrorism, or responses to these events;

~~price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;~~

●

•lawsuits threatened or filed against us;

●

~~developments in new legislation and pending lawsuits, executive actions, or regulatory actions, including interim or final rulings by judicial or regulatory bodies;~~•developments in new legislation and pending lawsuits, executive actions, or regulatory actions, including interim or final rulings by judicial or regulatory bodies, whether such developments may impact us or our competitors; and

●

•other events or factors, including those resulting from war, incidents of terrorism, pandemics, or responses to these events.

In addition, extreme price and volume fluctuations in the stock markets have affected and continue to affect many technology companies’ stock prices, including ~~us.~~ours. Often, their stock prices have fluctuated in ways unrelated or disproportionate to the companies’ operating performance. In the past, stockholders have filed securities class-action litigation following periods of market volatility. For example, in November 2021, we, and certain of our officers, were named as defendants in a securities ~~class action~~class-action lawsuit in federal court purportedly brought on behalf of purchasers of our Class A common stock. The lawsuit alleges that we and certain of our officers made false or misleading statements and omissions concerning the impact that Apple’s ATT framework would have on our business. We believe we have meritorious defenses to this lawsuit, but an unfavorable outcome could seriously harm our business. Any litigation could

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subject us to substantial costs, divert resources and the attention of management from our business, and seriously harm our business.

We may not realize the anticipated long-term stockholder value of any stock repurchase program undertaken by us and any failure to repurchase our Class A common stock after we have announced our intention to do so may negatively impact our stock price.

Our board of directors has in the past and may from time to time in the future authorize stock repurchase programs, pursuant to which repurchases of Class A common stock may be made either through open market transactions (including pre-set trading plans) or through other transactions in accordance with applicable securities laws. Any repurchase programs may be modified, suspended, or terminated at any time. Any failure to repurchase stock after we have announced our intention to do so may negatively impact our reputation and investor confidence in us and may negatively impact our stock price.

The existence of a stock repurchase program could cause our stock price to trade higher than it otherwise would be and could potentially reduce the market liquidity for our stock. Although stock repurchase programs are intended to enhance long-term stockholder value, there is no assurance they will do so because the market price of our Class A common stock may decline below the levels at which we repurchased shares and short-term stock price fluctuations could reduce the effectiveness of any such program.

Repurchasing our Class A common stock reduces the amount of cash we have available to fund working capital, capital expenditures, strategic acquisitions or business opportunities, and other general corporate purposes, and we may fail to realize the anticipated long-term stockholder value of any stock repurchase program.

Conversions or exchanges of the Convertible Notes may dilute the ownership interest of our stockholders or may otherwise affect the market price of our Class A common stock.

The conversion of some or all of the Convertible Notes may dilute the ownership interests of our stockholders. On conversion of the Convertible Notes, we have the option to pay or deliver, as the case may be, cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock. If we elect to settle our conversion obligation in shares of our Class A common stock or a combination of cash and shares of our Class A common stock, any sales in the public market of our Class A common stock issuable on such conversion could adversely affect prevailing market prices of our Class A common stock. In addition, the existence of the Convertible Notes may encourage short selling by market participants because the conversion of the Convertible Notes could be used to satisfy short positions, or anticipated conversion of the Convertible Notes into shares of our Class A common stock, any of which could depress the market price of our Class A common stock.

We may also engage in exchanges, repurchase, or induce conversions, of the Convertible Notes in the future. Holders of the Convertible Notes that participate in any of these exchanges, repurchases, or induced conversions may enter into or unwind various derivatives with respect to our Class A common stock or sell shares of our Class A common stock in the open market to hedge their exposure in connection with these transactions. These activities could decrease (or reduce the size of any increase in) the market price of our Class A common stock or the Convertible Notes, or dilute the ownership interests of our stockholders. In addition, the market price of our Class A common stock is likely to be affected by short sales of our Class A common stock or the entry into or unwind of economically equivalent derivative transactions with respect to our Class A common stock by

investors that do not participate in the exchange transactions and by the hedging activity of the counterparties to our Capped Call Transactions or their respective affiliates.

We may still incur substantially more debt or take other actions that would diminish our ability to make payments on the Convertible Notes when due. Our ability to repay our debt depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control.

We and our subsidiaries may incur substantial additional debt in the future, subject to the restrictions contained in our current and future debt instruments. We are not restricted under the terms of the Indentures governing the Convertible Notes from incurring additional debt, securing existing or future debt, repurchasing our stock, making investments, paying dividends, recapitalizing our debt, or taking a number of other actions that could have the effect of diminishing our ability to make payments on the Convertible Notes when due.

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Our ability to pay our debt when due or to refinance our indebtedness, including the Convertible Notes, depends on our financial condition at such time, the condition of capital markets, and our future performance, which is subject to economic, financial, competitive, and other factors beyond our control.

The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results.

The Convertible Notes are convertible at the option of the holder. In the event the conditions for optional conversion of the 2025 Notes, 2026 Notes, 2027 Notes, or ~~2027~~2028 Notes by holders are met before the close of business on the business day immediately preceding February 1, 2025, May 1, 2026, February 1, 2027, or ~~February~~December 1, 2027, respectively, holders of the applicable Convertible Notes will be entitled to convert the Convertible Notes at any time during specified periods at their option. If one or more holders elect to convert their Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A common stock (other than paying cash in lieu of delivering any fractional share), we may settle all or a portion of our conversion obligation in cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital and may seriously harm our business.

We entered into certain hedging positions that may affect the value of the Convertible Notes and the volatility and value of our Class A common stock.

In connection with the issuance of the Convertible Notes, we entered into certain hedging positions with certain financial institutions. These hedging positions are expected generally to reduce potential dilution of our Class A common stock on any conversion of the Convertible Notes or offset any cash payments we are required to make in excess of the principal amount of such converted Convertible Notes, as the case may be, with such reduction or offset subject to a cap.

The counterparties to these hedging positions or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our Class A common stock or purchasing or selling our Class A common stock in secondary market transactions prior to the maturity of the Convertible Notes (and are likely to do so during any observation period related to a conversion of Convertible Notes or following any repurchase of Convertible Notes by us on any fundamental change repurchase date or otherwise). This activity could cause or avoid an increase or a decrease in the market price of our Class A common stock or the Convertible Notes. In addition, if any such hedging positions fail to become effective, the counterparties to these hedging positions or their respective affiliates may unwind their hedge positions, which could adversely affect the value of our Class A common stock.

Delaware law and provisions in our certificate of incorporation and bylaws, as well as our Indentures, could make a merger, tender offer, or proxy contest difficult or more expensive, thereby depressing the trading price of our Class A common stock.

Our certificate of incorporation and bylaws contain provisions that could depress the trading price of our Class A common stock by acting to discourage, delay, or prevent a change of control of our company or changes in our management that the stockholders of our company may deem advantageous. These provisions include the following:

●

our certificate of incorporation provides for a tri-class capital structure. As a result of this structure, Mr. Spiegel and Mr. Murphy control all stockholder decisions, and Mr. Spiegel alone may exercise voting control over our outstanding capital stock. This includes the election of directors and significant corporate transactions, such as a merger or other sale of our company or our assets. This concentrated control could discourage others from initiating any potential merger, takeover, or other change-of-control transaction that other stockholders may view as beneficial. As noted above, the issuance of the Class A common stock dividend, and any future issuances of Class A common stock dividends, could have the effect of prolonging the influence of Mr. Spiegel and Mr. Murphy on the company;

●•our certificate of incorporation provides for a tri-class capital structure. As a result of this structure, Mr. Spiegel and Mr. Murphy control all stockholder decisions, and Mr. Spiegel alone may exercise voting control over our outstanding capital stock. This includes the election of directors and significant corporate transactions, such as a merger or other sale of our company or our assets. This concentrated control could discourage others from initiating any potential merger, takeover, or other change-of-control transaction that other stockholders may view as beneficial. As noted above, the issuance of the Class A common stock dividend, and any future issuances of Class A common stock dividends, could have the effect of prolonging the influence of Mr. Spiegel and Mr. Murphy on the company;

our board of directors has the right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

●•our board of directors has the right to elect directors to fill a vacancy created by the expansion of our board of directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

~~our certificate of incorporation prohibits cumulative voting in the election of directors. This limits the ability of minority stockholders to elect directors; and~~

●•our certificate of incorporation prohibits cumulative voting in the election of directors. This limits the ability of minority stockholders to elect directors; and

our board of directors may issue, without stockholder approval, shares of undesignated preferred stock. The ability to issue undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.

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•our board of directors may issue, without stockholder approval, shares of undesignated preferred stock. The ability to issue undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.

Any provision of our certificate of incorporation, bylaws, or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our Class A common stock.

Furthermore, certain provisions in the Indentures governing the Convertible Notes may make it more difficult or expensive for a third party to acquire us. For example, the Indentures require us, at the holders’ election, to repurchase the Convertible Notes for cash on the occurrence of a fundamental change and, in certain circumstances, to increase the conversion rate for a holder that converts its Convertible Notes in connection with a make-whole fundamental change. A takeover of us may trigger the requirement that we repurchase the Convertible Notes or increase the conversion rate, which could make it more costly for a third party to acquire us. The Indentures also prohibit us from engaging in a merger or acquisition unless, among other things, the surviving entity assumes our obligations under the Convertible Notes and the Indentures. These and other provisions in the Indentures could deter or prevent a third party from acquiring us even when the acquisition may be favorable to holders of the Convertible Notes or our stockholders.

Future sales of shares by existing stockholders could cause our stock price to decline.

If our existing stockholders, including employees and service providers who obtain equity, sell, or indicate an intention to sell, substantial amounts of our Class A common stock in the public market, the trading price of our Class A common stock could decline. As of December 31, 2021, we had outstanding a total of 1.4 billion shares of Class A common stock, 22.8 million shares of Class B common stock, and 231.6 million shares of Class C common stock. In addition, as of December 31, 2021, 82.2 million shares of Class A common stock and 0.6 million shares of Class B common stock were subject to outstanding stock options and RSUs. As a result of our capital structure, holders who are not required to file reports under Section 16 of the Exchange Act are not obligated to disclose changes in ownership of our Class A common stock, so there can be no assurance that you, or we, will be notified of any such changes. All of our outstanding shares are eligible for sale in the public market, except ~~approximately 374.0 million~~ shares ~~(including options exercisable and RSAs subject to forfeiture as of December 31, 2021)~~ held by directors, executive officers, and other affiliates that are subject to volume limitations under Rule 144 of the Securities Act. Our employees, other service providers, and directors are subject to our quarterly trading window closures. In addition, we have reserved shares for issuance under our equity incentive plans. We may also issue shares of our Class A common stock or securities convertible into our Class A common stock from time to time in connection with a financing, acquisition, investment, or otherwise. When these shares are issued and subsequently sold, it would be dilutive to existing stockholders and the trading price of our Class A common stock could decline.

If securities or industry analysts either do not publish research about us, or publish inaccurate or unfavorable research about us, our business, or our market, or if they change their recommendations regarding our common stock adversely, the trading price or trading volume of our Class A common stock could decline.

The trading market for our Class A common stock is influenced in part by the research and reports that securities or industry analysts may publish about us, our business, our market, or our competitors. If one or more of the analysts initiate research with an unfavorable rating or downgrade our Class A common stock, provide a more favorable recommendation about our competitors, or publish inaccurate or unfavorable research about our business, our Class A common stock price would likely decline. If any analyst who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the trading price or trading volume to decline. Since we provide only limited financial guidance, this may increase the probability that our financial results are perceived as not in line with analysts’ expectations, and could cause volatility to our Class A common stock price.

We do not intend to pay cash dividends for the foreseeable future.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any cash dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Class A common stock if the market price of our Class A common stock increases. In addition, our Credit Facility includes restrictions on our ability to pay cash dividends.

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If we are unable to maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our Class A common stock may be seriously harmed.

We are required to maintain adequate internal control over financial reporting, perform system and process evaluation and testing of those internal controls to allow management to report on their effectiveness, report any material weaknesses in such internal controls, and obtain an opinion from our independent registered public accounting firm regarding the effectiveness of such internal controls as required by Section 404 of the Sarbanes-Oxley Act, all of which is time-consuming, costly, and complicated. If we are unable to comply with these requirements in a timely manner, if we assert that our internal control over financial reporting is ineffective, if we identify material weaknesses in our internal control over financial reporting, or if our independent registered public accounting firm is unable to express an opinion or expresses a qualified or adverse opinion about the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock could be negatively affected. In addition, we could become subject to investigations by the NYSE, the SEC, and other regulatory authorities, which could require additional financial and management resources.

The requirements of being a public company have and may continue to strain our resources, result in more litigation, and divert management’s attention.

We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the NYSE, and other applicable securities rules and regulations. Complying with these rules and regulations have caused and will continue to cause us to incur additional legal and financial compliance costs, make some activities more difficult, be time-consuming or costly, and continue to increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results, and that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting.

~~By complying~~ Failure to comply with these rules might also make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we might be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a public ~~disclosure requirements,~~company we are required to publicly disclose additional details about our business and financial condition ~~are more visible,~~information, which ~~we believe~~ may result in ~~increased~~ threatened or actual litigation, including by competitors, regulators, and other third parties. For example, in November 2021, we, and certain of our officers, were named as defendants in a securities class action lawsuit in federal court purportedly brought on behalf of purchasers of our Class A common stock. The lawsuit alleges that we and certain of our officers made false or misleading statements and omissions concerning the impact that Apple’s ATT framework would have on our business. We believe we have meritorious defenses to this lawsuit, but an unfavorable outcome could seriously harm our business. Shareholder litigation can subject us to substantial costs and divert resources and the attention of management from our business and, if theIf those claims are successful, our business could be ~~seriously~~ harmed. Even if the claims do not result in litigation or are resolved in our favor, the time and resources needed to resolve them could divert our management’s resources ~~impose large defense costs,~~ and ~~seriously~~ harm our business.

Our certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States ~~of America~~ will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for:

●

~~any derivative action or proceeding brought on our behalf;~~

●•any derivative action or proceeding brought on our behalf;

~~any action asserting a breach of fiduciary duty;~~

●•any action asserting a breach of fiduciary duty;

~~any action asserting a claim against us arising under the Delaware General Corporation Law, our certificate of incorporation, or our bylaws; and~~

●•any action asserting a claim against us arising under the Delaware General Corporation Law, our certificate of incorporation, or our bylaws; and

~~any action asserting a claim against us that is governed by the internal-affairs doctrine.~~

•any action asserting a claim against us that is governed by the internal-affairs doctrine.

This provision would not apply to actions brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all Securities Act claims, which means both courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our certificate of incorporation provides that the federal district courts of the United States ~~of America~~ will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.

These exclusive forum provisions may limit a stockholder’s ability to bring an action in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us

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and our directors, officers, and other employees. While the Delaware courts have determined that such choice of forum provisions are facially valid, federal courts have been split on the issue, and a stockholder may ~~nevertheless~~ seek to bring an action in a venue other than those designated in the exclusive forum provisions. In such an instance, we would expect to vigorously assert the validity and enforceability of our exclusive forum provisions, which may require significant additional costs associated with resolving such action in other jurisdictions, and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions. If a court were to find either exclusive forum provision in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could seriously harm our business.

Item 1B. Unresolved Staff Comments.

None.

Item 1C. Cybersecurity.

Risk Management and Strategy

Our engineering security team, led by our Chief Information Security Officer, or CISO, uses a multi-pronged approach to assessing, identifying, and managing material risks from cybersecurity threats. This approach includes identifying and assessing risks through: (1) an enterprise risk management program, which is periodically refreshed and includes an identification of our top risks, including cybersecurity risks; (2) formalized security and privacy reviews designed to identify risks from many new features, software, and vendors; (3) a vulnerability management program designed to identify hardware and software vulnerabilities; (4) an internal “red team” program, which simulates cyber threats, intended to allow us to fix vulnerabilities before threat actors identify them; (5) a threat intelligence program designed to model and research our adversaries; and (6) a privacy and security incident response program designed to investigate, respond to, and remediate known incidents. These processes vary in scope and maturity across the business and are processes we work to continually improve.

Our risk management approach is supplemented by external and internal enterprise risk management audits, which are designed to test the effectiveness of our security controls. We conduct penetration testing on a periodic basis, and have established an external bug bounty program to allow security researchers to help identify vulnerabilities and weaknesses in our controls and configurations in our systems. We also maintain a vendor risk management program designed to identify and mitigate potential risks associated with third-party suppliers and business partners. This program includes pre-engagement diligence, use of contractual cybersecurity and notification provisions, and ongoing monitoring of vendors, as appropriate.

We use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including for example professional service firms (including legal counsel), threat intelligence services, and cybersecurity consultants.

The material cybersecurity threats identified through these processes are managed by our CISO and, where appropriate, our risk and compliance committee, in consultation with management. Together, they identify responsive actions for inclusion in our annual strategic planning, or earlier resolution depending on the nature of the risk.

For a description of the risks from cybersecurity threats that may materially affect us and how they may do so, see “Risk Factors” in Part I, Item 1A in this Annual Report on Form 10-K.

Governance

Our board of directors maintains oversight of risks from cybersecurity threats by meeting with and receiving periodic updates from our CISO, via our audit committee, which is assigned oversight of cybersecurity risks. In addition, the chair of our audit committee meets with our CISO on a quarterly basis to discuss cybersecurity threats and incidents, as well as the business’s approach to responding to them. Our incident response plans also provide that our board of directors and audit committee are also notified in the event of a material cybersecurity incident.

Our CISO, Jim Higgins, has over 30 years of experience in the technology sector, including senior leadership roles in product security, information security engineering, and cloud enterprise. Mr. Higgins assisted the Linux Foundation in starting the Open Source Security Foundation to help increase awareness and promote technical solutions to address

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validation of Open Source software. Mr. Higgins has worked in information security at Chevron, Eastman Kodak, and Google, and, mostly recently, spent two years as the CISO of Block, Inc. (formerly Square).

Our CISO also regularly meets with our CEO and other members of our management team (or their designees), including our General Counsel, Chief Financial Officer, Chief Communications Officer, and Senior Vice President of Engineering, including as part of the cybersecurity incident response process.

Our CISO, and where necessary our management team and risk and compliance committee, are informed about and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents, through our security incident response process. We maintain internal aliases, which employees may use to identify a cybersecurity or privacy threat or incident, for escalation, investigation, containment, and remediation. A report to the alias triggers our Security Incident Response Policy and associated plans, which has defined roles for our cross-functional incident response team. The incident response team assesses the severity and priority of incidents on a rolling basis, with escalations of cybersecurity incidents provided to our management team by our CISO and General Counsel (or their designees) and escalations of certain cybersecurity incidents as appropriate to our board of directors. If a cybersecurity incident is determined to be a material cybersecurity incident, our Security Incident Response Policy and associated plans define the process to file a report regarding the incident with the SEC.

Item 2. Properties.

Our corporate headquarters are located in Santa Monica, California, where we occupy approximately ~~603,000~~718,000 square ~~feet, including some remaining Venice locations and excluding leases we have ceased to use primarily as a result of moving to a centralized corporate office.~~feet. As of December 31, ~~2021,~~2023, our global facilities totaled an aggregate of approximately ~~1.4~~1.8 million square feet of leased office space. We also maintain offices in multiple locations in North America and internationally in Europe, Asia, and Australia. We may add additional offices as we expand our business to other continents and countries. We believe that our facilities are sufficient for our current needs and that, should it be needed, additional facilities will be available to accommodate the expansion of our business.

Item 3. Legal Proceedings.

On November 11, 2021, we, and certain of our officers, were named as defendants in a federal securities ~~class action~~class-action lawsuit filed in the ~~United States~~U.S. District Court Central District of California. The lawsuit was purportedly brought on behalf of purchasers of our Class A common stock. The lawsuit alleges 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. Defendants seek monetary damages and other relief. We believe we have meritorious defenses to ~~this~~the lawsuit, and ~~intend~~continue to defend it vigorously, but litigation is inherently uncertain and an unfavorable outcome could seriously harm our business.

Beginning on January 20, 2022, we were named as defendants in various federal and state courts by plaintiffs alleging that the design and use of our platform, and those of our competitors, is addictive and harmful to minor users’ mental health. The majority of cases have been consolidated in either a federal Multi-District Litigation pending in the U.S. District Court for the Northern District of California (“MDL”) or a California Judicial Council Coordinated Proceeding (“JCCP”) pending in the Complex Division of the Los Angeles County Superior Court. On October 13, 2023, the court in the JCCP litigation issued a ruling dismissing some of the claims against us, but allowing the plaintiffs’ negligence claim to proceed. Numerous school districts have filed public nuisance claims based on similar allegations, which also have been consolidated in either the MDL or JCCP. We believe we have meritorious defenses to these lawsuits, and continue to defend them vigorously, but litigation is inherently uncertain and an unfavorable outcome could seriously harm our business.

On August 2, 2022, we, and certain of our directors, were named as defendants in a class-action lawsuit in Delaware Chancery Court purportedly brought on behalf of Class A stockholders, alleging that a transaction between our co-founders and us, in which our co-founders agreed to employment agreements and we agreed to amend our certificate of incorporation and issue a stock dividend if certain conditions were met, was not advantageous to the stockholders, constituted a breach of fiduciary duty, and should have been put to a vote of the Class A stockholders. In June 2023, we entered into a Stipulation of Compromise and Settlement to settle and dismiss the lawsuit, ~~vigorously.~~

with prejudice, subject to approval by the court and the satisfaction of various conditions. The parties entered an amended Stipulation of Compromise and Settlement in December 2023. The settlement would, among other things, modify the conditions for the issuance of the stock dividend. While we continue to believe we have meritorious defenses to the lawsuit, we understand

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that litigation is inherently uncertain and have agreed to the settlement to resolve the disputes, avoid the costs and risks of further litigation, and avoid unwarranted distractions to our management.

On October 13, 2022, we were named as a defendant in a lawsuit in Los Angeles Superior Court alleging that we should be responsible for the deaths of young people who died from ingesting fatal doses of fentanyl after communicating on Snapchat with drug dealers concerning drug transactions. Other similar lawsuits were filed on behalf of other families, which were coordinated with the first-filed case and assigned to the same judge. On January 2, 2024, the judge granted in part and overruled in part our demurrer to the lawsuit, allowing several of the claims to proceed. We believe we have meritorious defenses to these lawsuits, and plan to continue to defend them vigorously, but litigation is inherently uncertain and an unfavorable outcome could seriously harm our business.

We are ~~also~~ currently involved in, and may in the future be involved in, legal proceedings, claims, inquiries, and investigations in the ordinary course of our business, including claims for infringing intellectual property rights related to our products and the content contributed by our users and partners. Although the results of these proceedings, claims, inquiries, and investigations cannot be predicted with certainty, we do not believe that the final outcome of these matters is reasonably likely to have a material adverse effect on our business, financial condition, or results of operations. Regardless of final outcomes, however, any such proceedings, claims, inquiries, and investigations may nonetheless impose a significant burden on management and employees and may come with costly defense costs or unfavorable preliminary and interim rulings.

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information for Common Stock

Our Class A common stock has been listed on the NYSE under the symbol “SNAP” since March 2, 2017. Our Class B common stock and Class C common stock are not listed or traded on any stock exchange.

Holders of Record

As of December 31, ~~2021,~~2023, there w~~ere 916~~were 937 stockholders of record of our Class A common stock. Because many of our shares of Class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. The closing price of our Class A common stock onas of December 31, ~~2021~~2023 was ~~$47.03~~ $16.93 per share as reported on the NYSE. As of December 31, ~~2021,~~2023, there were 8074 stockholders of record of our Class B common stock and two stockholders of record of our Class C common stock.

Dividend Policy

We have never declared or paid cash dividends on our capital stock. We intend to retain all available funds and future earnings, if any, to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. The terms of our Credit Facility also restrict our ability to pay dividends, and we may also enter into credit agreements or other borrowing arrangements in the future that will restrict our ability to declare or pay cash dividends on our capital stock.

We have paid a stock dividend of our Class A common stock on our capital stock in the past and from time to time in the future may pay special or regular stock dividends in the form of Class A common stock, which per the terms of our certificate of incorporation must be paid equally to all stockholders. Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects, and other factors that our board of directors may deem relevant.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

~~None.~~

The following table summarizes stock repurchase activity for the three months ended December 31, 2023 (in thousands, except per share data):


	Total Number of Shares Purchased (1)	Average Price Per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Program (1)	Approximate Dollar Value of Shares that May Yet be Repurchased Under the Program (1)
October 1 - October 31, 2023	7,891	$	9.46	7,891	$	425,437
November 1 - November 30, 2023	10,532	$	10.90	10,532	$	310,790
December 1 - December 31, 2023	—	$	—	—	$	310,790
Total	18,423			18,423

(1)In October 2023, our board of directors authorized a stock repurchase program of up to $500.0 million of our Class A common stock. During the fourth quarter of 2023, we repurchased 18.4 million shares of our Class A common stock for an aggregate of $189.4 million, including costs associated with the repurchases. As of December 31, 2023, the remaining availability under the stock repurchase authorization was $310.8 million.

(2)Average price paid per share includes costs associated with the repurchases.

Recent Sale of Unregistered Securities and Use of Proceeds

~~During the three months ended December 31, 2021, we agreed to issue a total~~

None.

Table of 880,440 shares of our Class A common stock as consideration in connection with acquisitions, all in private transactions exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2), Regulation D, or Regulation S under the Securities Act.
Contents

Stock Performance Graph

This performance graph shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing of Snap Inc. under the Securities Act.

The following graph shows a comparison, ~~from March 2, 2017 (the date our Class A common stock commenced trading on~~for the ~~NYSE) through~~five years ended December 31, ~~2021~~2023, of the cumulative total return for our Class A common stock, the Standard & Poor’s 500 Stock Index (S(“S&P 500 ~~Index)~~Index”), and the NYSE Composite. The graph assumes that $100 was invested at the market close on ~~March 2, 2017~~December 31, 2018 in our Class A common stock, the S&P 500 Index, and the NYSE Composite, and data for the S&P 500 Index and the NYSE Composite assumes reinvestment of any dividends. The stock price performance of the following graph is not necessarily indicative of future stock price performance.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Risk Factors,” “Note Regarding Forward-Looking Statements,” and “Note Regarding User Metrics and Other Data.”

The following generally discusses ~~2021~~2023 and ~~2020~~2022 items and year-to-year comparisons between ~~2021~~2023 and ~~2020.~~2022. Discussion of historical items and year-to-year comparisons between ~~2020~~2022 and ~~2019~~2021 that are not included in this discussion can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2022, filed with the SEC on February ~~4, 2021.~~

1, 2023.

Overview of Full Year ~~2021~~2023 Results

Our key user metrics and financial results for fiscal year ~~2021~~2023 are as follows:

User Metrics

•

~~Daily Active Users, or DAUs, increased to 319 million in Q4 2021, compared to 265 million in Q4 2020.~~

•Daily Active Users, or DAUs, increased 10% year-over-year to 414 million in Q4 2023.•

~~Average revenue per user, or ARPU, increased 18% to $4.06 in Q4 2021, compared to $3.44 in Q4 2020.~~

•Average revenue per user, or ARPU, was $3.29 in Q4 2023, compared to $3.47 in Q4 2022.

Financial Results

•

~~Revenue increased 64% year-over-year to reach $4.1 billion in 2021.~~

•Revenue was $4.6 billion in 2023, compared to $4.6 billion in 2022.•

~~Total costs and expenses excluding stock-based compensation and other payroll related tax expense, increased 42% to $3.6 billion in 2021.~~

•Total costs and expenses were $6.0 billion in 2023, compared to $6.0 billion in 2022.•

~~Net loss improved by $456.9 million year-over-year to $(488.0) million~~ ~~in 2021.~~

•Net loss was $1.3 billion in 2023, compared to $1.4 billion in 2022.•

~~Diluted net loss per share improved by 52%to $(0.31) in 2021, compared to $(0.65) in 2020.~~

•Adjusted EBITDA was $161.6 million in 2023, compared to $377.6 million in 2022.•

~~Adjusted EBITDA improved by $571.5 million year-over-year to $616.7 million in 2021.~~

•Diluted net loss per share was $(0.82) in 2023, compared to $(0.89) in 2022.•

~~Cash provided by (used in) operating activities was $292.9 million~~ ~~in 2021,~~ ~~compared to $(167.6) million in 2020.~~

•Cash provided by operating activities was $246.5 million in 2023, compared to $184.6 million in 2022.•

~~Capital expenditures were $69.9 million in 2021, compared to $57.8 million in 2020.~~

•Free Cash Flow was $34.8 million in 2023, compared to $55.3 million in 2022.•

~~Free Cash Flow was $223.0 million in 2021, compared to $(225.5) million in 2020.~~

•Cash, cash equivalents, and marketable securities were $3.5 billion as of December 31, 2023.•

~~Cash, cash equivalents, and marketable securities were $3.7 billion as of December 31, 2021.~~

•

Common shares outstanding plus shares underlying stock-based awards, including restricted stock units, restricted stock awards, and outstanding stock options, totaled 1,702 million at December 31, 2021, compared to 1,630 million one year ago.

~~Overview~~

~~Snap Inc. is a camera company.~~

Business and Macroeconomic Conditions

In 2022, we realigned our priorities and we expect to continue to focus on our three strategic priorities: growing our community and deepening their engagement with our products, accelerating and diversifying our revenue growth, and investing in the future of augmented reality. We believe that ~~reinventing~~we can be successful in our current operating environment, with various macroeconomic factors impacting our business, by rigorously prioritizing our investments and continuing to engage our community with our products while driving success for our advertising partners. However, the ~~camera represents~~impact of this strategic reprioritization is difficult to predict.

Macroeconomic factors such as labor shortages and disruptions, supply chain disruptions, inflation, changes in interest and foreign currency exchange rates, banking instability, and other risks and uncertainties continue to cause logistical challenges, increased input costs, and inventory constraints for our ~~greatest opportunity~~advertisers, which in turn may cause our advertisers to ~~improve the way that people live and communicate. We contribute to human progress by empowering people to express themselves, live~~halt or decrease advertising spending on our platform. Such macroeconomic factors may also negatively impact, in the ~~moment, learn about~~short-term or long-term, the ~~world,~~global economy, advertising ecosystem, our customers and ~~have fun together.~~

their budgets with us, user engagement, other user metrics, and our business, financial condition, and results of operations.

In addition, competition for advertising dollars has increased and demand growth on our advertising platform has slowed. We expect to continue to experience increased competition, which may result in reduced advertising demand, and could adversely affect our revenue growth, pricing, business, financial condition, and results of operations. Demand has also been disrupted by recent changes we made to our advertising platform, and, in the future, we may

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continue to experience adverse impacts to our revenue growth as a result of these changes.

Our ~~flagship product, Snapchat,~~revenue, particularly in North America, has further been impacted by platform policy changes and restrictions that affected our targeting, measurement, and optimization capabilities, and in turn our ability to measure the effectiveness of advertisements on our services. This has resulted in, and in the future is ~~a camera application that helps people communicate visually~~likely to continue to result in, reduced advertising revenue, especially if we are unable to mitigate these developments.

We compete with ~~friends~~other companies in every aspect of our business. We must compete effectively for users and ~~family through short videos~~advertisers to grow our business and ~~images called Snaps.~~

increase our revenue. These and other risks and uncertainties are further described in the sections titled “Competition” in Part I, Item 1. Business, and “Risk Factors” in Part I, Item 1A in this Annual Report on Form 10-K.

Trends in User Metrics

We define a DAU as a registered Snapchat user who opens the Snapchat application at least once during a defined 24-hour period. We define ARPU as quarterly revenue divided by the average DAUs. We assess the health of our business by measuring DAUs and ARPU because we believe that these metrics are important ways for both management and investors to understand engagement and monitor the performance of our platform. We also measure ARPU because we believe that this metric helps our management and investors to assess the extent to which we are monetizing our service.

User Engagement

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 had ~~319~~414 million DAUs on average in the fourth quarter of ~~2021, compared to 306~~2023, an increase of 39 million, ~~in the prior quarter and 265 million in~~or 10%, from the fourth quarter of ~~2020.~~2022.

~~Quarterly Average Daily Active Users~~

~~(in millions)~~

~~(1)~~

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


			Quarterly Average Daily Active Users (1) (in millions)
			~~(2)~~Global			~~Europe includes Russia and Turkey.~~


YOY growth:						20%						18%						18%						19%						17%						15%						14%						12%						10%

(1) Numbers may not foot due to rounding.

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North America (2)

Europe (3)


			YOY growth:			6%			5%			4%			4%			3%			3%			2%			1%			—%						11%			10%			10%			11%			12%			10%			9%			7%			4%

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

(3) Europe includes Russia and Turkey.


			Rest of World


YOY growth:			41		%	36		%	35		%	34		%	31		%	27		%	25		%	21		%	19		%

Monetization

In the year ended December 31, ~~2021,~~2023, we recorded revenue of ~~$4.1~~$4.6 billion compared to ~~revenue of $2.5~~$4.6 billion for the year ended December 31, ~~2020, an increase of 64% year-over-year.~~ 2022. We monetize our business primarily through advertising. Our advertising products include Snap Ads and AR Ads.

We measure our business using ARPU because it helps us understand the rate at which we are monetizing our daily user base.

ARPU was ~~$4.06~~$3.29 in the fourth quarter of ~~2021, up from $3.49 in the third quarter of 2021 and $3.44~~2023, compared to $3.47 in the fourth quarter of ~~2020.~~2022. For purposes of calculating ARPU, revenue by user geography is apportioned to each region based on a determination of the geographic location in which advertising impressions are delivered, as this approximates revenue based on user activity. This differs from the presentation of our revenue by geography in the notes to our consolidated financial statements, where revenue is based on the billing address of the advertising customer.

~~Quarterly Average Revenue per User~~

~~(1)~~

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

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			Quarterly Average Revenue per User
			~~(2)~~Global			~~Europe includes Russia and Turkey.~~

North America (1)

Europe (2)

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

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

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			Rest of World

Results of Operations

Components of Results of Operations

Revenue

We generate substantially all of our revenue through the sale of our advertising products, which primarily include Snap Ads and AR Ads, referred to as advertising revenue. Snap Ads may be subject to revenue sharing arrangements between us and the ~~media~~content partner. We also generate revenue from ~~the~~subscriptions and sales of hardware ~~products. This revenue is reported~~products, net of allowances for returns.

Cost of Revenue

Cost of revenue consists ~~primarily~~ of payments to third-party infrastructure partners for hosting our products, which include expenses related to storage, computing, and bandwidth ~~costs. Cost of revenue also includes~~costs, and payments for content, developer, and advertiser partner costs. In addition, cost of revenue includes third-party selling costs and personnel-related costs, including salaries, benefits, and stock-based compensation expenses. Cost of revenue also includes facilities and other supporting overhead costs, including depreciation and amortization, and inventory costs.

Research and Development Expenses

Research and development expenses consist primarily of personnel-related costs, including salaries, benefits, and stock-based compensation expense for our engineers, designers, and other employees engaged in the research and development of our products. In addition, research and development expenses include facilities and other supporting overhead costs, including depreciation and amortization. Research and development costs are expensed as incurred.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of personnel-related costs, including salaries, benefits, commissions, and stock-based compensation expense for our employees engaged in sales and sales support, business development, media, marketing, corporate partnerships, and customer service functions. Sales and marketing expenses also include costs incurred for advertising, market research, tradeshows, branding, marketing, promotional expense, and public relations, as well as facilities and other supporting overhead costs, including depreciation and amortization.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits, and stock-based compensation expense for our finance, legal, information technology, human resources, and other administrative teams. General and administrative expenses also include facilities and supporting overhead costs, including depreciation and amortization, and external professional services.

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Interest Income

Interest income consists primarily of interest earned on our cash, cash equivalents, and marketable securities.

Interest Expense

Interest expense consists primarily of interest expense associated with ~~our senior~~ convertible notes ~~or the Convertible Notes,~~ and commitment fees related to our revolving credit facility.

Other Income (Expense), Net

Other income (expense), net primarily consists of ~~realized and unrealized~~ gains and losses on strategic investments, marketable securities, and foreign currency ~~transaction gains and losses, and gains and impairment on strategic investments.~~

transactions.

Income Tax Benefit (Expense)

We are subject to income taxes in the United States and numerous foreign jurisdictions. These foreign jurisdictions have different statutory tax rates than the United States. Additionally, certain of our foreign earnings may also be taxable in the

United States. Accordingly, our effective tax rates will vary depending on the relative proportion of foreign to domestic income, use of tax credits, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws.

Adjusted EBITDA

We define Adjusted EBITDA 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~~ payroll and other tax expense related to stock-based compensation; and certain other ~~non-cash or non-recurring~~ items impacting net income (loss) from time to time. We consider the exclusion of ~~certain non-cash and non-recurring expenses~~these items in calculating Adjusted EBITDA to provide a useful measure for period-to-period comparisons of our business and for investors and others to evaluate our operating results in the same manner as does our management. Additionally, we believe that Adjusted EBITDA 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. See “Non-GAAP Financial Measures” for additional information and a reconciliation of net loss to Adjusted EBITDA.

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Discussion of Results of Operations

The following table sets forth our consolidated statements of operations data:


	Year Ended December 31,
	2023		2022		2021

	(in thousands)
Consolidated Statements of Operations Data:
Revenue	$	4,606,115	$	4,601,847	$	4,117,048
Costs and expenses (1) (2):
Cost of revenue	2,114,117		1,815,342		1,750,246
Research and development	1,910,862		2,109,800		1,565,467
Sales and marketing	1,122,092		1,118,746		792,764
General and administrative	857,423		953,265		710,640
Total costs and expenses	6,004,494		5,997,153		4,819,117
Operating loss	(1,398,379)		(1,395,306)		(702,069)
Interest income	168,394		58,597		5,199
Interest expense	(22,024)		(21,459)		(17,676)
Other income (expense), net	(42,414)		(42,529)		240,175
Loss before income taxes	(1,294,423)		(1,400,697)		(474,371)
Income tax benefit (expense)	(28,062)		(28,956)		(13,584)
Net loss	$	(1,322,485)	$	(1,429,653)	$	(487,955)
Adjusted EBITDA (3)	$	161,577	$	377,573	$	616,686

(1)

Stock-based compensation expense included in the above line items:

Year Ended December 31,

2021

2020

2019

(in thousands)

Consolidated Statements of Operations Data:

Revenue
$
4,117,048

$
2,506,626

$
1,715,534

Costs and expenses^{(1) (2)}:

Cost of revenue

1,750,246

1,182,505

895,838

Research and development

1,565,467

1,101,561

883,509

Sales and marketing

792,764

555,468

458,598

General and administrative

710,640

529,164

580,917

Total costs and expenses

4,819,117

3,368,698

2,818,862

Operating loss

(702,069
)

(862,072
)

(1,103,328
)
Interest income

5,199

18,127

36,042

Interest expense

(17,676
)

(97,228
)

(24,994
)
Other income (expense), net

240,175

14,988

59,013

Loss before income taxes

(474,371
)

(926,185
)

(1,033,267
)
Income tax benefit (expense)

(13,584
)

(18,654
)

(393
)
Net loss
$
(487,955
)

$
(944,839
)

$
(1,033,660
)
Adjusted EBITDA⁽³⁾
$
616,686

$
45,163

$
(202,230
)


	Year Ended December 31,
	2023		2022		2021

	(in thousands)
Stock-based compensation expense:
Cost of revenue	$	9,555	$	12,288	$	17,221
Research and development	893,026		970,746		740,130
Sales and marketing	255,688		203,092		164,241
General and administrative	165,735		201,661		170,543
Total	$	1,324,004	$	1,387,787	$	1,092,135

~~(1)~~(2)Depreciation and amortization expense included in the above line items:

~~Stock-based compensation expense included in the above line items:~~

	Year Ended December 31,
	Year Ended December 31,									Year Ended December 31,
	2023							2023	2022		2021
	2021			2020		2019
	(in thousands)
Stock-based compensation expense:
			(in thousands)
			(in thousands)
			(in thousands)
Depreciation and amortization expense:
Cost of revenue
Cost of revenue
Cost of revenue	$	17,221		$	9,367	$	6,365
Research and development		740,130			533,272		464,639
Sales and marketing		164,241			108,270		93,355
General and administrative		170,543			119,273		121,654
Total	$	1,092,135		$	770,182	$	686,013

(3)See “Non-GAAP Financial Measures” in this Annual Report on Form 10-K for more information and for a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP.

~~(2)~~

~~Depreciation and amortization expense included in the above line items:~~

Year Ended December 31,

2021

2020

2019

(in thousands)

Depreciation and amortization expense:

Cost of revenue
$
19,711

$
22,205

$
21,271

Research and development

62,159

37,627

33,208

Sales and marketing

21,772

12,916

13,256

General and administrative

15,499

13,996

19,510

Total
$
119,141

$
86,744

$
87,245

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~~(3)~~

See “Non-GAAP Financial Measures” of this Annual Report on Form 10-K for more information and for a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP.

The following table sets forth the components of our consolidated statements of operations data for each of the periods presented as a percentage of revenue:

	Year Ended December 31,
	2021			2020			2019
	Year Ended December 31,																Year Ended December 31,
	2023												2023			2022				2021
Consolidated Statements of Operations Data:
Revenue		100	%		100	%		100	%
Revenue
Revenue											100	%		100	%			100	%
Costs and expenses:
Cost of revenue
Cost of revenue
Cost of revenue		43			47			52
Research and development		38			44			52
Sales and marketing		19			22			27
General and administrative		17			21			34
Total costs and expenses		117			134			164
Operating loss		17			34			64
Interest income		—			1			2
Interest expense		—			4			1
Other income (expense), net		6			1			3
Loss before income taxes		12			37			60
Income tax benefit (expense)		—			1			—
Net loss		12	%		38	%		60	%	Net loss	(29)	%		(31)	%			(12)	%

Revenue

Year Ended December 31,

2021 vs 2020
Change

2020 vs 2019
Change

2021

2020

2019

$

%

$

%

(dollars in thousands)

Revenue
$
4,117,048

$
2,506,626

$
1,715,534

$
1,610,422

64
%

$
791,092

46
%


	Year Ended December 31,						2023 vs 2022 Change				2022 vs 2021 Change
	2023		2022		2021		$		%		$		%

	(dollars in thousands)
Revenue	$	4,606,115	$	4,601,847	$	4,117,048	$	4,268	—	%	$	484,799	12	%

~~2021~~

2023 compared to ~~2020~~

2022

Revenue for the year ended December 31, ~~2021~~2023 increased ~~$1,610.4~~$4.3 million compared to the same period in ~~2020. Revenue~~2022. In 2023, subscription revenue increased, ~~due to~~partially offset by a ~~combination of growth~~reduction in ~~advertisers~~advertiser spend and auction-based advertising ~~demand and optimization efficiencies.~~

demand.

Cost of Revenue

Year Ended December 31,

2021 vs 2020
Change

2020 vs 2019
Change

2021

2020

2019

$

%

$

%

(dollars in thousands)

Cost of Revenue
$
1,750,246

$
1,182,505

$
895,838

$
567,741

48
%

$
286,667

32
%


	Year Ended December 31,						2023 vs 2022 Change				2022 vs 2021 Change
	2023		2022		2021		$		%		$		%

	(dollars in thousands)
Cost of Revenue	$	2,114,117	$	1,815,342	$	1,750,246	$	298,775	16	%	$	65,096	4	%

2023 compared to ~~2020~~

2022

Cost of revenue for the year ended December 31, ~~2021~~2023 increased ~~$567.7~~$298.8 million compared to the same period in ~~2020.~~ The2022. The increase ~~in cost of revenue~~ was primarily driven by higher content costs, including Spotlight, which launched in the fourth quarter of 2020 as well as growth in revenue share due to the overall increase in revenue and higher proportion of revenue subject to revenue share. The increases were also a result of increased infrastructure costs attributable to DAU growth ~~net~~and investments in machine learning and AI, partially offset by lower content and advertising partner costs and $20.6 million relating to restructuring charges in the prior period.

Research and Development Expenses

Year Ended December 31,

2021 vs 2020
Change

2020 vs 2019
Change

2021

2020

2019

$

%

$

%

(dollars in thousands)

Research and Development Expenses
$
1,565,467

$
1,101,561

$
883,509

$
463,906

42
%

$
218,052

25
%


	Year Ended December 31,						2023 vs 2022 Change				2022 vs 2021 Change
	2023		2022		2021		$		%		$		%

	(dollars in thousands)
Research and Development Expenses	$	1,910,862	$	2,109,800	$	1,565,467	$	(198,938)	(9)	%	$	544,333	35	%

2023 compared to ~~2020~~

2022

Research and development expenses for the year ended December 31, ~~2021 increased $463.9~~2023 decreased $198.9 million compared to the same period in ~~2020.~~ 2022. The ~~increase~~decrease was primarily driven by ~~greater personnel~~lower cash- and stock-based compensation expenses due to ~~growth~~decreased headcount compared to the prior period and $78.9 million relating to restructuring charges in ~~research and development headcount, including increased cash- and~~ ~~stock-based compensation expenses~~.

the prior period.

Sales and Marketing Expenses

Year Ended December 31,

2021 vs 2020
Change

2020 vs 2019
Change

2021

2020

2019

$

%

$

%

(dollars in thousands)

Sales and Marketing Expenses
$
792,764

$
555,468

$
458,598

$
237,296

43
%

$
96,870

21
%


	Year Ended December 31,						2023 vs 2022 Change				2022 vs 2021 Change
	2023		2022		2021		$		%		$		%

	(dollars in thousands)
Sales and Marketing Expenses	$	1,122,092	$	1,118,746	$	792,764	$	3,346	—	%	$	325,982	41	%

2023 compared to ~~2020~~

2022

Sales and marketing expenses for the year ended December 31, ~~2021~~2023 increased ~~$237.3~~$3.3 million compared to the same period in ~~2020.~~ 2022. The increase was primarily driven by ~~greater personnel expenses due to growth in sales and marketing headcount, including increased cash- and~~ higher stock-based compensation expenses, ~~as well as~~ and increased marketing ~~investments.~~investments

, partially offset by lower cash-based compensation expenses. The prior period included higher amortization expense from our revision of the useful lives of certain customer relationships and trademarks and $30.8 million relating to restructuring charges.

General and Administrative Expenses

Year Ended December 31,

2021 vs 2020
Change

2020 vs 2019
Change

2021

2020

2019

$

%

$

%

(dollars in thousands)

General and Administrative Expenses
$
710,640

$
529,164

$
580,917

$
181,476

34
%

$
(51,753
)

(9
)%


	Year Ended December 31,						2023 vs 2022 Change				2022 vs 2021 Change
	2023		2022		2021		$		%		$		%

	(dollars in thousands)
General and Administrative Expenses	$	857,423	$	953,265	$	710,640	$	(95,842)	(10)	%	$	242,625	34	%

General and administrative expenses for the year ended December 31, ~~2021 increased $181.5~~2023 decreased $95.8 million compared to the same period in ~~2020.~~ 2022. The ~~increase~~decrease was primarily driven by ~~greater~~lower personnel expenses, ~~due to growth in headcount,~~ including ~~increased~~ cash- and stock-based compensation expenses ~~as well as an increase in professional service fees.~~

~~Interest Income~~

Year Ended December 31,

2021 vs 2020
Change

2020 vs 2019
Change

2021

2020

2019

$

%

$

%

(dollars in thousands)

Interest Income
$
5,199

$
18,127

$
36,042

$
(12,928
)

(71
)%

$
(17,915
)

(50
)%

~~2021~~ compared to ~~2020~~

the prior period, and $58.7 million relating to restructuring charges in the prior period.


	Year Ended December 31,						2023 vs 2022 Change				2022 vs 2021 Change
	2023		2022		2021		$		%		$		%

	(dollars in thousands)
	(NM = Not Meaningful)
Interest Income	$	168,394	$	58,597	$	5,199	$	109,797	187	%	$	53,398	NM

2023 compared to 2022

Interest income for the year ended December 31, ~~2021 decreased $12.9~~2023 increased $109.8 million compared to the same period in ~~2020.~~ ~~The decrease was~~2022, primarily ~~a result of lower~~due to higher interest rates on U.S. government-backed securities, ~~partially~~ offset by a ~~higher~~lower overall invested cash balance.

Year Ended December 31,

2021 vs 2020
Change

2020 vs 2019
Change

2021

2020

2019

$

%

$

%

(dollars in thousands)

Interest Expense
$
(17,676
)

$
(97,228
)

$
(24,994
)

$
79,552

(82
)%

$
(72,234
)

289
%


	Year Ended December 31,						2023 vs 2022 Change				2022 vs 2021 Change
	2023		2022		2021		$		%		$		%

	(dollars in thousands)
Interest Expense	$	(22,024)	$	(21,459)	$	(17,676)	$	(565)	3	%	$	(3,783)	21	%

2023 compared to ~~2020~~

2022

Interest expense for the year ended December 31, ~~2021 decreased $79.6~~2023 increased $0.6 million compared to the same period in 2020 primarily due to the early adoption of ASU 2020-06 on January 1, 2021. As a result of this adoption, we account for the Convertible Notes as a single liability, which eliminates the amortization of the debt discount. Prior to January 1, 2021, the carrying amount of the equity component was recorded as a debt discount and amortized to interest expense.2022. Interest expense ~~related to the~~for all periods consists primarily of amortization of debt issuance costs ~~was $4.3 million for the year ended December 31, 2021, while~~and contractual interest expense related to the amortization of debt discount and issuance costs was $81.4 million for the year ended December 31, 2020. Contractual interest expense was $8.9 million for the year ended December 31, 2021 and $11.2 million for the year ended December 31, 2020.

expense.

Other Income (Expense), Net

Year Ended December 31,

2021 vs 2020
Change

2020 vs 2019
Change

2021

2020

2019

$

%

$

%

(dollars in thousands)

Other Income (Expense), Net
$
240,175

$
14,988

$
59,013

$
225,187

1,502
%

$
(44,025
)

(75
)%


	Year Ended December 31,						2023 vs 2022 Change				2022 vs 2021 Change
	2023		2022		2021		$		%		$		%

	(dollars in thousands)
Other Income (Expense), Net	$	(42,414)	$	(42,529)	$	240,175	$	115	—	%	$	(282,704)	(118)	%

2023 compared to ~~2020~~

2022

Other ~~income,~~expense, net for the year ended December 31, ~~2021 increased $225.2~~2023 was $42.4 million, compared to other ~~income,~~expense, net of $42.5 million for the same period in ~~2020.~~2022. Other ~~income,~~expense, net for the current year was primarily a result of ~~$207.7~~$28.4 million ofin unrealized ~~gains and $27.8 million of realized gains~~losses on strategic investments and ~~$59.4~~$6.7 million ~~of unrealized gains~~in total losses on publicly traded securities ~~reclassified from strategic investments to~~classified as marketable ~~securities in the fourth quarter. This increase is partially offset~~ ~~by an induced conversion~~securities. Other expense, ~~related to the Convertible Notes of $41.5 million. Other income,~~ net in the comparable period in ~~2020~~2022 was primarily a result of $101.3 million in total losses on publicly traded securities primarily classified as marketable securities, offset by $19.9 million in unrealized gains and $45.9 million in realized gains on strategic ~~investments partially offset by impairments~~investments.

2023 compared to ~~2020~~

2022

Income tax expense was ~~$13.6~~$28.1 million for the year ended December 31, ~~2021,~~2023, compared to ~~$18.7~~$29.0 million for the same period in ~~2020.~~

2022. Our effective tax rate differs from the U.S. statutory tax rate primarily due to valuation allowances on our deferred tax assets as it is more likely than not that some or all of our deferred tax assets will not be realized.

For additional discussion, see Note 12 to our consolidated financial statements included in “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

Net Loss and Adjusted EBITDA

2023 compared to ~~2020~~

2022

Net loss for the year ended December 31, ~~2021~~2023 was ~~$488.0~~$1,322.5 million, compared to ~~$944.8~~$1,429.7 million for the same period in ~~2020.~~2022. Adjusted EBITDA for the year ended December 31, ~~2021~~2023 was ~~$616.7~~$161.6 million, compared to ~~$45.2~~$377.6 million for the same period in ~~2020.~~2022. The ~~increase~~decrease in Adjusted EBITDA was attributable to increased ~~revenues,~~cost of revenue and sales and marketing expenses, partially offset by increased cost of revenue primarily due to higher content acquisition costs between the periods. The decreases in net loss were also partially offset by an increase in stock-based compensation expense.

decreased research and development and general and administrative expenses.

For a discussion of the limitations associated with using Adjusted EBITDA rather than GAAP measures and a reconciliation of this measure to net loss, see “Non-GAAP Financial Measures.”

Liquidity and Capital Resources

Cash, cash equivalents, and marketable securities were ~~$3.7~~$3.5 billion as of December 31, ~~2021,~~2023, primarily consisting of cash on deposit with banks and highly liquid investments in U.S. government and agency securities, publicly traded equity securities, corporate debt securities, certificates of deposit, and commercial paper. Our primary source of liquidity is cash generated through financing activities. Our primary uses of cash include operating costs such as personnel-related costs and the infrastructure costs of the Snapchat application, facility-related capital spending, and acquisitions and investments. There are no known material subsequent events that could have a material impact on our cash or liquidity. We may contemplate and engage in merger and acquisition activity that could materially impact our liquidity and capital resource position.

In ~~2021,~~October 2023, our board of directors authorized a stock repurchase program of up to $500.0 million of our Class A common stock. During the fourth quarter of 2023, we repurchased 18.4 million shares of our Class A common stock for an aggregate of $189.4 million, including costs associated with the repurchases. As of December 31, 2023, the remaining availability under the stock repurchase authorization was $310.8 million.

In May 2022, we entered into ~~various exchange agreements,~~a five-year senior unsecured revolving credit facility, or ~~the Exchange Agreements,~~Credit Facility, with certain ~~holders~~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, or 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 December 31, 2023, we had $49.6 million in the form of outstanding standby letters of credit, with no amounts outstanding under the Credit Facility.

In February 2022, we entered into a purchase agreement for the sale of an aggregate of $1.5 billion principal amount of convertible senior notes due in ~~2025, or~~2028. The net proceeds from the ~~2025~~issuance of the 2028 Notes were $1.31 billion, net of debt issuance costs and the ~~convertible senior notes due~~2028 Capped Call Transactions discussed further in ~~2026,~~Note 7. The 2028 Notes mature on March 1, 2028 unless repurchased, redeemed, or converted in accordance with their terms prior to such date. The sale price requirement for conversion was not satisfied as of December 31, 2023 and as a result, the ~~2026~~2028 Notes ~~pursuant to which we exchanged approximately $715.9 million principal amount~~will not be eligible for optional conversion during the first quarter of ~~the 2025 Notes and approximately $426.5 million principal amount of the 2026 Notes for aggregate consideration of approximately 52.4 million shares of Class A common stock.~~

2024.

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, or the 2027 Notes.~~2027. The net proceeds from the issuance of the 2027 Notes were $1.05

billion, net of debt issuance costs and ~~the cash used to pay the costs of the capped call transactions, or~~ the 2027 Capped Call Transactions discussed further in Note 7. The 2027 Notes mature on May 1, 2027 unless repurchased, redeemed, or converted in accordance with their terms prior to such date. The ~~2027 Notes were~~sale price requirement for conversion was not ~~convertible~~satisfied as of December 31, ~~2021.~~

2023 and as a result, the 2027 Notes will not be eligible for optional conversion during the first quarter of 2024.

In April 2020, we entered into a purchase agreement for the sale of an aggregate of $1.0 billion principal amount of ~~the~~convertible senior notes due in 2025, ~~Notes.~~of which $284.1 million remains outstanding as of December 31, 2023. The net proceeds from the issuance of the 2025 Notes were $888.6 million, net of debt issuance costs and ~~the cash used to pay the costs of the capped call transactions, or~~ the 2025 Capped Call Transactions discussed further in Note 7. The 2025 Notes mature on May 1, 2025 unless repurchased, redeemed, or converted in accordance with their terms prior to such date. The sale price requirement for conversion was not satisfied as of December 31, ~~2021~~2023 and as a result, the 2025 Notes will ~~continue to~~not be eligible for optional conversion during the first quarter of ~~2022.~~

2024.

In August 2019, we entered into a purchase agreement for the sale of an aggregate of ~~$1.265~~$1.265 billion principal amount of ~~the~~convertible senior notes due in 2026, ~~Notes.~~of which $838.5 million remains outstanding as of December 31, 2023. The net proceeds from the issuance of the 2026 Notes were $1.15 billion, net of debt issuance costs and ~~the cash used to pay the costs of the capped call transactions, or~~ the 2026 Capped Call Transactions discussed further in Note 7. The 2026 Notes mature on August 1, 2026 unless repurchased, redeemed, or converted in accordance with their terms prior to such date. The sale price requirement for conversion was not satisfied as of December 31, ~~2021~~2023 and as a result, the 2026 Notes will ~~continue to~~not be eligible for optional conversion during the first quarter of ~~2022.~~

In July 2016, we entered into a senior unsecured revolving credit facility, or the Credit Facility, with certain lenders, some of which are affiliated with certain members of the underwriting syndicate for our Convertible Notes offerings, to fund working capital and general corporate-purpose expenditures. Since July 2016, we have amended the Credit Facility multiple times. As of December 31, 2021, the Credit Facility has a maximum borrowing amount of $1.05 billion, bears interest at LIBO plus 0.75%, as well as an annual commitment fee of 0.10% on the daily undrawn balance of the facility and terminates in August 2023. As of December 31, 2021, no amounts were outstanding under the Credit Facility. As of December 31, 2021, we had $23.9 million in the form of outstanding standby letters of credit.

2024.

We believe our existing cash balance is sufficient to fund our ongoing working capital, investing, and financing requirements for at least the next 12 months. Our future capital requirements will depend on many factors including our growth rate, headcount, sales and marketing activities, research and development efforts, the introduction of new features, products, and acquisitions, and continued user engagement. We continually evaluate opportunities to issue or repurchase equity or debt securities, obtain, retire, or restructure credit facilities or financing arrangements, or declare dividends for strategic reasons or to further strengthen our financial position.

As of December 31, ~~2021,~~2023, approximately 6%3% of our cash, cash equivalents, and marketable securities was held outside the United States. These amounts were primarily held in the United Kingdom and are utilized to fund our foreign operations. Cash held outside the United States may be repatriated, subject to certain limitations, and would be available to be used to fund our domestic operations. However, repatriation of funds may result in additional tax liabilities. We believe our existing cash balance in the United States is sufficient to fund our working capital needs.

The following table sets forth the major components of our consolidated statements of cash flows for the periods presented:

Year Ended December 31,

2021

2020

2019

(dollars in thousands)

Net cash provided by (used in) operating activities
$
292,880

$
(167,644
)

$
(304,958
)
Net cash provided by (used in) investing activities

90,227

(729,864
)

(728,608
)
Net cash provided by financing activities

1,065,073

922,791

1,165,852

Change in cash, cash equivalents, and restricted cash
$
1,448,180

$
25,283

$
132,286

Free Cash Flow ⁽¹⁾
$
223,005

$
(225,476
)

$
(341,436
)

~~(1)~~

~~For information on how we define and calculate Free Cash Flow and a reconciliation to net cash used in operating activities to Free Cash Flow, see “Non-GAAP Financial Measures.”~~


	Year Ended December 31,
	2023		2022		2021

	(dollars in thousands)
Net cash provided by (used in) operating activities	$	246,521	$	184,614	$	292,880
Net cash provided by (used in) investing activities	570,954		(1,062,275)		90,227
Net cash provided by (used in) financing activities	(458,789)		306,714		1,065,073
Change in cash, cash equivalents, and restricted cash	$	358,686	$	(570,947)	$	1,448,180
Free Cash Flow (1)	$	34,794	$	55,308	$	223,005

(1)For information on how we define and calculate Free Cash Flow and a reconciliation to net cash provided by (used in) operating activities to Free Cash Flow, see “Non-GAAP Financial Measures.”

Net Cash Provided Byby (Used ~~In)~~in) Operating Activities

~~2021~~

2023 compared to ~~2020~~

2022

Net cash provided by operating activities was ~~$292.9~~$246.5 million infor the year ended December 31, ~~2021, as~~2023, compared to net cash ~~used in operations~~provided by operating activities of ~~$167.6~~$184.6 million infor the year ended December 31, ~~2020,~~2022, resulting primarily from our net loss, adjusted for non-cash items, including stock-based compensation expense of ~~$1.1~~$1.3 billion and depreciation and amortization expense of ~~$119.1 million, partially offset by gains on debt and equity securities, net of $289.1~~$168.4 million. Net cash provided by operating activities for the year ended December 31, ~~2021~~2023 was also ~~impacted~~driven by a $95.0 million increase in accounts payable and a $62.1 million increase in accrued expenses and other current liabilities, primarily due to the timing of payments, partially offset by a $98.1 million increase in accounts receivables due to the timing of collections and an increase in billings in the ~~accounts receivable balance of $333.0 million due to an increase in revenue compared to the prior~~ period.

Net Cash Provided Byby (Used ~~In)~~in) Investing Activities

~~2021~~

2023 compared to ~~2020~~

2022

Net cash provided by investing activities was ~~$90.2~~$571.0 million for the year ended December 31, ~~2021,~~2023, compared to net cash used in investing activities of ~~$729.9 million~~$1.1 billion for the ~~same period in 2020.~~year ended December 31, 2022. Our investing activities in the year ended December 31, ~~2021~~2023 consisted primarily of ~~cash provided by the sales and~~ maturities ~~of marketable securities of $2.9 billion, partially offset by the purchase~~ of marketable securities of $2.4 billion and ~~cash paid for acquisitions~~sales of ~~$310.9~~marketable securities of $459.5 million, partially offset by purchases of marketable securities of $2.0 billion and purchases of property and equipment of $211.7 million. ~~Net cash used in~~Our investing activities for the year ended December 31, ~~2020~~2022 consisted of ~~cash used in the purchase~~purchases of marketable securities of $3.5 billion, ~~cash paid for acquisitions of $168.9 million, and cash used in strategic investments of $111.6 million,~~ partially offset by ~~the sales and~~ maturities of marketable securities of ~~$3.1~~$2.5 billion.

Net Cash Provided Byby (Used in) Financing Activities

~~2021~~

2023 compared to ~~2020~~

2022

Net cash used in financing activities was $458.8 million for the year ended December 31, 2023, compared to net cash provided by financing activities ~~was $1.1 billion and $0.9 billion~~of $306.7 million for the ~~years~~year ended December 31, ~~2021 and 2020, respectively.~~2022. Our financing activities for the year ended December 31, ~~2021~~2023 consisted primarily of ~~net proceeds~~$189.4 million of ~~$1.1 billion from the issuance~~repurchases of ~~the 2027 Notes, offset by the purchase~~our Class A common stock and $270.4 million of ~~the 2027 Capped Call Transactions of $86.8 million.~~deferred payments for acquisitions completed in prior periods. Our financing activities for the year ended December 31, ~~2020~~2022 consisted primarily of net proceeds of ~~$988.6 million~~$1.5 billion from the issuance of the ~~2025~~2028 Notes, offset by the purchase of the ~~2025~~2028 Capped Call Transactions of ~~$100.0 million. Net cash provided by financing activities in all periods presented includes proceeds from the exercise~~$177.0 million and repurchases of our Class A common stock ~~options.~~

for an aggregate of $1.0 billion.

Free Cash Flow

~~2021~~

2023 compared to ~~2020~~

2022

Free Cash Flow was ~~$223.0~~$34.8 million for the year ended December 31, ~~2021 and~~2023, compared to $55.3 million for the year ended December 31, 2022. Free Cash Flow in all periods was composed of net cash provided by operating activities, resulting primarily from net loss, adjusted for non-cash items and changes in working capital. Free Cash Flow also

Table of Contents

included purchases of property and equipment of ~~$69.9~~$211.7 million for the year ended December 31, ~~2021. See “Non-GAAP Financial Measures.”~~

~~Free Cash Flow was $(225.5)~~2023, compared to $129.3 million for the year ended December 31, 2020 and was composed of net cash used in operating activities, resulting primarily from net loss, adjusted for non-cash items and changes in working capital. Free Cash Flow also included purchases of property and equipment of $57.8 million for the year ended December 31, 2020.2022. See “Non-GAAP Financial Measures.”

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 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; ~~and~~ payroll and other tax expense related to stock-based compensation; and certain other ~~non-cash or non-recurring~~ 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 believe that both Free Cash Flow and Adjusted EBITDA 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 the non-GAAP measures of Free Cash Flow and Adjusted EBITDA 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.

These non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures compared to the closest comparable GAAP measure. Some of these limitations are that:

•

~~Free Cash Flow does not reflect our future contractual commitments.~~

•Free Cash Flow does not reflect our future contractual commitments;•

Adjusted EBITDA excludes certain recurring, non-cash charges such as depreciation of fixed assets and amortization of acquired intangible assets and, although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future;

•Adjusted EBITDA excludes certain recurring, non-cash charges such as depreciation of fixed assets and amortization of acquired intangible assets and, although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future;•

Adjusted EBITDA excludes stock-based compensation expense and payroll and other tax expense related to stock-based compensation, which have been, and will continue to be for the foreseeable future, significant recurring expenses in our business and an important part of our compensation strategy; and

•Adjusted EBITDA excludes stock-based compensation expense and payroll and other tax expense related to stock-based compensation, which have been, and will continue to be for the foreseeable future, significant recurring expenses in our business and an important part of our compensation strategy; and•

~~Adjusted EBITDA excludes income tax expense.~~

•Adjusted EBITDA excludes income tax benefit (expense).

Table of Contents

The following table presents a reconciliation of Free Cash Flow to net cash ~~used in~~provided by (used in) operating activities, the most comparable GAAP financial measure, for each of the periods presented:

		Year Ended December 31,
	Year Ended December 31,												Year Ended December 31,
	2023										2023	2022		2021
		2021			2020			2019
		(in thousands)
			(in thousands)
			(in thousands)
			(in thousands)
Free Cash Flow reconciliation:
Net cash provided by (used in) operating activities
Net cash provided by (used in) operating activities
Net cash provided by (used in) operating activities		$	292,880		$	(167,644	)	$	(304,958	)
Less:
Purchases of property and equipment			(69,875	)		(57,832	)		(36,478	)
Purchases of property and equipment
Purchases of property and equipment
Free Cash Flow		$	223,005		$	(225,476	)	$	(341,436	)

The following table presents a reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure, for each of the periods presented:

Restructuring charges (1)

(1)Restructuring charges in 2023 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 $5.7 million relating to the wind down, which is included in the income tax (benefit) expense line item above. Restructuring charges in 2022 relating to the ~~fourth quarter~~strategic reprioritization plan were composed primarily of ~~2019 were~~severance and related ~~to a preliminary agreement to settle the securities class actions that arose following our initial public offering in 2017. The preliminary settlement agreement was signed in January 2020~~charges of $97.1 million, stock-based compensation expense, lease exit and provided for a resolution of all of the pending claims in the stockholder class actions for $187.5 million. We recorded legal settlement expense, net of amounts directly covered by insurance, of $100.0 million.related charges, impairment charges, contract termination charges, and intangible asset amortization. These charges are ~~non-recurring and~~ not reflective of underlying trends in our business.

See Note 18 to our consolidated financial statements included in the “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for more information.

We are involved in claims, lawsuits, tax matters, government investigations, and proceedings arising in the ordinary course of our business. We record a provision for a liability when we believe that it is both probable that a liability has been incurred and the amount can be reasonably estimated. We also disclose material contingencies when we believe that a loss is not probable but reasonably possible. Significant judgment is required to determine both probability and the estimated amount. Such claims, suits, and proceedings are inherently unpredictable and subject to significant uncertainties, some of which are beyond our control. Many of these legal and tax contingencies can take years to resolve. Should any of these estimates and assumptions change or prove to be incorrect, it could have a material impact on our results of operations, financial position, and cash flows.

We have non-cancelable contractual agreements primarily related to the hosting of our data ~~storage~~ processing, storage, and other computing services, as well as lease, content and developer partner, and other commitments. We had ~~$2.7~~$3.0 billion in commitments, as of December 31, ~~2021,~~2023, primarily due within three years.

For additional discussion on our leases, see Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Critical Accounting Policies and Estimates

We prepare our financial statements in accordance with GAAP. Preparing these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.

The critical accounting estimates, assumptions, and judgments that we believe to have the most significant impact on our consolidated financial statements are described below.

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 ~~Filters and Sponsored Lenses. Sponsored Filters allow users to interact with an advertiser’s brand by enabling stylized brand artwork to be overlaid on a Snap. 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 or based on the number of advertising impressions delivered.~~time. Revenue related to agreements based on the number of impressions delivered is recognized when the advertisement is ~~displayed.~~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.

~~Stock-Based Compensation~~

In the year ended December 31, 2021, total stock-based compensation expense recognized was $1.1 billion. We have granted stock-based awards consisting primarily of restricted stock units, or RSUs, restricted stock awards, or RSAs, and to a lesser extent, stock options to employees, members of our board of directors, and non-employee advisors. The substantial majority of our stock-based awards have been made to employees. RSUs vest and RSAs lapse to a forfeiture condition on the satisfaction of service conditions. The service conditions for RSUs and RSAs granted prior to February 2018 is generally satisfied over four years, 10% after the first year of service, 20% over the second year, 30% over the third year, and 40% over the fourth year. The service condition for RSUs and RSAs granted after February 2018 is generally satisfied in equal monthly or quarterly installments over three or four years.

We account for stock-based employee compensation under the fair value recognition and measurement provisions, in accordance with applicable accounting standards, which requires stock-based awards to be measured based on the grant date fair value. Stock-based compensation expense is recorded net of estimated forfeitures in our consolidated statements of operations. Accordingly, stock-based compensation expense is only recorded for those potential stock-based awards that we expect to vest. We estimate the forfeiture rate using historical forfeitures of equity awards and other expected changes in facts and circumstances, if any. We will re-evaluate our estimated forfeiture rate if actual forfeitures differ from our initial estimates. A modification of the terms of a stock-based award is treated as an exchange of the original award for a new award with total compensation cost equal to the grant-date fair value of the original award plus the incremental value of the modification to the award.

We estimate the fair value of assets acquired and liabilities assumed in a business combination. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement.

Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired technology, useful lives, and discount rates. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. During the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. On the conclusion of the measurement period or final determination of the

values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations.

~~Convertible Notes~~

Prior to January 1, 2021, we accounted for the 2025 Notes and the 2026 Notes as separate liability and equity components. On issuance, the carrying amount of the liability component was calculated by measuring the fair value of a similar liability that did not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was calculated by deducting the fair value of the liability component from the principal amount of the Convertible Notes as a whole. We estimated the fair value of the liability and equity components using a convertible bond model, which includes subjective assumptions such as the expected term, expected volatility, and the interest rate of a similar non-convertible debt instrument. These assumptions involved inherent uncertainties and management judgement.

Effective January 1, 2021, we early adopted Accounting Standards Update, or ASU, 2020-06 using the modified retrospective approach. As a result, the 2025 Notes and 2026 Notes are each accounted for as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives. Adoption of the new standard resulted in a decrease to accumulated deficit of $95.0 million, a decrease to additional paid-in capital of $664.0 million, and an increase to convertible senior notes, net of $569.0 million.

We are involved in claims, lawsuits, tax matters, government investigations, and proceedings arising in the ordinary course of our business. We record a provision for a liability when we believe that it is both probable that a liability has been incurred and the amount can be reasonably estimated. When there appears to be a range of possible costs with equal likelihood, a liability is recorded based on the low-end of such range. However, the likelihood of a loss is often difficult to predict and determining a meaningful estimate of the loss or a range of loss may not be practicable based on the information available, the potential effect of future events, and decisions by third parties impacting the ultimate resolution of the contingency. It is also not uncommon for such matters to be resolved over multiple reporting periods. During this time, relevant developments and new information must be continuously evaluated to determine both the likelihood of potential loss and whether it is possible to reasonably estimate a range of potential loss. We also disclose material contingencies when we believe that a loss is reasonably possible.


Delaware			45-5452795
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
3000 31st Street, Santa Monica, California 90405
(Address of principal executive offices, including zip code)


				Page
Note Regarding Forward-Looking Statements						1
Risk Factor Summary						3
Note Regarding User Metrics and Other Data						5

PART I
Item 1.		Business		6
~~PART I~~Item 1A.		Risk Factors					12
~~Item 1.~~			~~Business~~	6
~~Item 1A.~~	~~Risk Factors~~		12
Item 1B.			Unresolved Staff Comments		45 50
Item 2. 1C.		Cybersecurity		~~Properties~~50			45
Item 3. 2.		Properties		~~Legal Proceedings~~51			45
Item 3.		Legal Proceedings		51
Item 4.				Mine Safety Disclosures			45 52

PART II
Item 5.				Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			46 53
Item 6.		Reserved		~~Reserved~~54			47
Item 7.				Management’s Discussion and Analysis of Financial Condition and Results of Operations			48 55
Item 7A.				Quantitative and Qualitative Disclosures About Market Risk			63 71
Item 8.				Financial Statements and Supplementary Data			65 73
Item 9.				Changes in and Disagreements With Accountants on Accounting and Financial Disclosure			~~101~~ 109
Item 9A.				Controls and Procedures			~~101~~ 109
Item 9B.				Other Information			~~102~~ 109
Item 9C.				Disclosure Regarding Foreign Jurisdictions that Prevent Inspections			~~102~~ 110

PART III
Item 10.				Directors, Executive Officers and Corporate Governance			~~103~~ 111
Item 11.				Executive Compensation			~~108~~ 117
Item 12.				Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			~~126~~ 136
Item 13.				Certain Relationships and Related Transactions, and Director Independence			~~129~~ 139
Item 14.				Principal ~~Accounting~~Accountant Fees and Services			~~132~~ 142

PART IV
Item 15.				~~Exhibits,~~Exhibit and Financial Statement Schedules			~~133~~ 143
Item 16.				Form 10-K Summary			~~136~~ 146
		Signatures				~~Signatures~~147		~~137~~


Reports of Independent Registered Public Accounting Firm		66 74

Consolidated Financial Statements:

Consolidated Statements of Cash Flows		69 77

Consolidated Statements of Operations		70 78

Consolidated Statements of Comprehensive Income (Loss)		71 79

Consolidated Balance Sheets		72 80

Consolidated Statements of Stockholders’ Equity		73 81

Notes to Consolidated Financial Statements		74
	82

	Year Ended December 31,
	2021			2020			2019
	Year Ended December 31,											Year Ended December 31,
	2023									2023	2022		2021
Cash flows from operating activities
Net loss
Net loss
Net loss	$	(487,955	)	$	(944,839	)	$	(1,033,660	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		119,141			86,744			87,245
Depreciation and amortization
Depreciation and amortization
Stock-based compensation		1,092,135			770,182			686,013
Amortization of debt discount and issuance costs		4,311			81,401			17,797
(Gains) losses on debt and equity securities, net		(289,052	)		(10,250	)		(18,982	)
Amortization of debt issuance costs
Losses (gains) on debt and equity securities, net
Induced conversion expense related to convertible notes		41,538			—			—
Gain on divestiture		—			—			(39,883	)

Other
Other
Other		8,643			2,963			(10,084	)
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net of allowance
Accounts receivable, net of allowance
Accounts receivable, net of allowance		(332,967	)		(255,818	)		(147,862	)
Prepaid expenses and other current assets		(26,607	)		(14,587	)		(9,849	)
Operating lease right-of-use assets		47,258			38,940			58,199
Other assets		(10,916	)		(11,442	)		1,169
Accounts payable		53,579			20,374			20,674
Accrued expenses and other current liabilities		117,092			108,601			146,063
Operating lease liabilities		(49,294	)		(49,730	)		(60,844	)
Other liabilities		5,974			9,817			(954	)
Net cash provided by (used in) operating activities		292,880			(167,644	)		(304,958	)
Cash flows from investing activities
Purchases of property and equipment		(69,875	)		(57,832	)		(36,478	)
Purchases of property and equipment
Purchases of property and equipment
Purchases of strategic investments		(41,160	)		(111,586	)		(5,481	)
Sales of strategic investments
Cash paid for acquisitions, net of cash acquired		(310,915	)		(168,850	)		(77,119	)
Proceeds from divestiture, net		—			—			73,796
Purchases of marketable securities		(2,438,983	)		(3,524,599	)		(2,477,388	)
Sales of marketable securities		379,555			389,974			184,179
Maturities of marketable securities		2,536,725			2,737,523			1,608,854
Other		34,880			5,506			1,029
Net cash provided by (used in) investing activities		90,227			(729,864	)		(728,608	)
Cash flows from financing activities
Proceeds from issuance of convertible notes, net of issuance costs		1,137,227			988,582			1,251,411
Proceeds from issuance of convertible notes, net of issuance costs
Proceeds from issuance of convertible notes, net of issuance costs
Purchase of capped calls		(86,825	)		(100,000	)		(102,086	)
Proceeds from the exercise of stock options		14,671			34,209			16,527
Net cash provided by financing activities		1,065,073			922,791			1,165,852
Payments of debt issuance costs
Repurchases of Class A non-voting common stock
Deferred payments for acquisitions
Net cash provided by (used in) financing activities
Change in cash, cash equivalents, and restricted cash		1,448,180			25,283			132,286
Cash, cash equivalents, and restricted cash, beginning of period		546,543			521,260			388,974
Cash, cash equivalents, and restricted cash, end of period	$	1,994,723		$	546,543		$	521,260
Supplemental disclosures
Cash paid for income taxes, net	$	25,333		$	3,692		$	156
Cash paid for income taxes, net
Cash paid for income taxes, net
Cash paid for interest	$	10,887		$	12,019		$	1,546
Supplemental disclosures of non-cash activities
Net change in accounts payable and accrued expenses and other current liabilities related to property and equipment additions	$	6,498		$	2,732		$	(6,027	)

	Year Ended December 31,						2021 vs 2020 Change					2020 vs 2019 Change
	2021		2020		2019		$		%			$		%
	(dollars in thousands)
Revenue	$	4,117,048	$	2,506,626	$	1,715,534	$	1,610,422		64	%	$	791,092		46	%

How We Addressed the Matter in Our Audit						With the support of our information technology professionals, we identified and tested the relevant systems ~~and tools~~ used for the determination of initiation, processing, recording, and billing of revenue, which included processes and controls related to access to the relevant systems and data, changes to the relevant systems and interfaces, and configuration of the relevant systems. We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's internal controls over the identification and evaluation of revenue recognition for standard and non-standard terms and conditions.
		To test the Company’s recognition of advertising revenue, our audit procedures included, among others, testing the completeness and accuracy of the underlying data within the Company’s billing systems by agreeing amounts recognized to contractual terms and conditions, and testing revenue recognized to accounts receivable and cash receipts. Additionally, we examined standard customer online terms and conditions to understand the distinct performance obligations and tested the timing of revenue recognition. Further, we selected a sample of non-standard contractual arrangements to understand the performance obligations and the timing of revenue recognition. To assess completeness of non-standard terms and conditions, we obtained external confirmations of terms and conditions for a sample of customers.

	December 31,
	2021			2020
	December 31,								December 31,
	2023							2023		2022
Assets
Current assets
Current assets
Current assets
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	$	1,993,809		$	545,618
Marketable securities		1,699,076			1,991,922
Accounts receivable, net of allowance		1,068,873			744,288
Prepaid expenses and other current assets		92,244			56,147
Total current assets		4,854,002			3,337,975
Property and equipment, net		202,644			178,709
Operating lease right-of-use assets		322,252			269,728
Intangible assets, net		277,654			105,929
Goodwill		1,588,452			939,259
Other assets		291,302			192,638
Total assets	$	7,536,306		$	5,024,238
Liabilities and Stockholders’ Equity
Current liabilities
Current liabilities
Current liabilities
Accounts payable
Accounts payable
Accounts payable	$	125,282		$	71,908
Operating lease liabilities		52,396			41,077
Accrued expenses and other current liabilities		674,108			554,342
Total current liabilities		851,786			667,327
Convertible senior notes, net		2,253,087			1,675,169
Operating lease liabilities, noncurrent		325,509			287,292
Other liabilities		315,756			64,474
Total liabilities		3,746,138			2,694,262
Commitments and contingencies (Note 8)							Commitments and contingencies (Note 8)
Stockholders’ equity
Class A non-voting common stock, $0.00001 par value. 3,000,000 shares authorized, 1,364,887 shares issued and outstanding at December 31, 2021 and 3,000,000 shares authorized, 1,248,010 shares issued and outstanding at December 31, 2020.		14			12
Class B voting common stock, $0.00001 par value. 700,000 shares authorized, 22,769 shares issued and outstanding at December 31, 2021 and 700,000 shares authorized, 23,696 shares issued and outstanding at December 31, 2020.		—			—
Class C voting common stock, $0.00001 par value. 260,888 shares authorized, 231,627 shares issued and outstanding at December 31, 2021 and 260,888 shares authorized, 231,627 shares issued and outstanding at December 31, 2020.		2			2
Class A non-voting common stock, $0.00001 par value. 3,000,000 shares authorized, 1,440,541 shares issued, 1,391,341 shares outstanding at December 31, 2023, and 3,000,000 shares authorized, 1,371,242 shares issued, 1,319,930 shares outstanding at December 31, 2022.
Class A non-voting common stock, $0.00001 par value. 3,000,000 shares authorized, 1,440,541 shares issued, 1,391,341 shares outstanding at December 31, 2023, and 3,000,000 shares authorized, 1,371,242 shares issued, 1,319,930 shares outstanding at December 31, 2022.
Class A non-voting common stock, $0.00001 par value. 3,000,000 shares authorized, 1,440,541 shares issued, 1,391,341 shares outstanding at December 31, 2023, and 3,000,000 shares authorized, 1,371,242 shares issued, 1,319,930 shares outstanding at December 31, 2022.
Class B voting common stock, $0.00001 par value. 700,000 shares authorized, 22,528 shares issued and outstanding at December 31, 2023, and 700,000 shares authorized, 22,529 shares issued and outstanding at December 31, 2022.
Class C voting common stock, $0.00001 par value. 260,888 shares authorized, 231,627 shares issued and outstanding at December 31, 2023 and December 31, 2022.
Treasury stock, at cost. 49,200 and 51,312 shares of Class A non-voting common stock at December 31, 2023 and December 31, 2022, respectively.
Additional paid-in capital		12,069,097			10,200,141
Accumulated deficit
Accumulated other comprehensive income (loss)		5,521			21,363
Accumulated deficit		(8,284,466	)		(7,891,542	)
Total stockholders’ equity		3,790,168			2,329,976
Total liabilities and stockholders’ equity	$	7,536,306		$	5,024,238


Intangible Asset						Estimated Useful Life
Domain names						5 Years
Trademarks						~~1 to 5~~3 Years
Acquired developed technology						43 to 7 Years
Customer relationships						2 to 58 Years
Patents						34 to 1114 Years

		Class A Outstanding			Weighted- Average Grant Date Fair Value per RSU
	Class A Number of Shares						Class A Number of Shares	Weighted- Average Grant Date Fair Value
		(in thousands, except per share data)
Unvested at December 31, 2020			131,172		$	15.10
			(in thousands, except per share data)
			(in thousands, except per share data)
			(in thousands, except per share data)
Unvested at December 31, 2022
Granted			23,131		$	59.28
Vested			(59,009	)	$	16.20
Forfeited			(9,114	)	$	16.32
Unvested at December 31, 2021			86,180		$	26.07
Unvested at December 31, 2023

	Class A Number of Shares			Class B Number of 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, 2020		4,828			796		$	10.37		5.20	$	223,230
Granted		48			—		$	49.63
Exercised		(1,174	)		(168	)	$	10.95
Forfeited		(26	)		—		$	17.26
Outstanding at December 31, 2021		3,676			628		$	10.59		4.19	$	157,374
Exercisable at December 31, 2021		3,303			628		$	10.08		3.93	$	145,315
Vested and expected to vest at December 31, 2021		3,668			628		$	10.59		4.18	$	157,106

	Total
	(in thousands)
Trademarks, net	$	1,052
Technology, net		14,193
Customer relationships, net		5,246
Goodwill		2,682
Other assets and liabilities, net		3,827
Total	$	27,000

	Goodwill
	(in thousands)
Balance as of December 31, 2019	$	761,153
Goodwill acquired		162,747
Foreign currency translation		15,359
Balance as of December 31, 2020	$	939,259
Goodwill acquired		661,850
Foreign currency translation		(12,657	)
Balance as of December 31, 2021	$	1,588,452

	December 31, 2021
	December 31, 2023												December 31, 2023
	Weighted- Average Remaining Useful Life - Years										Weighted- Average Remaining Useful Life - Years	Gross Carrying Amount	Accumulated Amortization	Net
	Weighted- Average Remaining Useful Life - Years			Gross Carrying Amount			Accumulated Amortization		Net
	(in thousands, except years)
			(in thousands, except years)
			(in thousands, except years)
			(in thousands, except years)
Domain names		4.6		$	967		$	365	$	602
Trademarks		4.3			21,384			2,613		18,771
Technology		3.6			343,800			142,588		201,212
Customer relationships		5.1			53,709			6,332		47,377
Patents		4.0			21,195			11,503		9,692
				$	441,055		$	163,401	$	277,654
Other
						$

	December 31, 2020
	December 31, 2022												December 31, 2022
	Weighted- Average Remaining Useful Life - Years										Weighted- Average Remaining Useful Life - Years	Gross Carrying Amount	Accumulated Amortization	Net
	Weighted- Average Remaining Useful Life - Years			Gross Carrying Amount			Accumulated Amortization		Net
	(in thousands except years)
			(in thousands, except years)
			(in thousands, except years)
			(in thousands, except years)
Domain names		1.6		$	414		$	283	$	131
Trademarks
Technology		3.2			206,197			111,129		95,068
Customer relationships
Patents		4.9			19,860			9,130		10,730
				$	226,471		$	120,542	$	105,929
Other
						$

	Estimated Amortization
	(in thousands)
	Estimated Amortization		Estimated Amortization
	(in thousands)		(in thousands)
Year ending December 31,
2022	$	79,186
2023		73,240
2024
2024
2024		61,590
2025		44,331
2026		14,624
2027
2028
Thereafter		4,683
Total	$	277,654

	As of December 31, 2021									As of December 31, 2020
	2027 Notes			2025 Notes			2026 Notes			2025 Notes			2026 Notes
	(in thousands)
Liability:
Principal	$	1,150,000		$	284,105		$	838,493		$	1,000,000		$	1,265,000
Unamortized debt discount and issuance costs⁽¹⁾		(11,361	)		(2,168	)		(5,982	)		(263,956	)		(325,875	)
Net carrying amount	$	1,138,639		$	281,937		$	832,511		$	736,044		$	939,125


	As of December 31,
	2023						2022
	Principal		Unamortized Debt Issuance Costs		Net Carrying Amount		Principal		Unamortized Debt Issuance Costs		Net Carrying Amount

	(in thousands)
2025 Notes	$	284,105	$	(871)	$	283,234	$	284,105	$	(1,521)	$	282,584
2026 Notes	838,482		(3,402)		835,080		838,482		(4,698)		833,784
2027 Notes	1,150,000		(7,114)		1,142,886		1,150,000		(9,239)		1,140,761
2028 Notes	1,500,000		(11,800)		1,488,200		1,500,000		(14,609)		1,485,391
Total	$	3,772,587	$	(23,187)	$	3,749,400	$	3,772,587	$	(30,067)	$	3,742,520

	For the Year Ended December 31,
	2021			2020
	As of December 31,											As of December 31,
	2023									2023			2022
Weighted-average remaining lease term		6.6			7.6		Weighted-average remaining lease term	10.0			6.8
Weighted-average discount rate		5.0	%		5.5	%	Weighted-average discount rate	6.1	%		5.0	%

	Operating Leases
	(in thousands)
	Operating Leases			Operating Leases
	(in thousands)			(in thousands)
Year ending December 31,
2022	$	69,857
2023		84,573
2024
2024
2024		82,312
2025		77,406
2026		34,635
2027
2028
Thereafter		99,092
Total lease payments	$	447,875
Less: Imputed interest		(69,970	)
Present value of lease liabilities	$	377,905

	December 31, 2021
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Total Estimated Fair Value
	(in thousands)
Cash	$	1,966,966	$	—	$	—		$	1,966,966
Level 1 securities:
U.S. government securities		811,092		1		(1,454	)		809,639
U.S. government agency securities		77,409		1		(8	)		77,402
Publicly traded equity securities⁽¹⁾		71,139		122,064		—			193,203
Level 2 securities:
Corporate debt securities		143,124		—		(207	)		142,917
Commercial paper		422,328		—		(1	)		422,327
Certificates of deposit		80,431		—		—			80,431
Total	$	3,572,489	$	122,066	$	(1,670	)	$	3,692,885

		Changes in Accumulated Other Comprehensive Income (Loss) by Component
	Changes in Accumulated Other Comprehensive Income (Loss) by Component												Changes in Accumulated Other Comprehensive Income (Loss) by Component
	Marketable Securities										Marketable Securities	Foreign Currency Translation		Total
		Marketable Securities			Foreign Currency Translation			Total
		(in thousands)
Balance at December 31, 2020		$	(87	)	$	21,450		$	21,363
			(in thousands)
			(in thousands)
			(in thousands)
Balance at December 31, 2022
OCI before reclassifications			(1,664	)		(14,107	)		(15,771	)
Amounts reclassified from AOCI ⁽¹⁾			(71	)		—			(71	)
Net current period OCI			(1,735	)		(14,107	)		(15,842	)
Balance at December 31, 2021		$	(1,822	)	$	7,343		$	5,521
Balance at December 31, 2023


	Severance and Related Charges (1)		Stock-Based Compensation Expense (Benefit)		Lease Exit and Related Charges (2)		Other (3)		Total

	(in thousands)
Cost of revenue	$	2,291	$	709	$	—	$	17,585	$	20,585
Research and development	46,994		29,188		—		2,733		78,915
Sales and marketing	30,565		(504)		—		730		30,791
General and administrative	17,211		5,111		31,227		5,109		58,658
Total	$	97,061	$	34,504	$	31,227	$	26,157	$	188,949


Name				Age		~~Age~~				Position
Executive Officers
Evan Spiegel				33				31			Co-Founder, Chief Executive Officer, and Director
Robert Murphy				35				33			Co-Founder, Chief Technology Officer, and Director
Derek Andersen				45				43			Chief Financial Officer
~~Jeremi Gorman~~ Rebecca Morrow				50				44			Chief ~~Business~~Accounting Officer
~~Jerry Hunter~~ Michael O’Sullivan				58				General Counsel
Eric Young	57			47					Senior Vice President of Engineering
~~Rebecca Morrow~~ Non-Employee Directors						48				~~Chief Accounting Officer and Controller~~
Michael ~~O’Sullivan~~ Lynton (1)(2)(3)				64				56			~~General Counsel~~
~~Non-Employee Directors~~
~~Michael Lynton(1)(2)~~	62			Director and ~~Chairman~~Chairperson of the Board
Kelly ~~Coffey(3)~~ Coffey (3)				58				56			Director
Joanna ~~Coles(2)~~ Coles (2)				61				59			Director
Liz ~~Jenkins(3)~~ Jenkins (3)				46				44			Director
~~A.G. Lafley(1)(2)(4)~~ Scott D. Miller (1)(3)				71				74			Director
~~Stanley Meresman(3)~~ Patrick Spence				49				75			Director
~~Scott D. Miller(1)~~ Poppy Thorpe (1)(3)				39				69			Director
~~Poppy Thorpe(1)(3)~~			37		~~Director~~
Fidel Vargas (2)		55					53		Director


Activision Blizzard			Match Group			Twilio
~~Activision Blizzard~~ Autodesk			Pinterest			~~Twilio~~ X (formerly Twitter)
~~Autodesk~~			~~Roku~~	~~Twitter~~
~~DocuSign~~	~~ServiceNow~~	~~Uber~~
~~Etsy~~	~~Shopify~~	~~Workday~~
~~Intuit~~	~~Spotify~~	~~Zillow Group~~
~~Match Group~~	Block (formerly Square)	Roku			Uber
DocuSign			ServiceNow			Workday
Etsy			Shopify			Zillow Group
Intuit			Spotify			Zoom Video


Name	2021 Base Salary
Evan Spiegel	$	1
Derek Andersen		500,000
Jeremi Gorman		500,000
Jerry Hunter		500,000
Michael O’Sullivan		500,000
Jared Grusd(1)		500,000


Name	2023 Base Salary
Evan Spiegel	$	1
Derek Andersen	1,000,000
Rebecca Morrow	500,000
Michael O’Sullivan	1,000,000
Eric Young	1,000,000
Jerry Hunter (1)	1,000,000 ~~Mr. Grusd served as our Chief Strategy Officer until January 31, 2021, and then transitioned to a Strategic Advisor. Through January 31, 2021, Mr. Grusd’s annual base salary was $500,000.~~

Name and Principal Position	Year	Salary		Bonus		Stock Awards(1)			Non-Equity Incentive Plan Compensation			All Other Compensation			Total
Evan Spiegel	2021	$	1	$	—	$	—		$	—		$	3,290,615	(2)	$	3,290,616
Co-Founder and Chief	2020		1		—		—			—			2,094,431			2,094,432
Executive Officer	2019		1		—		—			—			1,669,809			1,669,810
Derek Andersen	2021		500,000		—		5,876,814			225,000	(3)		14,364	(4)		6,616,178
Chief Financial Officer	2020		500,000		—		6,242,566			400,000			24,841			7,167,407
	2019		422,404		—		8,866,092			—			11,271			9,299,767
Jeremi Gorman	2021		500,000		—		5,876,814			225,000	(3)		21,631	(5)		6,623,445
Chief Business Officer	2020		500,000		—		5,675,063			400,000			16,213			6,591,276
	2019		500,000		—		—			—			17,038			517,038
Jerry Hunter	2021		500,000		—		9,402,903			225,000	(3)		12,164	(6)		10,140,067
Senior Vice President,	2020		500,000		—		24,970,262			400,000			20,489			25,890,751
Engineering	2019		500,000		—		2,855,000			—			21,427			3,376,427
Michael O'Sullivan	2021		500,000		—		4,701,451			225,000	(3)		21,631	(7)		5,448,082
General Counsel	2020		500,000		—		6,810,086			400,000			17,191			7,727,277
	2019		500,000		—		8,565,000			—			15,830			9,080,830
Jared Grusd(8)	2021		307,315		—		26,651,711	(9)		—			11,853	(10)		26,970,879
Former Chief Strategy Officer

Name	Grant Date		All Other Stock Awards: Number of Shares of Stock or Units(1)		Grant Date Fair Value of Stock Awards(2)
Evan Spiegel		—		—	$	—
Derek Andersen	2/3/2021			99,170		5,876,814
Jeremi Gorman	2/3/2021			99,170		5,876,814
Jerry Hunter	2/3/2021			158,672		9,402,903
Michael O’Sullivan	2/3/2021			79,336		4,701,451
Jared Grusd		—		—		—

	Stock Awards								Option Awards
Name	Grant Date		Number of Shares or Units of Stock That Have Not Vested(#)₍₁₎				Market Value of Shares or Units of Stock That Have Not Vested($)₍₂₎		Number of Securities Underlying Unexercised Options Exercisable		Number of Securities Underlying Unexercised Options Unexercisable(1)		Option Exercise Price		Option Expiration Date
Evan Spiegel		—		—			$	—		—		—	$	—		—
Derek Andersen	7/26/2018			124,697	(3	)		5,864,500		—		—		—		—
	3/4/2019			8,854	(4	)		416,404		—		—		—		—
	5/16/2019			281,250	(5	)		13,227,188		—		—		—		—
	2/18/2020			363,574	(6	)		17,098,885		—		—		—		—
	2/3/2021			99,170	(7	)		4,663,965		—		—		—		—
Jeremi Gorman	11/5/2018			799,990	(8	)		37,623,530		—		—		—		—
	2/18/2020			330,522	(9	)		15,544,450		—		—		—		—
	2/3/2021			99,170	(7	)		4,663,965		—		—		—		—
Jerry Hunter	12/29/2017			34,988	(10	)		1,645,486		—		—		—		—
	12/29/2017			—				—		700,000		—		14.72	12/29/2027
	5/16/2019			93,750	(11	)		4,409,063		—		—		—		—
	2/18/2020			1,057,670	(12	)		49,742,220		—		—		—		—
	2/3/2021			158,672	(7	)		7,462,344		—		—		—		—
Michael O’Sullivan	5/16/2019			281,250	(11	)		13,227,188		—		—		—		—
	2/18/2020			396,627	(13	)		18,653,368		—		—		—		—
	2/3/2021			79,336	(7	)		3,731,172		—		—		—		—
Jared Grusd	11/5/2018			130,670	(14	)		6,145,410		—		—		—		—


~~Name~~	~~Accelerated Vesting of RSUs~~No named executive officer is also entitled to any payments following a resignation for good reason, other than Mr. Spiegel. If Mr. Spiegel resigns for good reason as an employee and member of our board of directors, then Mr. Spiegel is entitled to continue receiving his existing aircraft usage and security benefits provided by us, in each case, subject to the terms of his employment agreement entered into with us in July 2022. 128 Table of Contents ~~(1)~~
~~Evan Spiegel~~	$	—
~~Derek Andersen~~		—
~~Jeremi Gorman~~		—
~~Jerry Hunter~~		~~1,645,486~~
~~Michael O’Sullivan~~		—
~~Jared Grusd~~		—


~~Name~~	~~Accelerated Vesting~~ ~~of Stock Awards~~ ~~(1)~~
~~Evan Spiegel~~	$	—
~~Derek Andersen~~		~~41,270,941~~
~~Jeremi Gorman~~		~~57,831,944~~
~~Jerry Hunter~~		~~63,259,112~~
~~Michael O’Sullivan~~		~~35,611,727~~
~~Jared Grusd~~		~~6,145,410~~


Name	Accelerated Vesting of Stock Awards (1)		Remaining Sign-on Bonus		Total
Evan Spiegel	$	—	$	—	$	—
Derek Andersen	28,504,669		—		28,504,669
Rebecca Morrow	2,092,159		—		2,092,159
Michael O’Sullivan	16,686,208		—		16,686,208
Eric Young	56,734,309		125,000		56,859,309
Jerry Hunter	64,934,863		—		64,934,863

Name	Fees Earned or Paid in Cash		Stock Awards(1)(8)		Option Awards(1)(8)		Total
Michael Lynton(2)	$	172,692	$	124,561	$	125,000	$	422,253
Kelly Coffey		75,000		124,561		125,000		324,561
Joanna Coles		75,000		124,561		125,000		324,561
Liz Jenkins		67,255		124,561		125,000		316,816
A.G. Lafley(3)(4)		145,000		124,561		125,000		394,561
Stanley Meresman(5)		100,398		124,561		125,000		349,959
Scott D. Miller(3)		132,935		124,561		125,000		382,496
Robert Murphy(6)		184,437		—		—		184,437
Poppy Thorpe		75,000		124,561		125,000		324,561
Fidel Vargas(7)		21,399		124,561		125,000		270,960


Name	Fees Earned or Paid in Cash		Stock Awards (1)(6)		Total
Michael Lynton	$	170,000	$	292,747	$	462,747
Kelly Coffey	75,000		292,747		367,747
Joanna Coles	85,000		292,747		377,747
Liz Jenkins	100,000		292,747		392,747
Stanley Meresman (2)	42,391		—		42,391
Scott D. Miller (3)	135,000		292,747		427,747
Robert Murphy (4)	801,334		—		801,334
Patrick Spence (5)	22,215		215,594		237,809
Poppy Thorpe (3)	135,000		292,747		427,747
Fidel Vargas (3)	135,000		292,747		427,747

Revenue Recognition

Description of the Matter

As described in Note 2 to the consolidated financial statements, the Company generates substantially all of its revenues by offering various advertising products on Snapchat. The substantial majority of such advertising revenues is generated based upon contractual agreements with customers that are either based on the number of advertising impressions delivered or on a fixed fee basis for advertisements delivered over a period of ~~time, or fees based on the number of advertising impressions delivered.~~time. Revenues ~~related to fixed fee agreements are recognized ratably over the service period while revenues~~ related to agreements based on the number of advertising impressions delivered are recognized when the advertisements are ~~displayed.~~

served while fixed fee agreements are recognized ratably over the service period.
The Company’s advertising revenue recognition process utilizes ~~multiple, complex,~~ proprietary systems ~~and tools~~ for the initiation, processing, and recording of transactions which comprise a high volume of individually low monetary value transactions. This process is dependent on the effective design and operation of ~~multiple~~ systems, ~~sub-processes,~~ data sources, and controls ~~which~~that required significant audit effort. Also, the identification and evaluation of certain non-standard terms and conditions required incremental audit effort to determine the distinct performance obligations and the timing of revenue recognition.