| Item 2.02 | Results of Operations and Financial Condition. |
On August 31, 2022, we posted an Investor Update presentation to our Investor Relations website at investor.snap.com disclosing preliminary year-over-year revenue growth for the third quarter of 2022 through August 29, 2022 of approximately 8%. A copy of that Investor Update is attached as Exhibit 99.2. Given uncertainties related to the operating environment, we are not providing our expectations for revenue or adjusted EBITDA for the third quarter of 2022.
The information presented in this Item 2.02 is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information shall not be deemed incorporated by reference into any other filing with the U.S. Securities and Exchange Commission made by Snap Inc., whether made before or after today’s date, regardless of any general incorporation language in such filing.
| Item 2.05 | Costs Associated with Exit or Disposal Activities. |
On August 31, 2022, we announced a plan to reduce our global headcount by approximately 20% of our global full time employees. The headcount reduction is part of a broader strategic reprioritization by the company 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, we currently estimate that we will incur pre-tax charges in the range of $110 million to $175 million, primarily consisting of severance and related costs, contract termination costs, and other impairment charges, of which $95 million to $135 million are expected to be future cash expenditures. The majority of these costs are expected to be incurred during the third quarter of 2022. Potential position eliminations in each country are subject to local law and consultation requirements, which may extend this process into the fourth quarter of 2022 or beyond in certain countries. The charges that we expect to incur are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual expenses may differ materially from the estimates disclosed above.
| Item 5.02 | Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers. |
As part of the strategic planning process, Evan Spiegel, Chief Executive Officer and Co-Founder, outlined a proposal to our board of directors to create the role of Chief Operating Officer in order to more closely align our engineering, ad product, and sales functions. Following those discussions, Mr. Spiegel made a recommendation to the compensation committee of the board to nominate Jerry Hunter, Senior Vice President of Engineering, age 57, to the newly-created role of Chief Operating Officer. The compensation committee approved Mr. Hunter’s promotion, effective immediately, on August 30, 2022. Mr. Hunter has served as our Senior Vice President of Engineering since November 2017 and previously served as Vice President of Core Engineering since October 2016. In Mr. Hunter’s new role, he will oversee our engineering, sales, partnerships, and revenue organizations. In connection with Mr. Hunter’s promotion, he will be awarded $19.5 million in new restricted stock units that will vest over the next 39 months in equal quarterly increments.
On August 26, 2022, Jeremi Gorman, our Chief Business Officer, notified us that she will leave Snap to pursue a new opportunity. Ms. Gorman’s last day at Snap will be September 16, 2022. Ms. Gorman has agreed to continue to serve as Chief Business Officer for an interim period to assist with an effective transition of her duties and responsibilities. Accordingly, on August 30, 2022, we entered into a transition agreement with Ms. Gorman. Ms. Gorman has confirmed that this transition is not related to any disagreement with us on any matter relating to our accounting, strategy, management, operations, policies, or practices (financial or otherwise). The foregoing description of Ms. Gorman’s transition agreement is qualified in its entirety by reference to the full text of the agreement, which is attached to this Current Report on Form 8-K as Exhibit 10.1 and is incorporated by reference.
| Item 7.01 | Regulation FD Disclosure. |
On August 31, 2022, we began notifying team members affected by the strategic reprioritization and communicated the changes to the entire company with a letter from Evan Spiegel, our Chief Executive Officer and Co-Founder, which is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated by reference.
On August 31, 2022, we posted an Investor Update presentation to our Investor Relations website at investor.snap.com, which is attached to this Current Report on Form 8-K as Exhibit 99.2 and is incorporated by reference.
The information presented in this Item 7.01 is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information shall not be deemed incorporated by reference into any other filing with the U.S. Securities and Exchange Commission made by Snap Inc., whether made before or after today’s date, regardless of any general incorporation language in such filing.
