#1Snap Inc. Q3 2018 Earnings Slides October 25, 2018#2Forward-Looking Statements & Non-GAAP Financial Measures This presentation contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this presentation, including statements regarding guidance, our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, 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," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will," or "would" or the negative of these words or other similar terms or expressions. You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this presentation on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. These forward-looking statements are subject to risks, uncertainties, and other factors, including those described in the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our quarterly report on Form 10-Q for the quarter ended June 30, 2018, which is available on the SEC's website at www.sec.gov. Additional information will be made available in our quarterly report on Form 10-Q for the quarter ended September 30, 2018 and other filings that we make from time to time with the SEC. In addition, the forward-looking statements in this presentation relate only to events as of the date on which the statements are made and are based on information available to us as of the date of this presentation. We undertake no obligation to update any forward-looking statements made in this presentation to reflect events or circumstances after the date of this presentation or to reflect new information or the occurrence of unanticipated events, 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, mergers, dispositions, joint ventures, or investments. This presentation includes certain non-GAAP financial measures. 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. A reconciliation of GAAP to non-GAAP measures is provided in the appendix of this presentation. 2#3Third Quarter Financial Highlights Cash Rev nue Operating Performance Operating cash flow improved $61 million YoY and $67 million QoQ to $(133) million. • Free Cash Flow improved $61 million YoY and $75 million QoQ to $(159) million. Change in cash balance improved $344 million YoY and $96 million QoQ to $(156) million. • Revenue increased 43% YoY and 14% QoQ to a record $298 million. ● o Trailing twelve months revenue increased 53% to $1.1 billion. Average revenue per user increased 37% YoY and 14% QoQ to $1.60. • Gross margin¹1 increased to a record 36%, compared to 21% in Q3 2017 and 30% in Q2 2018. Operating loss improved $138 million YoY and $34 million QoQ to $(323) million. • Net loss improved $118 million YoY and $28 million QoQ to $(325) million. Adjusted EBITDA improved $41 million YoY and $31 million QoQ to $(138) million. Adjusted EBITDA margin improved to (46)%, compared to (86) % in Q3 2017 and (64)% in Q2 2018. › Adjusted EBITDA leverage improved to 45%, compared to (88) % in Q3 2017 and 31% in Q2 2018. ● ¹Excludes stock-based compensation expense and related payroll tax expense, depreciation and amortization, and certain other non-cash or non-recurring items impacting net income (loss) from time to time. STRONG FINANCIAL PERFORMANCE YOY AND QOQ 3#4Business Highlights - Community and Engagement • Our community grew 5% year-over-year to 186 million Daily Active Users. DAUs were down 1% compared to the prior quarter. • We launched Snap Original Shows and the debut of serialized Shows, our first slate of exclusive scripted Shows and docuseries. • In Q3, 21 unique Shows in Discover reached a monthly active audience of over 10 million viewers. • CBS' Snapchat Show "James Corden's Next James Corden" won two Emmy awards: Outstanding Short Form Comedy or Drama Series and Outstanding Actor in a Short Form Comedy or Drama Series. • We announced partner curated Our Stories and added over 25 media partners to increase the volume and variety of content available in Discover on Snapchat. Partners include CNN, digital brands like Overtime, and longtime partners like Hearst. • We extended our partnerships with NBCUniversal and Viacom to create even more content for our users worldwide. NBCUniversal extended its content production commitments through 2019, and Viacom has committed to creating 10 new Snap Original Shows. Viacom also committed to syndicating at least 500 episodes of its network's shows to the Snapchat audience. • We partnered with Amazon to bring a new shopping experience to our community, accessible right from the Snapchat camera. Snapchatters can simply point the Snapchat camera at a physical product or barcode, and press and hold the screen to get started. • We introduced two new styles of Spectacles: Nico and Veronica. Both designs come in black-on-black with polarized lenses. • On National Voter Registration Day, we offered a new way for our community to register to vote quickly and easily - right in Snapchat with TurboVote and attracted over 400,000 new voter registrations according to TurboVote. Snapchatters have saved more than 200 billion Snaps in Memories. ● ENHANCING THE USER EXPERIENCE FOR OUR LARGE AND HIGHLY ENGAGED COMMUNITY 4#5Business Highlights - Monetization • We announced two new products focused on e-commerce advertisers to enhance our e-commerce offering ahead of the holiday season: o Product Catalogs, which allow advertisers to upload their standard product catalog, a format utilized broadly by other ad platforms, and quickly generate a product catalog in the form of a Story Ad. o Collection Ads, which give users the ability to interact with four products in a single Snap Ad, rathe than swiping up to a single product/category. Wish, eBay, and Guess, who were all part of the initial testing group for Collection Ads, saw significantly higher engagement rates compared to typical Snap Ads. eBay's engagement rate, for example, was five times higher. • We brought Commercials to our self-serve platform. Commercials are our 6-second, non-skippable ad that appears only within premium content, including 12 new Snap Original Shows. • The Snap Pixel, which helps advertisers measure the cross-device impact of their campaigns continued to see impressive growth with over 230 million purchase events in Q3, up from 70 million in Q2. • Our Snapchat Show "Fashion Five Ways" included our first ever shoppable brand integration within a Show on Snapchat. This campaign helped the Adidas Falcon sneaker to sell out. • We expanded the availability of goal-based bidding for conversions to all advertisers and introduced new automated audience creation capabilities for the Snap Pixel, allowing advertisers to automatically generate audiences on various events measured by the Snap Pixel. • We expanded augmented reality marketing, and have added 'attachments' to our self-serve augmented reality buying tools, which means lower funnel goals such as App Installs can be driven directly from augmented reality. • We started connecting the insights we share with advertisers with actions they can take in Ad Manager. This month, we added the ability to build re-engagement audiences off of foot traffic data, meaning advertisers can engage audiences who have visited their retail locations. FOCUSED ON GROWING AD REVENUE, NUMBER OF ADVERTISERS, AND IMPROVING OPTIMIZATION LO 5#6Free Cash Flow¹ (in millions, unaudited) YOY Change Q2'17 $(210) $(19) $(229) (52)% Q3'17 $(194) $(26) $(220) 6% Q4'17 $(176) $(21) $(197) (5)% Q1'18 $(232) $(36) $(268) (55)% Cash Used in Operating Activities Numbers throughout presentation may not foot due to rounding. 'We define Free Cash Flow as net cash provided by (used in) operating activities, reduced by purchases of property and equipment. See Appendix for reconciliation of net cash used in operating activities to Free Cash Flow. Q2'18 $(199) $(35) $(234) (2)% Capital Expenditures Q3'18 $(133) $(26) $(159) 28% OPTIMIZING LONG-TERM FREE CASH FLOW; FREE CASH FLOW IMPROVED 28% YOY AND 32% QOQ 6#7Common Shares Outstanding Plus Shares Underlying Stock-Based Awards (in millions, unaudited) YOY Change 1,434 254 1,180 Q2'17 NM 1,441 240 1,202 Q3'17 NM ¹Shares underlying stock-based awards include restricted stock units and outstanding stock options. 1,453 231 1,222 Q4'17 NM 1,457 202 1,254 Q1'18 2% EFFICIENTLY MANAGING DILUTION Common Shares Outstanding 1,479 206 1,273 Q2'18 3% Shares Underlying Stock-Based Awards¹ 1,476 185 1,291 Q3'18 2% 7#8Revenue by Geography (in millions, unaudited) YOY Change QUARTER-OVER-QUARTER $182 $12 $22 $148 Q2'17 153% $208 $13 $27 $167 Q3'17 62% $286 $26 $40 $219 Q4'17 72% $231 $27 $33 $170 Q1'18 54% $262 $45 $40 $177 Q2'18 44% $298 $40 $50 $207 Q3'18 43% North America¹ $705 $39 $77 TRAILING TWELVE MONTHS (TTM) $589 TTM Q3'17 Europe² 160% $1,076 $138 Total revenue for geographic reporting 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 is consistent with how we determine ARPU. ¹North America includes Mexico and the Caribbean. 2Europe includes Russia and Turkey. $163 TTM Q3'18 REVENUE UP 43% YOY AND 14% QOQ; TTM REVENUE INCREASED 53% TO $1.1 BILLION $775 Rest of World 53% 8#9Average Daily Active Users (DAU) (in millions, unaudited) GLOBAL 173 Q2'17 EUROPE ² 57 Q2'17 178 Q3'17 57 Q3'17 187 Q4'17 60 Q4'17 +5% 191 Q1'18 +4% 62 Q1'18 188 Q2'18 61 Q2'18 186 Q3'18 59 Q3'18 NORTH AMERICA¹ 75 Q2'17 42 77 REST OF WORLD Q2'17 Q3'17 44 Q3'17 80 Q4'17 47 Q4'17 +3% GLOBAL DAU INCREASED 5% YOY AND DECREASED 1% QOQ 81 Q1'18 +8% 48 Q1'18 80 Q2'18 47 Q2'18 79 Q3'18 47 Q3'18 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 Daily Active Users 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. ¹North America includes Mexico and the Caribbean. 2Europe includes Russia and Turkey. 9#10Average Revenue Per User (ARPU) (unaudited) GLOBAL $1.05 Q2'17 EUROPE ² $0.39 Q2'17 $1.17 Q3'17 $0.48 Q3'17 $1.53 Q4'17 $0.66 Q4'17 +37% $1.21 Q1'18 +78% $0.53 Q1'18 $1.40 Q2'18 $0.66 Q2'18 $1.60 Q3'18 $0.85 Q3'18 NORTH AMERICA ¹ $1.97 Q2'17 $0.29 $2.17 REST OF WORLD Q2'17 Q3'17 $0.30 Q3'17 $2.75 GLOBAL ARPU INCREASED 37% YOY AND 14% QOQ Q4'17 $0.56 Q4'17 +20% $2.10 Q1'18 +175% $0.58 Q1'18 $2.21 Q2'18 $0.96 Q2'18 $2.62 Q3'18 $0.84 Q3'18 We define ARPU as quarterly revenue divided by the average Daily Active Users. 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. ¹North America includes Mexico and the Caribbean. 2Europe includes Russia and Turkey. 10#11Cost of Revenue¹ (in millions, unaudited) COST OF REVENUE AS A % OF REVENUE Gross Margin¹ 81% 19% 79% Q2'17 64% 36% [H 21% 17% Q3'17 -15 PPTS Q4'17 83% 70% Q1'18 30% Q2'18 64% 36% Q3'18 Total Non-GAAP Exclusions¹ COST OF REVENUE COMPOSITION Infrastructure Cost Revenue Share Cost Other $147 $18 $23 $106 Q2'17 $5 $163 $21 $22 $121 Q3'17 $47 $184 $25 $28 $131 Q4'17 $7 ¹Excludes stock-based compensation expense and related payroll tax expense (SBC-Related Expense), depreciation and amortization (D&A Expense), and certain other non-cash or non-recurring items impacting net income (loss) from time to time. +17% $191 $20 $32 $139 Q1'18 $5 $184 $25 $24 $136 Q2'18 $8 $191 $25 $26 $140 Q3'18 COST OF REVENUE INCREASED 17% YOY AND 3% QOQ, WHILE REVENUE INCREASED 43% YOY AND 14% QOQ FOCUSED ON OPERATIONAL EFFICIENCIES AND UNIT COST ECONOMICS WHICH DRIVE MARGIN EXPANSION $7 11#12Operating Expenses¹ (in millions, unaudited) OPERATING EXPENSES AS A % OF REVENUE 126% Q2'17 107% Q3'17 91% Q4'17 -25 PPTS 112% Q1'18 94% Q2'18 82% Q3'18 Total Non-GAAP Exclusions¹ OPERATING EXPENSES COMPOSITION Research and Development Sales and Marketing General and Administrative $229 $74 $69 $86 Q2'17 $250 $223 $66 $71 $87 Q3'17 $236 $261 $88 $78 $96 Q4'17 $195 ¹Excludes stock-based compensation expense and related payroll tax expense (SBC-Related Expense) and depreciation and amortization (D&A Expense) and certain other non-cash or non-recurring items impacting net income (loss) from time to time. Refer to Appendix for description of Reduction in Force Charges and Lease Exit Charges. +10% $257 $77 $79 $102 Q1'18 $169 $247 $75 $75 $97 Q2'18 $182 $246 $82 $68 $95 Q3'18 $178 OPERATING EXPENSES INCREASED 10% YOY AND DECREASED 1% QOQ, WHILE REVENUE INCREASED 43% YOY AND 14% QOQ FIXED COST LEVERAGE CONTINUES TO IMPROVE 12#13Adjusted EBITDA¹ (in millions, unaudited) Q3'17 Q2'17 Q118 (56)% (64)% (94)% (107)% - 11 $(159) $(169) $(194) $(218) (86)% $(179) Q4'17 Q2'18 Adjusted EBITDA Margin '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 related payroll tax expense; and certain other non-cash or non-recurring items impacting net income (loss) from time to time. See Appendix for reconciliation of net loss to Adjusted EBITDA. Q3'18 (46)% $(138) ADJUSTED EBITDA IMPROVED $41 MILLION YOY, AND ADJUSTED EBITDA MARGIN IMPROVED 40 PPTS YOY 13#14Financial Guidance The following forward-looking statements reflect our expectations for the fourth quarter of 2018 as of October 25, 2018, and are subject to substantial uncertainty. This guidance assumes, among other things, that no business acquisitions, investments, restructurings, or legal settlements are concluded in the quarter. Our results are based on assumptions that we believe to be reasonable as of this date, but may be materially affected by many factors, as discussed in "Forward-Looking Statements & Non-GAAP Financial Measures." Q4 2018 Outlook • Revenue is expected to reach a new high of between $355 million and $380 million, or grow between 24% and 33% year-over-year. • Adjusted EBITDA is expected to be between $(100) million and $(75) million, compared to $(159) million in Q4 2017. EXPECTING RECORD REVENUE AND THIRD CONSECUTIVE QUARTER OF ADJUSTED EBITDA IMPROVEMENT DRIVING TOWARDS PROFITABILITY AND FREE CASH FLOW 14#15Appendix#16Non-GAAP Financial Measures Reconciliation (in thousands, unaudited) Free Cash Flow Reconciliation Net cash used in operating activities Less: Purchases of property and equipment Free Cash Flow¹ Adjusted EBITDA Reconciliation Net loss Add (deduct): Interest income Interest expense Other (income) expense, net Income tax (benefit) expense Depreciation and amortization Stock-based compensation expense Payroll tax expense related to stock-based compensation Spectacles inventory-related charges Reduction in force Lease exit charges Adjusted EBITDA² $ $ $ $ Three Months Ended June 30, 2017 September 30, 2017 December 31, 2017 March 31, 2018 (209,574) $ (19,365) (228,939) $ (443,093) $ (6,349) 998 (786) 212 12,585 245,028 (2,585) (194,013) $ (25,948) (219,961) $ Three Months Ended June 30, 2017 September 30, 2017 December 31, 2017 March 31, 2018 (193,990) $ (443,159) $ (6,253) 887 (1,002) (12,300) 17,467 221,702 3,890 39,867 (176,083) $ (21,212) (197,295) $ (178,901) $ (349,977) $ (6,070) 876 (2,553) (3,240) 18,786 181,044 2,212 (231,981) $ (36,315) (268,296) $ (158,922) $ (385,785) $ (6,104) 934 (3,153) 1,578 21,553 133,258 9,968 9,884 (217,867) $ June 30, 2018 September 30, 2018 (199,346) $ (34,901) (234,247) $ June 30, 2018 September 30, 2018 (353,310) $ (6,600) 930 61 1,077 22,514 156,371 5,997 (132,543) (26,285) (158,828) 3,928 (169,032) $ (325,148) (7,011) 919 7,625 244 24,898 126,809 3,947 29,340 (138,377) ¹ We define Free Cash Flow as net cash provided by (used in) operating activities, reduced by purchases of property and equipment. 2We 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 related payroll tax expense; and certain other non-cash or non-recurring items impacting net income (loss) from time to time. Spectacles inventory-related charges were primarily related to excess inventory reserves and inventory purchase commitment cancellation charges. Reduction in force charges were primarily composed of severance expense and related payroll tax expense related to a reduction in force plan we implemented in Q1 2018. Lease exit charges were related to our exit of various operating leases prior to the end of the contractual lease term. The lease exit charges primarily include the present value of our remaining lease obligation on the cease use dates that occurred during the quarter, net of estimated sublease income. These charges are non-recurring and not reflective of underlying trends in our business. 1#17Non-GAAP Financial Measures Reconciliation (Continued) (in thousands, except per share amounts, unaudited) Non-GAAP Net Loss Reconciliation Net loss Amortization of intangible assets Stock-based compensation expense Payroll tax expense related to stock-based compensation Spectacles inventory-related charges Reduction in force charges Lease exit charges Income tax adjustments Non-GAAP net loss¹ Weighted-average common shares - Diluted Non-GAAP diluted net loss per share reconciliation GAAP diluted net loss per share Non-GAAP adjustment to net loss 1 Non-GAAP diluted net loss per share $ $ $ $ Three Months Ended June 30, 2017 September 30, 2017 December 31, 2017 March 31, 2018 (443,093) $ 5,767 245,028 (2,585) (623) (195,506) $ 1,223,443 June 30, 2017 (443,159) $ 9,743 221,702 3,890 39,867 (0.36) $ 0.20 (0.16) $ (123) (168,080) $ 1,232,993 (349,977) $ 10,607 181,044 2,212 (0.36) $ 0.22 (0.14) $ 60 (156,054) $ 1,247,017 (385,785) $ 10,824 133,258 9,968 (0.28) $ 0.15 (0.13) $ 9,884 Three Months Ended September 30, 2017 December 31, 2017 March 31, 2018 220 (221,631) $ 1,270,998 (0.30) $ 0.13 (0.17) $ June 30, 2018 (353,310) $ 10,754 156,371 5,997 September 30, 2018 3,928 (339) (176,599) $ 1,294,846 June 30, 2018 (325,148) 10,610 126,809 3,947 (0.27) $ 0.13 (0.14) $ 29,340 (253) (154,695) 1,309,918 September 30, 2018 (0.25) 0.13 (0.12) ¹ We define Non-GAAP Net Loss as net income (loss); excluding amortization of intangible assets; stock-based compensation expense and related payroll tax expense; certain other non-cash or non-recurring items impacting net income (loss) from time to time; and related income tax adjustments. Non-recurring items include spectacles inventory-related charges, reduction in force charges, and lease exit charges as described in the preceding slide. Non-GAAP Net Loss and weighted average diluted shares are then used to calculate Non-GAAP diluted net loss per share. 2#18Note 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 Daily Active Users 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. We also break out Daily Active Users by geography because certain markets have a greater revenue opportunity and lower bandwidth costs. We define average revenue per user, or ARPU, as quarterly revenue divided by the average Daily Active Users. 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. 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. 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 multiple Snapchat accounts, even though we forbid that in our Terms of Service and implement measures to detect and suppress that behavior. We have not determined the number of such multiple accounts. 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. 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 believe that we don't capture all data regarding all our active users. For example, technical issues may result in data not being recorded from every user's application. While we believe this underreporting is generally immaterial, we are unable to precisely determine the level of underreporting and for some periods the underreporting may be material. We continually seek to address these technical issues and improve our accuracy, but given the complexity of the systems involved and the rapidly changing nature of mobile devices and systems, we expect underreporting to continue. We do not adjust our reported metrics to reflect this underreporting. 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 exclude those users and estimate their ages based on a sample of the self-reported ages we do have. If our Daily 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. 3#19Note Regarding User Metrics and Other Data (Continued) 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. For example, before June 2015, we used a third party that counted a Daily Active User when the application was opened or a notification was received via the application on any device. We now use an analytics platform that we developed and operate and we count a Daily Active User 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 thus is a Daily Active User. 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 Daily Active Users or other metrics may not be comparable to those in prior periods. Our measures of Daily Active Users may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology or data used. 4