#1Snap Inc. Q3 2020 Earnings Slides October 20, 2020#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, user growth and engagement, product initiatives, and objectives of management for future operations, and the impact of COVID-19 on our business and the economy as a whole, 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. 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, including the ongoing COVID-19 pandemic, 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 most recent quarterly report on Form 10-Q filed with the SEC, 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, 2020 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, including future developments related to the COVID-19 pandemic, 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 Revenue Operating Performance Cash ● Revenue increased 52% YoY to $679 million. ● ● Average revenue per user increased 28% YoY to $2.73. Adjusted gross margin¹ improved to 58%, compared to 51% in Q3 2019. Operating margin improved to (25) %, compared to (51)% in Q3 2019. Net loss was $(200) million, compared to $(227) million in Q3 2019. Adjusted EBITDA was $56 million, compared to $(42) million in Q3 2019. Adjusted EBITDA margin² was 8%, compared to (9)% in Q3 2019. Operating cash flow improved $21 million YoY to $(55) million. Free Cash Flow improved $15 million YoY to $(70) million. Ending cash and marketable securities increased $464 million YoY to $2.7 billion. 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. 2We define Adjusted EBITDA margin as Adjusted EBITDA divided by GAAP revenue. See Appendix for reconciliation of net loss to Adjusted EBITDA. 3#4Business Highlights Daily Active Users grew by 18% year-over-year and we saw increased engagement across key metrics: DAUS were 249 million in Q3 2020, an increase of 39 million or 18% year-over-year. We continue to invest in our Discover platform as a destination for content that entertains and informs: Total daily time spent by Snapchatters watching Shows increased by over 50% year-over-year in Q3 2020. The daily average number of Snapchatters in India watching Discover content increased by nearly 50% sequentially in Q3 2020. More than 40% of the US Gen Z population watched sports Discover content on Snapchat last month. SportsCenter viewership on Snapchat increased by 80% from July to September. We launched a new unscripted series called "The Solution Committee" in which Jaden Smith seeks out the help of young activists and celebrity friends to explore racial and social justice issues. Our "VS The World" docuseries franchise launched its second season, featuring Conor McGregor, and reached over 14 million viewers. We launched a new unscripted series called "Coach Kev" in which Kevin Hart inspires Snapchatters to live their best lives through bursts of inspiration, positivity, and wisdom. ● ● ● ● DAUS increased sequentially and year-over-year on each of iOS and Android platforms. The average number of Snaps created every day grew 25% year-over-year. ● 4#5Business Highlights (Continued) We continue to invest in our camera and augmented reality platforms: As of the end of Q3 2020, over 1.5 million Lenses have been created by our community through Lens Studio. The 'Raise Your Voice' Lens generated over 70 million impressions and over 48,000 hours of playtime, demonstrating the power of AR as a format in honoring the legacy of important movements, such as the March on Washington in 1963. ● We strengthened our ad platform and products while engaging with advertisers: We partnered with Champs Sports, Clearly, Essie, Hoka One One, Kohl's, Levi's, Jordan Brand, and Sally Hansen to launch augmented reality-powered virtual try-on experiences. ● Our 'Anime Style' Lens powered by real time machine learning was engaged with 3 billion times in its first week. We added 2D body tracking technology in Lens Studio, allowing Lens creators to make AR experiences for the full human body. We released Lens Favorites, a new feature that allows Snapchatters to pin their favorite Lenses for future use, to our Android users. We launched our first Local Lens experience called City Painter, allowing Snapchatters to virtually paint the shared digital space on Carnaby Street in London. ● We launched 'Meet the Snapchat Generation,' our first-ever global business-to-business marketing campaign highlighting Snapchat's unique audience. We launched Platform Burst, which allows advertisers to purchase ad inventory across different formats to reach a significant portion of their target audience over a few days. We launched a Snap Select gaming bundle, which is the first commercial bundle tailored to a specific category and has led to impactful partnerships with advertisers. LO 5#6Business Highlights (Continued) We continue to innovate to better serve our large and engaged community: We introduced Creator Profiles to our community, providing Creators with a permanent profile to host their photo, video, and Lenses content, Story replies, and data analytics insights. ● ● We launched Sounds on Snapchat, empowering Snapchatters to express themselves by adding licensed music from emerging and established artists to their Snaps, including music companies like Warner Music Group, Universal Music Publishing, The NMPA, and Merlin. We helped over 1 million Snapchatters with voter registration for the upcoming 2020 U.S. General Election through our 'Register to Vote' Mini, developed in partnership with Democracy Works. Our Bitmoji team launched its first-ever branded customizable Mix and Match collection, in partnership with Ralph Lauren, and millions of users globally have dressed their Bitmoji in Ralph Lauren since launch. Snapchatters can now dress their Bitmoji avatars in a new collection of 19 different digital apparel and sneakers from Nike's Jordan brand, including the new Air Jordan XXXV. Our Headspace Mini, developed in partnership with Headspace, was used by 5 million users in its first month after launch and we released two new meditations in honor of World Mental Health Day. 6#7Revenue by Geography (in millions, unaudited) GLOBAL $388 Q2'19 EUROPE 2 $61 Q2'19 $446 Q3'19 $69 Q3'19 $561 Q4'19 $92 Q4'19 +52% $462 Q1'20 +49% $76 Q1'20 $454 Q2'20 $79 Q2'20 $679 Q3'20 $102 Q3'20 NORTH AMERICA ¹ $260 Q2'19 $67 $316 REST OF WORLD Q2'19 Q3'19 $62 Q3'19 $382 Q4'19 $87 Q4'19 +56% $316 Q1'20 +35% $70 Q1'20 $307 Q3'20 REVENUE INCREASED 52% YOY TO $679 MILLION TRAILING TWELVE MONTHS REVENUE INCREASED 40% YOY TO $2.2 BILLION Q2'20 $69 Q2'20 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, the Caribbean, and Central America. 2Europe includes Russia and Turkey. $493 Q3'20 $83 Q3'20 7#8Average Daily Active Users (DAU) (in millions, unaudited) GLOBAL 203 Q2'19 EUROPE 2 64 Q2'19 210 Q3'19 65 Q3'19 218 Q4'19 67 Q4'19 +18% 229 Q1'20 +10% 70 Q1'20 238 Q2'20 71 Q2'20 249 Q3'20 72 Q3'20 NORTH AMERICA¹ 83 Q2'19 56 84 REST OF WORLD Q2'19 Q3'19 61 Q3'19 86 Q4'19 64 Q4'19 +7% GLOBAL DAU INCREASED 39 MILLION, OR 18% YoY 88 Q1'20 +43% 71 Q1'20 90 Q2'20 77 Q2'20 90 Q3'20 87 Q3'20 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, the Caribbean, and Central America. 2Europe includes Russia and Turkey. 8#9Average Revenue Per User (ARPU) (unaudited) GLOBAL $1.91 Q2'19 EUROPE ² $0.95 Q2'19 $2.12 Q3'19 $1.05 Q3'19 $2.58 Q4'19 $1.37 Q4'19 +28% $2.02 Q1'20 +36% $1.09 Q1'20 $1.91 Q2'20 $1.10 Q2'20 $2.73 Q3'20 $1.43 Q3'20 NORTH AMERICA¹ $3.14 Q2'19 $1.20 $3.75 REST OF WORLD Q2'19 Q3'19 $1.01 Q3'19 $4.42 Q4'19 $1.35 Q4'19 +46% GLOBAL ARPU INCREASED 28% YOY NORTH AMERICA ARPU INCREASED 46% YOY $3.57 Q1'20 -6% $1.00 Q1'20 $3.40 Q2'20 $0.89 Q2'20 $5.49 Q3'20 $0.95 Q3'20 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, the Caribbean, and Central America. 2Europe includes Russia and Turkey. 9#10Adjusted Gross Margin¹ Adjusted Cost of Revenue¹ ADJUSTED COST OF REVENUE AS A % OF REVENUE 54% Q2'19 46% 49% Q3'19 51% 44% Q4'19 56% -7 PPT 53% Q1'20 47% 53% Q2'20 47% 42% Q3'20 58% COST OF REVENUE COMPOSITION (in millions, unaudited) Infrastructure Cost Total Non-GAAP Exclusions¹ Total GAAP Cost of Revenue Revenue Share Cost Other $208 $24 $37 $146 Q2'19 $8 $215 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. $217 $26 $45 $146 Q3'19 $6 $223 $247 $33 $58 $157 Q4'19 $6 $253 ADJUSTED GROSS MARGIN¹ IMPROVED 7 PPT YOY +31% $246 $32 $50 $163 Q1'20 $7 $253 $243 $27 $52 $163 Q2'20 $8 $250 $285 $36 $75 $174 Q3'20 $8 $293 10#11Adjusted Operating Expenses¹ ADJUSTED OPERATING EXPENSES AS A % OF REVENUE 67% Q2'19 61% Q3'19 48% Q4'19 -11 PPT 64% Q1'20 68% Q2'20 50% Q3'20 Total Non-GAAP Exclusions1 OPERATING EXPENSES COMPOSITION (in millions, unaudited) Research and Development Sales and Marketing General and Administrative Total GAAP Operating Expenses $259 $87 $81 $91 Q2'19 $219 $477 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. Refer to Appendix for a description of non-recurring items, including securities class actions legal charges. $271 $83 $96 $92 Q3'19 $180 $452 OPERATING EXPENSES INCREASED 24% YOY, REVENUE INCREASED 52% YOY $271 $81 $96 $94 Q4'19 $290 $561 +24% $298 $102 $93 $103 Q1'20 $198 $495 $307 $87 $100 $120 Q2'20 $207 $514 $338 $91 $111 $135 Q3'20 $216 $553 11#12Net Loss & Adjusted EBITDA¹ (dollars in millions, unaudited) NET LOSS Q2'19 (66)% $(255) Net Loss Margin Q3'19 (51)% $(227) Q4'19 (43)% $(241) Q1'20 (66)% $(306) Q2'20 (72)% $(326) Q3'20 (29)% $(200) Adjusted EBITDA Leverage³ 2 We define Adjusted EBITDA margin as Adjusted EBITDA divided by GAAP revenue. ³We define Adjusted EBITDA leverage as the year-over-year change in Adjusted EBITDA divided by the year-over-year change in GAAP revenue. ADJUSTED EBITDA Q2'19 (20)% 2 $(79) 72% Adjusted EBITDA Margin² Q3'19 (9)% $(42) 65% Q4'19 $42 8% 54% Q1'20 ADJUSTED EBITDA WAS $56 MILLION IN Q3 2020, ADJUSTED EBITDA MARGIN WAS 8% IN Q3 2020 (18)% $(81) 30% Q2'20 (21)% $(96) (25)% Q3'20 $56 8% '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. 42% 12#13Diluted Net Loss Per Share & Common Shares Outstanding Plus Shares Underlying Stock-Based Awards (in millions, except per share data, unaudited) DILUTED NET LOSS PER SHARE¹ Q2'19 $(0.19) Q3'19 $(0.16) Q4'19 $(0.17) Q1'20 $(0.21) Q2'20 $(0.23) ¹Diluted net loss per share is calculated using weighted average shares outstanding during the period. 2Shares underlying stock-based awards include restricted stock units, restricted stock awards, and outstanding stock options. Q3'20 $(0.14) YOY Change COMMON SHARES OUTSTANDING PLUS SHARES UNDERLYING STOCK-BASED AWARDS Common Shares Outstanding Shares Underlying Stock-Based Awards² 1,553 181 1,372 Q2'19 5% 1,565 176 1,389 Q3'19 6% 1,576 160 1,416 Q4'19 DILUTED NET LOSS PER SHARE INCREASED $0.02 YOY 5% 1,589 149 1,440 Q1'20 3% 1,616 152 1,464 Q2'20 4% 1,624 139 1,485 Q3'20 4% 13#14Operating Cash Flow and Free Cash Flow¹ (in millions, unaudited) FCF YOY Change Q2'19 $(96) $(8) $(103) 56% Q3'19 $(76) $(8) $(84) 47% Q4'19 $(67) $(9) $(76) 49% Cash Provided by (Used in) Operating Activities Q1'20 $6 $(11) $(5) 94% 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. Q3'20 OPERATING CASH FLOW WAS $(55) MILLION, FREE CASH FLOW IMPROVED 17% YOY Q2'20 $(67) $(16) $(82) 20% Capital Expenditures Q3'20 $(55) $(15) $(70) 17% 14#15Financial Guidance Given the uncertainties related to the ongoing COVID-19 pandemic and the rapidly shifting macro conditions, we are not providing revenue or Adjusted EBITDA guidance for the fourth quarter of 2020. 15#16Appendix#17Non-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 Securities class actions legal charges Adjusted EBITDA² $ $ $ $ June 30, 2019 (95,789) $ (7,633) (103,422) $ June 30, 2019 (255,174) $ (7,446) 809 (44,085) 1,078 22,660 195,574 7,871 (78,713) $ September 30, 2019 (76,149) $ (7,938) (84,087) $ September 30, 2019 (227,375) $ (10,317) 8,654 1,481 (1,296) 20,646 161,228 4,604 Three Months Ended December 31, 2019 (42,375) $ (66,842) $ (9,093) (75,935) $ December 31, 2019 Three Months Ended (240,704) $ (10,463) 14,775 (17,536) 332 March 31, 2020 20,620 166,655 8,628 100,000 42,307 $ 6,283 (10,891) (4,608) $ March 31, 2020 $ (305,936) $ (8,589) 15,113 12,389 659 21,204 172,049 11,874 (81,237) $ June 30, 2020 (66,554) $ (15,767) (82,321) $ June 30, 2020 (325,951) $ (4,768) 24,727 (3,575) (1,041) 20,925 186,171 7,942 (95,570) $ September 30, 2020 (54,828) (14,727) (69,555) September 30, 2020 (199,853) (2,801) 28,212 5,669 909 21,804 192,080 10,341 56,361 ¹We 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. Securities class actions legal charges related to a preliminary agreement to settle the securities class actions that arose following our IPO. Charges recorded are net of amounts directly covered by insurance. These charges are non-recurring and not reflective of underlying trends in our business. 1#18Non-GAAP Financial Measures Reconciliation (Continued) (in thousands, except per share amounts, unaudited) Non-GAAP net income (loss) reconciliation Net loss Amortization of intangible assets Stock-based compensation expense Payroll tax expense related to stock-based compensation Securities class actions legal charges Gain on divestiture Income tax adjustments Non-GAAP net income (loss) ¹ Weighted-average common shares - Diluted Non-GAAP diluted net income (loss) per share reconciliation GAAP diluted net loss per share Non-GAAP adjustment to net loss Non-GAAP diluted net income (loss) per share¹ $ $ $ $ June 30, 2019 (255,174) $ 9,048 195,574 7,871 (39,883) 376 (82,188) $ 1,362,544 June 30, 2019 (0.19) $ 0.13 (0.06) $ September 30, 2019 (227,375) $ 6,915 161,228 4,604 200 (54,428) $ 1,392,864 September 30, 2019 (0.16) $ 0.12 (0.04) $ Three Months Ended December 31, 2019 (240,704) $ 7,067 166,655 8,628 100,000 289 41,935 1,409,519 $ December 31, 2019 Three Months Ended March 31, 2020 (0.17) $ 0.20 0.03 $ (305,936) $ 7,980 172,049 11,874 (59) (114,092) $ 1,426,305 March 31, 2020 (0.21) $ 0.13 (0.08) $ June 30, 2020 (325,951) $ 7,378 186,171 7,942 86 (124,374) $ 1,447,022 June 30, 2020 (0.23) $ 0.14 (0.09) $ September 30, 2020 (199,853) 8,422 192,080 10,341 388 11,378 1,466,420 September 30, 2020 (0.14) 0.15 0.01 ¹ We define Non-GAAP Net income (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 securities class actions legal charges described in the preceding slide. Non-GAAP Net Loss and weighted average diluted shares are then used to calculate Non-GAAP diluted net Income (loss) per share. 2#19Note 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. 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. 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 unauthorized or 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. 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 address these technical issues and improve both our accuracy and precision, including ensuring our investors and others can understand the factors impacting our business, but these 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 exclude those users and estimate their ages based on a sample of the self-reported ages we do have. If our DAUs 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#20Note 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. We count a DAU only when a user opens the application and only once per user per day. We believe this methodology 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 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. 4