Snapchat IPO Filing Chart Deck

Jan Dawson Chief Analyst (408) 744-6244 jan@jackdawresearch.com @jandawson

SNAP INC Q4 2016

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• This deck is a free sample of the Jackdaw Research Quarterly Company Decks subscription service

• The paid service includes about a dozen similar decks produced each quarter on major consumer tech companies

• The intention is to highlight trends and patterns which are not always obvious when merely looking at a spreadsheet

• Accompanying analysis can often be found on our blog at www.beyonddevic.es

• For more information, please visit: https://jackdawresearch.com/quarterly-company-decks/

INTRODUCTIONJACKDAW RESEARCH QUARTERLY DECKS SERVICE

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• Snap Inc (maker of the Snapchat app) is not yet a public company

• It filed confidentially with the SEC for an IPO in late 2016, and on February 2, 2017, it released its S-1 publicly

• We therefore finally have deep insights into the key financial and operating metrics at Snap as it prepares for an IPO, albeit only for a short period – it generated no meaningful revenue before 2015, so the financials only cover 2015 and 2016, though some other metrics go back to 2014

• Assuming the IPO goes ahead, I will be adding Snap to the list of companies for which decks are provided each quarter as part of the Jackdaw Research Quarterly Decks Service

INTRODUCTIONSNAP INC FINANCIALS

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REVENUEQUARTERLY, $000

0

50,000

100,000

150,000

200,000

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Source: Snap financial filings, Jackdaw Research analysis

5 Source: Snap financial filings, Jackdaw Research analysis

REVENUEBY REGION, $000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

North America Europe Rest of World

6 Source: Snap financial filings, Jackdaw Research analysis

REVENUESPLIT BY REGION, %

0%

20%

40%

60%

80%

100%

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

North America Europe Rest of World

7 Source: Snap financial filings, Jackdaw Research analysis

REVENUEPERCENTAGE OF TOTAL REVENUE FROM ADVERTISING, %

0%

20%

40%

60%

80%

100%

2015 2016

96%98%

8 Source: Snap financial filings, Jackdaw Research analysis

GROSS MARGINAS REPORTED

-700%

-600%

-500%

-400%

-300%

-200%

-100%

0%

100%

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Snap’s Gross Margin is its only margin which is anywhere close to positive (it was marginally positive in Q4 2016) – all other margins are at around -100% or worse, so it’s meaningful to put them on a slide. See the succeeding

slides for some other indicators of profitability

9 Source: Snap financial filings, Jackdaw Research analysis

COSTSAS MULTIPLE OF REVENUE, QUARTERLY

0

5

10

15

20

25

30

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Cost of revenue R&D S&M G&A Total

10 Source: Snap financial filings, Jackdaw Research analysis

COSTSAS MULTIPLE OF REVENUE, QUARTERLY – SHORTER TERM VIEW

0

1

2

3

4

Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Cost of revenue R&D S&M G&A

11 Source: Snap financial filings, Jackdaw Research analysis

DAILY ACTIVE USERSQUARTERLY AVERAGE METHOD, M

0

50

100

150

200

Q1 2014Q2 2014Q3 2014Q4 2014Q1 2015Q2 2015Q3 2015Q4 2015Q1 2016Q2 2016Q3 2016Q4 2016

12 Source: Snap financial filings, Jackdaw Research analysis

DAILY ACTIVE USERSLAST MONTH OF THE QUARTER METHOD, M

0

50

100

150

200

Q1 2014Q2 2014Q3 2014Q4 2014Q1 2015Q2 2015Q3 2015Q4 2015Q1 2016Q2 2016Q3 2016Q4 2016

Some other companies (Twitter and Facebook, for example) report user numbers based on the last month of each quarter. Snap instead prefers to use quarterly

averages (as shown on the previous slide), but also provides this version based on last month of the quarter.

13 Source: Snap financial filings, Jackdaw Research analysis

DAILY ACTIVE USERSQUARTERLY AVERAGE METHOD, BY REGION, M

0

50

100

150

200

Q1 2014Q2 2014Q3 2014Q4 2014Q1 2015Q2 2015Q3 2015Q4 2015Q1 2016Q2 2016Q3 2016Q4 2016

North AmericaEuropeRest of World

14 Source: Snap financial filings, Jackdaw Research analysis

DAILY ACTIVE USERSQUARTERLY AVERAGE METHOD, BY REGION, M

0%

20%

40%

60%

80%

100%

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

North America Europe Rest of World

15 Source: Snap financial filings, Jackdaw Research analysis

DAILY ACTIVE USERSQUARTERLY AVERAGE METHOD, BY REGION, M

0

10

20

30

40

50

60

70

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

North America Europe Rest of World

16 Source: Snap financial filings, Jackdaw Research analysis

GROWTH IN DAILY ACTIVE USERSQUARTER ON QUARTER, QUARTERLY AVERAGE METHOD, M

0

5

10

15

20

25

Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

17 Source: Snap financial filings, Jackdaw Research analysis

GROWTH IN DAILY ACTIVE USERSQUARTER ON QUARTER, QUARTERLY AVERAGE METHOD, BY REGION, M

0

1

2

4

5

6

7

Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

North America Europe Rest of World

18 Source: Snap financial filings, Jackdaw Research analysis

GROWTH IN DAILY ACTIVE USERSYEAR ON YEAR, QUARTERLY AVERAGE METHOD, M

0

10

20

30

40

50

60

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

19 Source: Snap financial filings, Jackdaw Research analysis

REVENUE SHARETO PUBLISHER PARTNERS, FROM SNAP-SOLD ADS, $000

0

10,000

20,000

30,000

40,000

50,000

60,000

2015 2016

20 Source: Snap financial filings, Jackdaw Research analysis

MISCELLANEOUS DATA POINTSFROM THE S-1 FILING, MOSTLY RELATING TO Q4 2016

Snaps created per day 2.5 billion

% of DAUs creating a Snap with the Camera daily Over 60%

Visits to Snapchat per day per DAU 18

% of users posting to their Story every day 25%

Average time spent per day 25-30 minutes

Jan Dawson Chief Analyst (408) 744-6244 jan@jackdawresearch.com @jandawson

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