Snap Inc.
02/05/2026 | Press release | Distributed by Public on 02/05/2026 05:03
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
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 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussion of historical items and year-to-year comparisons between 2024 and 2023 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, 2024, filed with the SEC on February 5, 2025.
Overview of Full Year 2025 Results
Our key user metrics and financial results for fiscal year 2025 are as follows:
User Metrics
•Daily Active Users, or DAUs, increased 5% year-over-year to 474 million in Q4 2025.
•Average revenue per user, or ARPU, was $3.62 in Q4 2025 compared to $3.44 in Q4 2024.
Financial Results
•Revenue was $5.9 billion, compared to $5.4 billion in the prior year, an increase of 11% year-over-year.
•Total costs and expenses were $6.5 billion, compared to $6.1 billion in the prior year.
•Net loss was $460.5 million, compared to $697.9 million in the prior year.
•Adjusted EBITDA was $689.5 million, compared to $508.6 million in the prior year.
•Diluted net loss per share was $(0.27), compared to $(0.42) in the prior year.
•Cash provided by operating activities was $656.2 million, compared to $413.5 million in the prior year.
•Free Cash Flow was $437.2 million, compared to $218.7 millionin the prior year.
•Cash, cash equivalents, and marketable securities were $2.9 billion as of December 31, 2025.
Business and Macroeconomic Conditions
We periodically make changes to our business and priorities. In recent years, our focus has been on 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, including our investments in Spectacles. We believe that we can be successful in our current operating environment, with various macroeconomic factors and geo-political events and conflicts impacting our business, by rigorously prioritizing our investments and continuing to engage our community with our products while driving success for our advertising partners.
Macroeconomic factors and geo-political events and conflicts such as labor shortages and disruptions, supply chain disruptions, inflation, changes in interest and foreign currency exchange rates, banking instability, tariffs and retaliatory countermeasures, war and other armed conflict, and other risks and uncertainties have in the past and may continue to cause logistical challenges, increased input costs, and inventory constraints for our advertisers, which in turn may cause our advertisers to halt or decrease advertising spending on our platform. Such macroeconomic factors and geo-political events and conflicts may also negatively impact, in the short-term or long-term, the global economy, advertising ecosystem, our customers and 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 continue to experience adverse impacts to our revenue growth as a result of these changes.
Our 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 likely to continue to result in, reduced advertising revenue, especially if we are unable to mitigate these developments.
We compete with other companies in every aspect of our business. We must compete effectively for users and advertisers to grow our business and 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 and logged-in Snapchat user who visits Snapchat through our applications or websites 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 474 million DAUs on average in the fourth quarter of 2025, an increase of 21 million, or 5%, from the fourth quarter of 2024.
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Quarterly Average Daily Active Users (1)
(in millions)
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| Global | ||||||||
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YoY growth (2):
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10% | 10% | 9% | 9% | 9% | 9% | 9% | 8% | 5% | ||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Numbers may not foot due to rounding.
(2)In the first quarter of 2025, we refined our processes and controls to allow us to more accurately record user activity that would not otherwise be recorded during such period due to delays in receiving user metric information resulting from carrier or other user connectivity issues during the measurement period. For additional information concerning these refinements, see the "Note Regarding User Metrics and Other Data." As a result of such refinements, our DAUs may not be directly comparable to those in prior periods, including in this table and the following tables below as they reflect a comparison to previously reported numbers.
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North America (3)
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Europe (4)
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YoY growth:
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-% | (1)% | -% | -% | (1)% | (1)% | (2)% | (3)% | (5)% | 4% | 4% | 3% | 4% | 4% | 3% | 3% | 1% | (1)% | |||||||||||||||||||||||||||||||||||||||||||||||
(3)North America includes Mexico, the Caribbean, and Central America.
(4)Europe includes Russia and Turkey.
| Rest of World | ||||||||
| YoY growth: | 19 | % | 19 | % | 16 | % | 16 | % | 17 | % | 16 | % | 15 | % | 15 | % | 11 | % | ||||||||||||||
Monetization
We recorded revenue of $5.9 billion for the year ended December 31, 2025, compared to revenue of $5.4 billion for the year ended December 31, 2024, an increase of 11% year-over-year. 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 $3.62 in the fourth quarter of 2025, compared to $3.44 in the fourth quarter of 2024. 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.
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Quarterly Average Revenue per User
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| Global | ||||||||
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North America (1)
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Europe (2)
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(1)North America includes Mexico, the Caribbean, and Central America.
(2)Europe includes Turkey. Europe also includes Russia and Belarus; however, we maintain a policy prohibiting sales to entities in these countries.
| Rest of World | ||||||||
Results of Operations
Components of Results of Operations
Revenue
We generate the substantial majority of our revenue through the sale of our advertising products on Snapchat, which include Snap Ads and AR Ads, referred to as advertising revenue. Snap Ads may be subject to revenue sharing arrangements between us and the content partner. Additionally, we generate revenue from subscriptions, such as Snapchat+, Lens+, and Snapchat Platinum, which provide subscribers access to exclusive, experimental, and pre-release features, as well as an ad-free experience for Snapchat Platinum subscribers. We generate revenue from Memories Storage Plans, which provide subscribers with the ability to purchase cloud storage. We also generate revenue from partnerships which allow leading companies to connect with our global community on Snapchat, such as an agreement with our AI platform partner, and through subscriptions and sales of physical products. Sales of physical products are reported net of allowances for returns.
Cost of Revenue
Cost of revenue includes payments for infrastructure, content and developer partner costs, and advertiser partner and other costs. Infrastructure costs primarily consist of payments to third-party infrastructure partners for hosting our products, which include expenses related to storage, computing, and bandwidth. Content and developer partner costs primarily consist of fees paid to our content creators and publisher partners who share content on our platform through revenue sharing arrangements.Under these arrangements, we pay a portion of the fees we receive from advertisers for Snap Ads that are displayed within partner content on Snapchat. Advertising partner and other costs primarily consist of payments to third-party partners for fulfillment services, transaction processing fees, and other expenses directly related to providing our services.Cost of revenue includes personnel-related costs, including salaries, benefits, and stock-based compensation expense for our employees engaged in the delivery of our services. 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 primarily consist 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. Research and development expenses also 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 primarily consist 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 costs incurred for marketing events, which are recognized when the event occurs. Sales and marketing expenses also include facilities and other supporting overhead costs, including depreciation and amortization.
General and Administrative Expenses
General and administrative expenses primarily consist 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.
Interest Income
Interest income primarily consists of interest earned on our cash, cash equivalents, and marketable securities.
Interest Expense
Interest expense primarily consists of interest expense associated with our notes and commitment fees related to our revolving credit facility.
Other Income (Expense), Net
Other income (expense), net primarily consists of gains and losses on debt extinguishments, and gains and losses on strategic investments, marketable securities, and foreign currency transactions.
Income Tax Benefit (Expense)
We are subject to income taxes in the United States and numerous foreign jurisdictions. Our effective tax rates will vary depending on changes in the valuation of our deferred tax assets and liabilities, the relative proportion of foreign to domestic income, use of tax credits, 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; payroll and other tax expense related to stock-based compensation; and certain other items impacting net income (loss) from time to time. We consider the exclusion of 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. See "Non-GAAP Financial Measures" for additional information and a reconciliation of net loss to Adjusted EBITDA.
Discussion of Results of Operations
The following table sets forth our consolidated statements of operations data:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Consolidated Statements of Operations Data: | |||||||||||||||||
| Revenue | $ | 5,931,447 | $ | 5,361,398 | $ | 4,606,115 | |||||||||||
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Costs and expenses (1) (2):
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| Cost of revenue | 2,669,575 | 2,474,237 | 2,114,117 | ||||||||||||||
| Research and development | 1,793,601 | 1,691,683 | 1,910,862 | ||||||||||||||
| Sales and marketing | 1,021,305 | 1,063,675 | 1,122,092 | ||||||||||||||
| General and administrative | 979,133 | 919,097 | 857,423 | ||||||||||||||
| Total costs and expenses | 6,463,614 | 6,148,692 | 6,004,494 | ||||||||||||||
| Operating income (loss) | (532,167) | (787,294) | (1,398,379) | ||||||||||||||
| Interest income | 134,159 | 153,466 | 168,394 | ||||||||||||||
| Interest expense | (121,998) | (21,552) | (22,024) | ||||||||||||||
| Other income (expense), net | 68,870 | (16,846) | (42,414) | ||||||||||||||
| Loss before income taxes | (451,136) | (672,226) | (1,294,423) | ||||||||||||||
| Income tax benefit (expense) | (9,353) | (25,630) | (28,062) | ||||||||||||||
| Net loss | $ | (460,489) | $ | (697,856) | $ | (1,322,485) | |||||||||||
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Adjusted EBITDA (3)
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$ | 689,479 | $ | 508,605 | $ | 161,577 | |||||||||||
(1)Stock-based compensation expense included in the above line items:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Stock-based compensation expense: | |||||||||||||||||
| Cost of revenue | $ | 7,426 | $ | 6,034 | $ | 9,555 | |||||||||||
| Research and development | 680,602 | 683,830 | 893,026 | ||||||||||||||
| Sales and marketing | 198,013 | 216,672 | 255,688 | ||||||||||||||
| General and administrative | 130,784 | 134,487 | 165,735 | ||||||||||||||
| Total | $ | 1,016,825 | $ | 1,041,023 | $ | 1,324,004 | |||||||||||
(2)Depreciation and amortization expense included in the above line items:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Depreciation and amortization expense: | |||||||||||||||||
| Cost of revenue | $ | 5,759 | $ | 6,110 | $ | 12,751 | |||||||||||
| Research and development | 101,531 | 99,656 | 106,278 | ||||||||||||||
| Sales and marketing | 21,363 | 19,947 | 26,161 | ||||||||||||||
| General and administrative | 34,980 | 32,361 | 23,251 | ||||||||||||||
| Total | $ | 163,633 | $ | 158,074 | $ | 168,441 | |||||||||||
(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.
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, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Consolidated Statements of Operations Data: | |||||||||||||||||
| Revenue | 100 | % | 100 | % | 100 | % | |||||||||||
| Costs and expenses: | |||||||||||||||||
| Cost of revenue | 45 | 46 | 46 | ||||||||||||||
| Research and development | 30 | 32 | 41 | ||||||||||||||
| Sales and marketing | 17 | 20 | 24 | ||||||||||||||
| General and administrative | 17 | 18 | 19 | ||||||||||||||
| Total costs and expenses | 109 | 115 | 130 | ||||||||||||||
| Operating loss | (9) | (15) | (30) | ||||||||||||||
| Interest income | 2 | 3 | 4 | ||||||||||||||
| Interest expense | (2) | (1) | (1) | ||||||||||||||
| Other income (expense), net | 1 | - | (1) | ||||||||||||||
| Loss before income taxes | (8) | (13) | (28) | ||||||||||||||
| Income tax benefit (expense) | - | - | (1) | ||||||||||||||
| Net loss | (8) | % | (13) | % | (29) | % | |||||||||||
Revenue
| Year Ended December 31, |
2025 vs 2024
Change
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2024 vs 2023
Change
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| 2025 | 2024 | 2023 | $ | % | $ | % | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 5,931,447 | $ | 5,361,398 | $ | 4,606,115 | $ | 570,049 | 11 | % | $ | 755,283 | 16 | % | |||||||||||||||||||||||||||
2025 compared to 2024
Revenue for the year ended December 31, 2025 increased $570.0 million compared to the same period in 2024. The increase was driven by a $282.4 million increase in advertising revenue for the year ended December 31, 2025. The increase in advertising revenue was primarily driven by an increase in global advertising impressions volume of approximately 17% compared to the prior year, largely due to expanded advertising delivery within Sponsored Snaps and Spotlight. The increase in advertising revenue was partially offset by a decrease in the cost per advertising impression of approximately 10%, which is driven by strong growth in impressions delivery. The increase in total revenue was also driven by a $287.6 million increase in other revenue, which is predominantly due to higher subscription revenue from growth in the number of subscribers.
Cost of Revenue
| Year Ended December 31, |
2025 vs 2024 Change |
2024 vs 2023 Change |
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| 2025 | 2024 | 2023 | $ | % | $ | % | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Cost of Revenue | $ | 2,669,575 | $ | 2,474,237 | $ | 2,114,117 | $ | 195,338 | 8 | % | $ | 360,120 | 17 | % | |||||||||||||||||||||||||||
2025 compared to 2024
Cost of revenue for the year ended December 31, 2025 increased $195.3 million compared to the same period in 2024. The increase was primarily driven by a $143.0 million increase in infrastructure costs, attributable to DAU growth as
well as investments in machine learning and AI. The increase was also attributable to higher transaction processing fees resulting from growth in subscription revenues.
Research and Development Expenses
| Year Ended December 31, |
2025 vs 2024 Change |
2024 vs 2023 Change |
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| 2025 | 2024 | 2023 | $ | % | $ | % | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Research and Development Expenses | $ | 1,793,601 | $ | 1,691,683 | $ | 1,910,862 | $ | 101,918 | 6 | % | $ | (219,179) | (11) | % | |||||||||||||||||||||||||||
2025 compared to 2024
Research and development expenses for the year ended December 31, 2025 increased $101.9 million compared to the same period in 2024. The increase was primarily due to investments in product development, including higher employee compensation due to additional research and development headcount. The increase was partially offset by $38.8 million in restructuring charges recognized in 2024.
Sales and Marketing Expenses
| Year Ended December 31, |
2025 vs 2024 Change |
2024 vs 2023 Change |
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| 2025 | 2024 | 2023 | $ | % | $ | % | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Sales and Marketing Expenses | $ | 1,021,305 | $ | 1,063,675 | $ | 1,122,092 | $ | (42,370) | (4) | % | $ | (58,417) | (5) | % | |||||||||||||||||||||||||||
2025 compared to 2024
Sales and marketing expenses for the year ended December 31, 2025 decreased $42.4 million compared to the same period in 2024. The decrease was primarily driven by the timing of marketing events occurring in the prior year, lower advertising and marketing investments, as well as $19.9 million in restructuring charges recognized in 2024.The decrease was partially offset by higher employee compensation due to additional sales and marketing headcount.
General and Administrative Expenses
| Year Ended December 31, |
2025 vs 2024
Change
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2024 vs 2023
Change
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| 2025 | 2024 | 2023 | $ | % | $ | % | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| General and Administrative Expenses | $ | 979,133 | $ | 919,097 | $ | 857,423 | $ | 60,036 | 7 | % | $ | 61,674 | 7 | % | |||||||||||||||||||||||||||
2025 compared to 2024
General and administrative expenses for the year ended December 31, 2025 increased $60.0 million compared to the same period in 2024. The increase was primarily driven by higher spend on external professional services, including legal-related expenses, partially offset by $10.3 million in restructuring charges recognized in 2024.
Interest Income
| Year Ended December 31, |
2025 vs 2024 Change |
2024 vs 2023 Change |
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| 2025 | 2024 | 2023 | $ | % | $ | % | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Interest Income | $ | 134,159 | $ | 153,466 | $ | 168,394 | $ | (19,307) | (13) | % | $ | (14,928) | (9) | % | |||||||||||||||||||||||||||
2025 compared to 2024
Interest income for the year ended December 31, 2025 decreased $19.3 million compared to the same period in 2024, primarily driven by lower interest rates and decreased investments in marketable debt securities.
Interest Expense
| Year Ended December 31, |
2025 vs 2024 Change |
2024 vs 2023 Change |
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| 2025 | 2024 | 2023 | $ | % | $ | % | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Interest Expense | $ | (121,998) | $ | (21,552) | $ | (22,024) | $ | (100,446) | 466 | % | $ | 472 | (2) | % | |||||||||||||||||||||||||||
2025 compared to 2024
Interest expense for the year ended December 31, 2025 increased $100.4 million compared to the same period in 2024. The increase was primarily driven by additional interest expense on our senior notes due in 2033 (the "2033 Notes") and our senior notes due in 2034 (the "2034 Notes"), which were issued in February 2025 and August 2025, respectively.
Other Income (Expense), Net
| Year Ended December 31, |
2025 vs 2024 Change |
2024 vs 2023 Change |
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| 2025 | 2024 | 2023 | $ | % | $ | % | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Other Income (Expense), Net | $ | 68,870 | $ | (16,846) | $ | (42,414) | $ | 85,716 | 509 | % | $ | 25,568 | 60 | % | |||||||||||||||||||||||||||
2025 compared to 2024
Other income, net for the year ended December 31, 2025 was $68.9 million, compared to other expense, net of $16.8 millionfor the same period in 2024. Other income, net for the current year was primarily driven by $96.7 millionin gains on extinguishment associated with the repurchases of certain outstanding convertible notes, which is discussed within Note 7 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, partially offset by $12.6 million in net losses on strategic investments. Other expense, net in the prior year was primarily the result of $7.4 million in net losses on strategic investments and a $6.7 million net loss on extinguishment associated with the repurchases of certain outstanding convertible notes in the prior year.
Income Tax Benefit (Expense)
| Year Ended December 31, |
2025 vs 2024 Change |
2024 vs 2023 Change |
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| 2025 | 2024 | 2023 | $ | % | $ | % | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Income Tax Benefit (Expense) | $ | (9,353) | $ | (25,630) | $ | (28,062) | $ | 16,277 | 64 | % | $ | 2,432 | 9 | % | |||||||||||||||||||||||||||
| Effective Tax Rate | (2.1) | % | (3.8) | % | (2.2) | % | |||||||||||||||||||||||||||||||||||
2025 compared to 2024
Income tax expensewas $9.4 millionfor the year ended December 31, 2025, compared to $25.6 millionfor the same period in 2024. The decrease of $16.3 million was primarily attributable to a reduction in unrecognized tax benefits due to statute expirations and a reduction in U.S. federal and certain state tax liabilities due to the enactment of the One Big Beautiful Bill Act, which repealed the mandatory capitalization of domestic research and experimental expenditures for tax years beginning after December 31, 2024.
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 12to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Net Loss and Adjusted EBITDA
| Year Ended December 31, |
2025 vs 2024 Change |
2024 vs 2023 Change |
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| 2025 | 2024 | 2023 | $ | % | $ | % | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Net Loss | $ | (460,489) | $ | (697,856) | $ | (1,322,485) | $ | 237,367 | 34 | % | $ | 624,629 | 47 | % | |||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 689,479 | $ | 508,605 | $ | 161,577 | $ | 180,874 | 36 | % | $ | 347,028 | 215 | % | |||||||||||||||||||||||||||
2025 compared to 2024
Net loss for the year ended December 31, 2025 was $460.5 million, compared to $697.9 million for the same period in 2024. The decrease in net loss was primarily the result of the changes in revenues and expenses discussed above.
Adjusted EBITDA for the year ended December 31, 2025 was $689.5 million, compared to $508.6 million for the same period in 2024. The increase in Adjusted EBITDA was attributable to increased revenue and lower sales and marketing expenses, partially offset by higher cost of revenue, research and development expenses, 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
Capital Resources
Cash, cash equivalents, and marketable securities were $2.9 billion as of December 31, 2025, primarily consisting of cash on deposit with banks and highly liquid investments in U.S. government securities, money market funds, corporate debt securities, and publicly traded equity securities. 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, except as disclosed herein. We may
contemplate and engage in merger and acquisition activity that could materially impact our liquidity and capital resource position.
As of December 31, 2025, approximately 7% of our cash, cash equivalents, and marketable securities was held by our foreign subsidiaries, primarily in the United Kingdom. Cash held by our foreign subsidiaries is utilized to fund our foreign operations and may be repatriated, subject to certain limitations. Upon repatriation, these funds would be available to fund our domestic operations, but repatriation may result in additional tax liabilities. We maintain substantially all of our cash, cash equivalents, and marketable securities in accounts with major United States and multi-national financial institutions. We believe our existing cash balance in the United States is sufficient to fund our working capital needs.
As of December 31, 2025 we had $1.05 billion under our revolving credit facility (the "Credit Facility"), of which $250.0 million expires in May 2027 and $800.0 million expires in February 2030. The interest rates for the Credit Facility are determined based on a formula using certain market rates, as described in Note 7 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The Credit Facility also contains an annual commitment fee of 0.10% on the daily undrawn balance of the facility. As of December 31, 2025, we had $82.2 million in the form of outstanding standby letters of credit, with no amounts outstanding under the Credit Facility.
Material Cash Requirements
Debt
As of December 31, 2025, we had outstanding debt in the form of senior unsecured notes and senior convertible notes for an aggregate principal amount of $3.5 billion, which mature from 2026 through 2034. Short-term and long-term future interest payment obligations as of December 31, 2025 were $149.3 million and $967.9 million, respectively.
Under certain circumstances, holders of the outstanding Convertible Notes may convert all or a portion of their notes prior to the applicable maturity date. Upon conversion, the notes may be settledin cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election. As of December 31, 2025, the Convertible Notes will not be eligible for optional conversion during the first quarter of 2026.
For additional discussion on our debt, see Note 7 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Contractual Commitments
We have non-cancelable contractual agreements primarily related to the hosting of our data processing, storage, and other computing services, as well as lease, content and developer partner, and other commitments. We had $3.4 billion in commitments as of December 31, 2025, primarily due within two 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.
Stock Repurchases
In November 2025, our board of directors authorized a stock repurchase program of up to $500.0 million of our Class A common stock. Under this program, we repurchased and retired 29.4 million shares of our Class A common stock for $250.3 million, including costs associated with the repurchase. As of December 31, 2025, the remaining availability under the stock repurchase authorization was $250.0 million. This program was completed in January 2026.
In February 2026, our board of directors authorized an additional stock repurchase program of up to $500 million of our Class A common stock. Repurchases of Class A common stock may be made from time to time and will be funded from existing cash and cash equivalents. Repurchases have been authorized for the next 12 months but the program may be initiated, modified, suspended, or terminated at any time during such period. For additional discussion on the program, see Note 20 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Contingencies
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 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.
Sources and Uses of Cash and Related Trends
The following table sets forth the major components of our consolidated statements of cash flows for the periods presented:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
|
(in thousands)
|
|||||||||||||||||
| Net cash provided by (used in) operating activities | $ | 656,170 | $ | 413,480 | $ | 246,521 | |||||||||||
| Net cash provided by (used in) investing activities | 173,118 | (717,084) | 570,954 | ||||||||||||||
| Net cash provided by (used in) financing activities | (848,125) | (428,624) | (458,789) | ||||||||||||||
| Change in cash, cash equivalents, and restricted cash | $ | (18,837) | $ | (732,228) | $ | 358,686 | |||||||||||
|
Free Cash Flow (1)
|
$ | 437,189 | $ | 218,654 | $ | 34,794 | |||||||||||
(1)For information on how we define and calculate Free Cash Flow, and a reconciliation of net cash provided by (used in) operating activities to Free Cash Flow, see "Non-GAAP Financial Measures."
Net Cash Provided by (Used in) Operating Activities
Net cash provided by operating activities was $656.2 million for the year ended December 31, 2025, compared to net cash provided by operating activities of $413.5 million for the year ended December 31, 2024, resulting primarily from our net loss, adjusted for non-cash items, including stock-based compensation expense of $1.0 billion, depreciation and amortization expense of $163.6 million and gains on debt extinguishment of $96.7 million. Net cash provided by operating activities for the year ended December 31, 2025 was also driven by a $45.9 million increase in accounts payable and a $66.7 million increase in prepaid expenses and other current assets primarily due to the timing of payments, as well as a $31.8 million increase in accounts receivable due to the timing of collections.
Net Cash Provided by (Used in) Investing Activities
Net cash provided by investing activities was $173.1 million for the year ended December 31, 2025, compared to net cash used in investing activities of $717.1 million for the year ended December 31, 2024. Our investing activities for the year ended December 31, 2025 primarily consisted of maturities of marketable securities of $977.2 million and sales of marketable securities of $741.3 million, partially offset by purchases of marketable securities of $1.3 billion and purchases of property and equipment of $219.0 million. Our investing activities for the year ended December 31, 2024 primarily consisted of purchases of marketable securities of $2.3 billion and purchases of property and equipment of $194.8 million, partially offset by maturities of marketable securities of $1.4 billion and sales of marketable securities of $354.3 million.
Net Cash Provided by (Used in) Financing Activities
Net cash used in financing activities was $848.1 million for the year ended December 31, 2025, compared to net cash used in financing activities of $428.6 million for the year ended December 31, 2024. Our financing activities for the year ended December 31, 2025 primarily consisted of the repurchases of certain outstanding convertible notesfor $2.0 billion, repurchases of our Class A common stock for $750.9 million, deferred payments for acquisitions of $72.5 million, and the repayment of our convertible senior notes due in 2025 (the "2025 Notes") for $36.2 million, partially
offset by the issuance of the 2033 Notes and 2034 Notes for total net proceeds of $2.0 billion. Our financing activities for the year ended December 31, 2024 primarily consisted of the repurchases of certain outstanding convertible notes for $859.0 million, repurchases of our Class A common stock for $311.1 million, and the purchase of the capped call transactions entered into in connection with the pricing of our convertible senior notes due in 2030 (the "2030 Notes") for $68.9 million, partially offset by the issuance of the 2030 Notes for net proceeds of $740.4 million and the termination of the 2025 Capped Call Transactions for proceeds of $62.7 million. Activities relating to our senior notes and convertible senior notes, including the capped call transactions, are discussed within Note 7 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Free Cash Flow
Free Cash Flow was $437.2 million for the year ended December 31, 2025, compared to $218.7 million for the year ended December 31, 2024. 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 included purchases of property and equipment of $219.0 million for the year ended December 31, 2025, compared to $194.8 million for the year ended December 31, 2024. Purchases of property and equipment in both periods are primarily related to improvements to our leased facilities to support our team workspaces. 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; payroll and other tax expense related to stock-based compensation; and certain other 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;
•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 income tax benefit (expense).
The following table presents a reconciliation of Free Cash Flow to net cash provided by (used in) operating activities, the most comparable GAAP financial measure, for each of the periods presented:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Free Cash Flow reconciliation: | |||||||||||||||||
| Net cash provided by (used in) operating activities | $ | 656,170 | $ | 413,480 | $ | 246,521 | |||||||||||
| Less: | |||||||||||||||||
| Purchases of property and equipment | (218,981) | (194,826) | (211,727) | ||||||||||||||
| Free Cash Flow | $ | 437,189 | $ | 218,654 | $ | 34,794 | |||||||||||
The following table presents a reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure, for each of the periods presented:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Adjusted EBITDA reconciliation: | |||||||||||||||||
| Net loss | $ | (460,489) | $ | (697,856) | $ | (1,322,485) | |||||||||||
| Add (deduct): | |||||||||||||||||
| Interest income | (134,159) | (153,466) | (168,394) | ||||||||||||||
| Interest expense | 121,998 | 21,552 | 22,024 | ||||||||||||||
| Other (income) expense, net | (68,870) | 16,846 | 42,414 | ||||||||||||||
| Income tax (benefit) expense | 9,353 | 25,630 | 28,062 | ||||||||||||||
| Depreciation and amortization | 163,633 | 154,459 | 159,999 | ||||||||||||||
| Stock-based compensation expense | 1,016,825 | 1,031,621 | 1,319,783 | ||||||||||||||
| Payroll and other tax expense related to stock-based compensation | 41,188 | 37,768 | 39,324 | ||||||||||||||
|
Restructuring charges (1)
|
- | 72,051 | 40,850 | ||||||||||||||
| Adjusted EBITDA | $ | 689,479 | $ | 508,605 | $ | 161,577 | |||||||||||
(1)Restructuring charges in 2024 are primarily related to cash severance, stock-based compensation expense, and other charges associated with the 2024 restructuring. Restructuring charges in 2023relating 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 millionrelating to the wind down, which is included in the income tax (benefit) expense line item above. These charges are 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.
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 policies, estimates, assumptions, and judgments that we believe to have the most significant impact on our consolidated financial statements are described below.
Revenue Recognition
We generate the substantial majority of our revenue through the sale of our advertising products on Snapchat, which include Snap Ads and AR Ads, referred to as advertising revenue. Other revenue primarily consists of service revenue from our Snapchat subscriptions and partnerships, including an agreement with our AI platform partner. Other revenue also includes our subscriptions and sales of physical products.
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.
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 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.
Valuation of Assets
The valuation and impairment assessment of certain assets requires significant judgment and assumptions such as the estimation of future cash flows, discount rates, useful lives, and market data of comparable assets, among others.
We measure certain financial instruments at fair value on a nonrecurring basis, consisting primarily of our strategic investments in privately held equity securities without readily determinable fair values. We adjust the carrying value of these equity securities to fair value upon observable transactions for identical or similar investments of the same issuer or upon impairment. The fair value derived from an observable transaction is based on information available at that time and may not be indicative of the fair value at the balance sheet date. All strategic investments are reviewed periodically for impairment. When indicators of impairment exist, we prepare quantitative measurements of the fair value of our equity investments using a market approach or an income approach, which requires judgment and the use of unobservable inputs, including discount rates, investee revenues and costs, and comparable market data of private and public companies, among others.
We also evaluate the recoverability of our property and equipment, operating lease right-of-use assets, and intangible assets, excluding goodwill, when events or changes indicate the carrying amount of an asset may not be recoverable. Events and changes in circumstances considered in determining whether the carrying value of long-lived assets may not be recoverable include significant changes in performance relative to expected operating results, significant changes in asset use, and significant negative industry or economic trends and changes in our business strategy. Recoverability of these assets is measured by comparison of their carrying amount to future undiscounted cash flows to be generated. If impairment is indicated based on a comparison of the assets' carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Loss Contingencies
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.
Significant judgment is required to determine both probability and the estimated amounts of loss contingencies. Such claims, suits, and proceedings are inherently unpredictable and subject to significant uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change, it could have a material impact on our results of operations, financial position, and cash flows.
Income Taxes
We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in determining our uncertain tax positions, including estimates for transfer pricing which have been based upon analyses of appropriate arm's length prices.
We recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.Although we believe that we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. We make adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences may affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and results of operations.
Recent Accounting Pronouncements
See Note 1 to our consolidated financial statements included in "Financial Statements and Supplementary Data" in this Annual Report on Form 10-K for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this Annual Report on Form 10-K.
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