What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-05 compared with 2025-02-05 · 95 added, 110 removed, 376 unchanged (35% of the section changed)

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• Total costs and expenses were $6.5 billion, compared to $6.1 billion in the prior year.

• Net loss was $0.7 billion, compared to $1.3 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.

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We periodically make changes to our business and priorities.

In recent years, we conducted a strategic reprioritization to realign our focus 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.

We believe that we can be successful in our current operating environment, with various macroeconomic factors impacting our business, by rigorously prioritizing our investments and continuing to engage our community with our products while driving success for our advertising partners.

However, the impact of our strategic reprioritization and recent restructurings is difficult to predict.

Macroeconomic factors such as labor shortages and disruptions, supply chain disruptions, inflation, changes in interest and foreign currency exchange rates, banking instability, tariffs, 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 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 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.

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(in millions)

YoY growth (2) :

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.

North America (3)

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(1) North America includes Mexico, the Caribbean, and Central America.

(2) Europe includes Russia and Turkey.

Effective March 2022, we halted advertising sales to Russian and Belarusian entities.

(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

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Components of Results of Operations

We generate substantially all of our revenue through the sale of our advertising products, which primarily include Snap Ads and AR Ads, referred to as advertising 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.

We also generate revenue from subscriptions and sales of hardware products.

Sales of hardware products are reported net of allowances for returns.

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 r evenue 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

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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, credit card and other transaction processing fees, and other expenses directly related to providing our services.

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.

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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 facilities and other supporting overhead costs, including depreciation and amortization.

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

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Interest Expense

Interest expense primarily consists of interest expense associated with convertible notes and commitment fees related to our revolving credit facility.

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 strategic investments, marketable securities, and foreign currency transactions.

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)

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Total costs and expenses 6,463,614 6,148,692 6,004,494

Operating loss (787,294) (1,398,379) (1,395,306)

Operating income (loss) (532,167) (787,294) (1,398,379)

Interest income 134,159 153,466 168,394

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Revenue for the year ended December 31, 2025 increased $570.0 million compared to the same period in 2024.

The increase in advertising revenue was primarily driven by an increase in global advertising impressions volume of approximately 16% compared to the prior year, partially offset by a decrease in the cost per advertising impression of approximately 4%.

The increase in global advertising impressions volume was driven by expanded advertising delivery within Spotlight and Creator Stories and the decrease in the cost per advertising impression was due to inventory growth exceeding advertising demand growth.

The increase in revenue was also driven by higher subscription revenue due to an increase in the number of subscribers.

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

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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 $269.1 million increase in infrastructure costs, attributable to DAU growth of

9% compared to the prior year as well as investments in machine learning and AI.

The increase in infrastructure costs was partially offset by improvements to our cloud infrastructure unit costs resulting from engineering efficiencies and pricing improvements.

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

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2025 compared to 2024

Research and development expenses for the year ended December 31, 2024 decreased $219.2 million compared to the same period in 2023.

The decrease was primarily driven by lower employee compensation, which included a $209.2 million decrease in stock-based compensation expenses.

The lower employee compensation was due to a decrease in research and development headcount compared to the prior year as well as the diminished impact of refresh equity grants relative to the prior year.

The decrease was partially offset by $38.8 million in restructuring charges related to the 2024 restructuring.

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

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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 lower employee compensation, which included a $39.0 million decrease in stock-based compensation expenses.

The lower employee compensation was primarily due to a decrease in sales and marketing headcount compared to the prior year.

The decrease was partially offset by increased marketing investments, which included a $32.8 million increase in advertising costs, and $19.9 million in restructuring charges related to the 2024 restructuring.

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 2023 vs 2022

2025 2024 2023 $ % $ %

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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, increased facilities costs, and $10.3 million in restructuring charges related to the 2024 restructuring.

The increase was partially offset

by a $31.2 million decrease in stock-based compensation expenses, driven by a decrease in general and administrative headcount compared to the prior year.

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

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2025 compared to 2024

Interest income for the year ended December 31, 2024 decreased $14.9 million compared to the same period in 2023, primarily driven by lower invested cash balances throughout the year and lower interest rates from macroeconomic events.

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

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2025 compared to 2024

Interest expense for the year ended December 31, 2024 decreased $0.5 million compared to the same period in 2023.

Interest expense for all periods primarily consists of amortization of debt issuance costs and contractual interest expense.

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

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2025 compared to 2024

Other expense, net for the year ended December 31, 2024 was $16.8 million, compared to other expense, net of $42.4 million for the same period in 2023 .

Other expense, net for the current 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 Note Repurchases, which is discussed within Note 7 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Other expense, net in the prior year was primarily the result of $27.1 million in net losses on strategic investments and $6.7 million in net losses on publicly traded securities classified as marketable securities.

Other income , net for the year ended December 31, 2025 was $68.9 million, compared to other expense , net of $16.8 million for the same period in 2024 .

Other income , net for the current year was primarily driven by $96.7 million in 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)

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Income tax expense was $9.4 million for the year ended December 31, 2025 , compared to $25.6 million for 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 12 to our consolidated financial statements included in “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

For additional discussion, see Note 12 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Net Loss and Adjusted EBITDA

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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, lower research and development expenses, and lower sales and marketing expenses, partially offset by higher cost of revenue and general and administrative expenses.

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.”

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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 and agency securities, money market funds, corporate debt securities, certificates of deposit, commercial paper, and publicly traded equity securities.

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.

We may contemplate and engage in merger and acquisition activity that could materially impact our liquidity and capital resource position.

As of December 31, 2024, approximately 3% of our cash, cash equivalents, and marketable securities was held outside the United States.

These amounts were primarily held in Canada and the United Kingdom and are utilized to fund our international operations.

Cash held outside the United States may be repatriated, subject to certain limitations, and

would be available to be used to fund our domestic operations.

However, repatriation of funds may result in additional tax liabilities.

There are no known material subsequent events that could have a material impact on our cash or liquidity, except as disclosed herein.

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.

In May 2022, we entered into a five-year senior unsecured revolving credit facility, or Credit Facility, with certain lenders that allows us to borrow up to $1.05 billion to fund working capital and general corporate-purpose expenditures.

Loans bear interest, at our option, at a rate equal to (i) a term secured overnight financing rate, or SOFR, plus 0.75% or the base rate, if selected by us, for loans made in U.S.

dollars, (ii) the Sterling overnight index average plus 0.7826% for loans made in Sterling, or (iii) foreign indices as stated in the credit agreement plus 0.75% for loans made in other permitted foreign currencies.

The base rate is defined as the greatest of (i) the Wall Street Journal prime rate, (ii) the greater of the (a) federal funds rate and (b) the overnight bank funding rate, plus 0.50%, and (iii) the applicable SOFR for a period of one month (but not less than zero) plus 1.00.

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.

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Material Cash Requirements

Convertible Notes

In May 2024, we entered into a purchase agreement for the sale of an aggregate of $750.0 million principal amount of convertible senior notes due in 2030.

The net proceeds from the issuance of the 2030 Notes were $671.5 million, net of debt issuance costs and the 2030 Capped Call Transactions discussed further in Note 7 in our consolidated financial statements.

The 2030 Notes mature on May 1, 2030 unless repurchased, redeemed, or converted in accordance with their terms prior to such date.

The sale price requirement for conversion was not satisfied as of December 31, 2024 and as a result, the 2030 Notes will not be eligible for optional conversion during the first quarter of 2025.

As of December 31, 2024, the outstanding principal of the 2030 Notes was $750.0 million.

In February 2022, we entered into a purchase agreement for the sale of an aggregate of $1.50 billion principal amount of convertible senior notes due in 2028.

The net proceeds from the issuance of the 2028 Notes were $1.31 billion, net of debt issuance costs and the 2028 Capped Call Transactions discussed further in Note 7 in our consolidated financial statements.

The 2028 Notes mature on March 1, 2028 unless repurchased, redeemed, or converted in accordance with their terms prior to such date.

The sale price requirement for conversion was not satisfied as of December 31, 2024 and as a result, the 2028 Notes will not be eligible for optional conversion during the first quarter of 2025.

As of December 31, 2024, the outstanding principal of the 2028 Notes was $1.50 billion.

In April 2021, we entered into a purchase agreement for the sale of an aggregate of $1.15 billion principal amount of convertible senior notes due in 2027.

The net proceeds from the issuance of the 2027 Notes were $1.05 billion, net of debt issuance costs and the 2027 Capped Call Transactions discussed further in Note 7 in our consolidated financial statements.

The 2027 Notes mature on May 1, 2027 unless repurchased, redeemed, or converted in accordance with their terms prior to such date.

The sale price requirement for conversion was not satisfied as of December 31, 2024 and as a result, the 2027 Notes will not be eligible for optional conversion during the first quarter of 2025.

As of December 31, 2024, the outstanding principal of the 2027 Notes was $1.15 billion.

In April 2020, we entered into a purchase agreement for the sale of an aggregate of $1.0 billion principal amount of convertible senior notes due in 2025.

The net proceeds from the issuance of the 2025 Notes were $888.6 million, net of debt issuance costs and the 2025 Capped Call Transactions discussed further in Note 7 in our consolidated financial statements.

The 2025 Notes mature on May 1, 2025 unless repurchased, redeemed, or converted in accordance with their terms prior to such date.

The sale price requirement for conversion was not satisfied as of December 31, 2024 and as a result, the 2025 Notes will not be eligible for optional conversion until February 1, 2025.

On or after February 1, 2025, the 2025 Notes are convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

The 2025 Notes are convertible at a conversion rate of 46.1233 shares of Class A common stock per $1,000 principal amount of 2025 Notes, which is equivalent to a conversion price of approximately $21.68 per share of our Class A common stock.

As of December 31, 2024, the outstanding principal of the 2025 Notes was $36.2 million.

In August 2019, we entered into a purchase agreement for the sale of an aggregate of $1.265 billion principal amount of convertible senior notes due in 2026.

The net proceeds from the issuance of the 2026 Notes were $1.15 billion, net of debt issuance costs and the 2026 Capped Call Transactions discussed further in Note 7 in our consolidated financial statements.

The 2026 Notes mature on August 1, 2026 unless repurchased, redeemed, or converted in accordance with their terms prior to such date.

The sale price requirement for conversion was not satisfied as of December 31, 2024 and as a

result, the 2026 Notes will not be eligible for optional conversion during the first quarter of 2025.

As of December 31, 2024, the outstanding principal of the 2026 Notes was $249.8 million.

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 settled in cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election .

A s 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 $4.9 billion in commitments as of December 31, 2024, primarily due within three years.

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 October 2024, our board of directors authorized a stock repurchase program of up to $500.0 million of our Class A common stock.

We did not repurchase any shares under this program in the fourth quarter of 2024.

Accordingly, as of December 31, 2024, the remaining availability under the stock repurchase authorization was $500.0 million.

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

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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.

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.

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$ 437,189 $ 218,654 $ 34,794

(1) For information on how we define and calculate Free Cash Flow, and a reconciliation to net cash provided by (used in) operating activities to Free Cash Flow, see “Non-GAAP Financial Measures.”

(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 $413.5 million for the year ended December 31, 2024, compared to net cash provided by operating activities of $246.5 million for the year ended December 31, 2023, resulting primarily from our net loss, adjusted for non-cash items, including stock-based compensation expense of $1,041.0 million and depreciation and amortization expense of $158.1 million.

Net cash provided by operating activities for the year ended December 31, 2024 was also driven by a $150.4 million increase in accrued expenses and other current liabilities, offset by a

$100.7 million decrease in accounts payable and a $94.0 million increase in accounts receivables due to the timing of collections and an increase in billings in the period.

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 used in investing activities was $717.1 million for the year ended December 31, 2024, compared to net cash provided by investing activities of $571.0 million for the year ended December 31, 2023.

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.

Our investing activities for the year ended December 31, 2023 primarily consisted of maturities of marketable securities of $2.4 billion and sales of marketable securities of $459.5 million, partially offset by purchases of marketable securities of $2.0 billion and purchases of property and equipment of $211.7 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, 2024 primarily consisted of the Note Repurchases for $859.0 million, repurchases of our Class A common stock for $311.1 million, and the purchase of the 2030 Capped Call Transactions 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.

Our financing activities for the year ended December 31, 2023 primarily consisted of $189.4 million of repurchases of our Class A common stock and $270.4 million of deferred payments for acquisitions completed in prior periods.

Our financing activities for the year ended December 31, 2025 primarily consisted of the repurchases of certain outstanding convertible notes for $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

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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.”

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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.

transparency with respect to key metrics used by our management for financial and operational decision-making.

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.

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Additionally, we recognized an income tax benefit of $5.7 million relating to the wind down, which is included in the income tax (benefit) expense line item above.

Restructuring charges in 2022 relating to the strategic reprioritization plan were composed primarily of severance and related charges of $97.1 million, stock-based compensation expense, lease exit and related charges, impairment charges, contract termination charges, and intangible asset amortization.

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 Estimates

Critical Accounting Policies and Estimates

We prepare our financial statements in accordance with GAAP.

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Our actual results could differ from these estimates.

The critical accounting estimates, assumptions, and judgments that we believe to have the most significant impact on our consolidated financial statements are described below.

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.

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Sales tax, including value added tax, is excluded from reported revenue.

We generate substantially all of our revenues by offering various advertising products on Snapchat, which include Snap Ads and AR Ads, referred to as advertising revenue.

AR Ads include Sponsored Lenses, which allow users to interact with an advertiser’s brand by enabling branded augmented reality experiences.

The substantial majority of advertising revenue is generated from the display of advertisements on Snapchat through contractual agreements that are either based on the number of advertising impressions delivered or on a fixed fee basis over a period of time.

Revenue related to agreements based on the number of impressions delivered is recognized when the advertisement is served.

Revenue related to fixed fee arrangements is recognized ratably over the service period, typically less than 30 days in duration, and such arrangements do not contain minimum impression guarantees.

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 advertising revenue arrangements where we are not the principal, we recognize revenue on a net basis.

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.

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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.

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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.

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.

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We are subject to income taxes in the United States and numerous foreign jurisdictions.

Significant judgment is required in determining our uncertain tax positions.

We recognize tax benefits from uncertain tax positions only if we believe that 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.

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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis