What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-10-21 compared with 2020-07-22 · 111 added, 116 removed, 341 unchanged (40% of the section changed)

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Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Risk Factors,” “Note Regarding Forward-Looking Statements,” and “Note Regarding User Metrics and Other Data.”

Overview of Second Quarter 2020 Results

Our key user metrics and financial results for the second quarter of 2020 were as follows:

Overview of Third Quarter 2020 Results

Our key user metrics and financial results for the third quarter of 2020 were as follows:

Daily Active Users, or DAUs, increased to 249 million in Q3 2020, compared to 210 million in Q3 2019.

Average revenue per user, or ARPU, remained flat at $1.91 in Q2 2020, compared to Q2 2019.

Average revenue per user, or ARPU, increased to $2.73 in Q3 2020, compared to $2.12 in Q3 2019.

Financial Results

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Free Cash Flow was $(69.6) million in Q3 2020, compared to $(84.1) million in Q3 2019.

Common shares outstanding plus shares underlying stock-based awards, including restricted stock units, restricted stock awards, and outstanding stock options, totaled 1,616 million at June 30, 2020, compared with 1,553 million one year ago.

Common shares outstanding plus shares underlying stock-based awards, including restricted stock units, restricted stock awards, and outstanding stock options, totaled 1,624 million at September 30, 2020, compared with 1,565 million one year ago.

Capital expenditures were $14.7 million in Q3 2020, compared to $7.9 million in Q3 2019.

Cash, cash equivalents, and marketable securities were $2.8 billion as of June 30, 2020.

Cash, cash equivalents, and marketable securities were $2.7 billion as of September 30, 2020.

Revenue increased 52% to $678.7 million in Q3 2020, compared to $446.2 million in Q3 2019.

Total costs and expenses, excluding stock-based compensation and related payroll tax expense, increased 26% to $644.1 million in Q3 2020, compared to $509.2 million in Q3 2019.

Net loss increased 28% to $(326.0) million in Q2 2020, compared to $(255.2) million in Q2 2019.

Diluted net loss per share increased 20% to $(0.23) in Q2 2020, compared to $(0.19) in Q2 2019.

Adjusted EBITDA decreased 21% to $(95.6) million in Q2 2020, compared to $(78.7) million in Q2 2019.

Net loss decreased 12% to $(199.9) million in Q3 2020, compared to $(227.4) million in Q3 2019.

Diluted net loss per share decreased 16% to $(0.14) in Q3 2020, compared to $(0.16) in Q3 2019.

Adjusted EBITDA increased 233% to $56.4 million in Q3 2020, compared to $(42.4) million in Q3 2019.

is a camera company.

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DAUs are broken out by geography because markets have different characteristics .

We had 238 million DAUs on average in the second quarter of 2020, an increase of 35 million, or 17%, from the second quarter of 2019.

We had 249 million DAUs on average in the third quarter of 2020, an increase of 39 million, or 18%, from the third quarter of 2019.

Quarterly Average Daily Active Users

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Europe includes Russia and Turkey.

We recorded revenue of $454.2 million for the three months ended June 30, 2020, compared to revenue of $388.0 million for the same period in 2019, an increase of 17% year-over-year.

In the six months ended June 30, 2020, we recorded revenue of $916.6 million compared to revenue of $708.4 million for the same period in 2019, an increase of 29% year-over-year.

We recorded revenue of $678.7 million for the three months ended September 30, 2020, compared to revenue of $446.2 million for the same period in 2019, an increase of 52% year-over-year.

In the nine months ended September 30, 2020, we recorded revenue of $1.6 billion compared to revenue of $1.2 billion for the same period in 2019, an increase of 38% year-over-year.

We monetize our business primarily through advertising.

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We measure our business using ARPU because it helps us understand the rate at which we’re monetizing our daily user base.

ARPU was $1.91 in the second quarter of 2020, flat compared to $1.91 a year ago and down from $2.02 in the prior quarter.

ARPU was $2.73 in the third quarter of 2020, up from $2.12 in the third quarter of 2019 and $1.91 in the second quarter of 2020.

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.

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The following table summarizes certain selected historical financial results:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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Additionally, we believe that Adjusted EBITDA 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.

See “Selected Financial Data — Non-GAAP Financial Measures” for additional information and a reconciliation of net loss to Adjusted EBITDA.

See “Non-GAAP Financial Measures” for additional information and a reconciliation of net loss to Adjusted EBITDA.

Discussion of Results of Operations

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The broader impact of the recent COVID-19 pandemic on our results of operations and overall financial performance continues to remain uncertain.

The COVID-19 pandemic has impacted our revenue growth, and will likely continue to adversely impact many aspects of our business and our partners, including advertising demand.

See “Risk Factors” for further discussion of the adverse impacts of the COVID-19 pandemic and related events on our business.

The COVID-19 pandemic has impacted our year to date revenue growth, and will likely continue to adversely impact many aspects of our business and our partners.

See “Risk Factors” for further discussion of the potential adverse impacts of the COVID-19 pandemic and related events on our business and partners.

The following table sets forth our consolidated statements of operations data:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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Stock-based compensation expense included in the above line items:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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Depreciation and amortization expense included in the above line items:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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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:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Consolidated Statements of Operations Data:

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Income tax benefit (expense)

Three and Six Months Ended June 30, 2020 and 2019

Three Months Ended June 30,

Six Months Ended June 30,

Three and Nine Months Ended September 30, 2020 and 2019

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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Revenue as a percentage change

Revenue for the three months ended June 30, 2020 increased $66.1 million, or 17%, compared to the same period in 2019.

Revenue was $916.6 million for the six months ended June 30, 2020, compared to $708.4 million for the same period in 2019.

Revenue increased due to overall growth in advertiser demand, which was tempered by the COVID-19 pandemic.

We continue to optimize our self-serve platform, enabling advertisers to utilize our inventory more efficiently and reach more users at a lower price compared to the prior period.

Revenue for the three months ended September 30, 2020 increased $232.5 million, or 52%, compared to the same period in 2019.

Revenue was $1.6 billion for the nine months ended September 30, 2020, compared to $1.2 billion for the same period in 2019, an increase of $440.7 million, or 38%.

Revenue increased due to overall growth in advertiser demand.

Cost of Revenue

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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Cost of Revenue as a percentage change

Cost of revenue for the three and six months ended June 30, 2020 increased $35.0 million and $84.6 million, respectively, compared to the same periods in 2019.

The increase in cost of revenue primarily consisted of increased infrastructure costs of $16.9 million and $43.7 million for the three and six months ended June 30, 2020, respectively, attributable to DAU growth and increased user activity between the periods, net of infrastructure cost efficiencies.

Cost of revenue for the three and nine months ended September 30, 2020 increased $70.0 million and $154.6 million, respectively, compared to the same periods in 2019.

The increase in cost of revenue primarily consisted of increased infrastructure costs of $27.6 million and $71.3 million for the three and nine months ended September 30, 2020, respectively, attributable to DAU growth and increased user activity between the periods, net of infrastructure cost efficiencies.

Additionally, the increases were driven by increased revenue share costs due to the overall increase in revenue and a higher mix of revenue subject to revenue share.

Research and Development Expenses

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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Research and Development Expenses as a percentage change

Research and development expenses for the three months ended June 30, 2020 increased $24.7 million, or 10%, compared to the same period in 2019.

The increase primarily consisted of an increase in personnel costs, driven by an increase in research and development headcount and changes to our cash compensation programs that were partially offset by lower stock based compensation expense .

Research and development expenses for the six months ended June 30, 2020 increased $47.1 million, or 10%, compared to the same period in 2019.

The increase primarily consisted of an increase in personnel costs, driven by an increase in research and development headcount and changes to our cash compensation programs.

Research and development expenses for the three and nine months ended September 30, 2020 increased $72.0 million and $119.1 million, respectively, compared to the same periods in 2019.

The increase primarily consisted of an increase in personnel costs, driven by growth in research and development headcount that contributed to higher total stock-based compensation expense, and changes to our cash compensation programs .

Sales and Marketing Expenses

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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Sales and Marketing Expenses as a percentage change

Sales and marketing expenses for the three months ended June 30, 2020 increased $20.6 million compared to the same period in 2019.

T he increase was primarily driven by increased marketing investments of $13.5 million, and an increase in personnel expenses due to the growth in sales and marketing headcount.

The increase was partially offset by the impact of lower travel and event-related spending given COVID-19 related restrictions on these activities.

Sales and marketing expenses for the six months ended June 30, 2020 increased $44.9 million compared to the same period in 2019.

T he increase was primarily driven by increased marketing investments of $28.9 million, and an increase in personnel expenses due to the growth in sales and marketing headcount and stock-based compensation expense.

Sales and marketing expenses for the three and nine months ended September 30, 2020 increased $20.3 million and $65.2 million compared to the same periods in 2019.

T he increase was primarily driven by an increase in personnel expenses due to the growth in sales and marketing headcount as well as increased marketing initiatives.

The increase was partially offset by the impact of lower travel and event-related spending given COVID-19 related restrictions on these activities.

General and Administrative Expenses

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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General and Administrative Expenses as a percentage change

General and administrative expenses for the three months ended June 30, 2020 decreased $8.3 million, or 6%, compared to the same period in 2019.

The decrease primarily consisted of lower travel and event-related spending given COVID-19 related restrictions on these activities and losses on the disposal of assets in the prior period.

The decrease was partially offset by an increase in personnel expenses, driven by changes to our cash compensation programs that were partially offset by lower stock based compensation expense .

General and administrative expenses for the six months ended June 30, 2020 increased $7.6 million, or 3%, compared to the same period in 2019.

The increase primarily consisted of an increase in legal settlement expenses related to the preliminary settlement of the Vaporstream matter in the first quarter of 2020, partially offset by a decrease in stock based compensation expense.

General and administrative expenses for the three months ended September 30, 2020 increased $9.2 million, or 8%, compared to the same period in 2019.

The increase primarily consisted of higher personnel expenses, driven by an increase in headcount.

The increase was partially offset by the impact of lower travel and event-related spending given COVID-19 related restrictions on these activities.

General and administrative expenses for the nine months ended September 30, 2020 increased $16.9 million , or 5% , compa red to the same period in 2019.

The increase consisted of a n increase in legal settlement expenses primarily related to the preliminary settlement of the Vaporstream matter in the first quarter of 2020 , as well as an increase in personnel expenses driven by an increase in headcount.

This increase was partially offset by a lower cost per head driven by a decrease in stock - based compensation expense and the impact of lower travel and event-related spending given COVID-19 related restrictions on these activities .

Interest Income

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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Interest Income as a percentage change

Interest income for the three and six months ended June 30, 2020 decreased $2.7 million and $1.9 million, respectively, compared to the same periods in 2019.

Interest income for the three and nine months ended September 30, 2020 decreased $7.5 million and $9.4 million, respectively, compared to the same periods in 2019.

The decrease was primarily a result of lower interest rates on U.S.

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Interest Expense

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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Interest Expense as a percentage change

Interest expense for the three and six months ended June 30, 2020 increased $23.9 million and $38.3 million, respectively, compared to the same periods in 2019.

Interest expense for the three and nine months ended September 30, 2020 increased $19.6 million and $57.8 million, respectively, compared to the same periods in 2019.

The increase in interest expense is related to the Convertible Notes.

Other Income (Expense), Net

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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Other Income (Expense), Net as a percentage change

Other income, net for the three months ended June 30, 2020 was $3.6 million compared to $44.1 million in the same period in 2019.

Other income, net for the three months ended June 30, 2020 primarily consisted of gains on non-marketable investments.

Other income, net in the comparable periods in 2019 was primarily a result of a gain of $39.9 million on the divestiture of Placed, as well as gains on non-marketable investments.

Other expense, net for the six months ended June 30, 2020 was $(8.8) million, compared to other income, net of $43.0 million in the same period in 2019.

Other expense, net for the six months ended June 30, 2020 was primarily a result of a $10.5 million impairment of non-marketable investments.

Other income, net in the comparable periods in 2019 was primarily a result of a gain of $39.9 million on the divestiture of Placed, as well as gains on non-marketable investments.

Other expense, net for the three months ended September 30, 2020 was $(5.7) million compared to $(1.5) million in the same period in 2019.

Other expense, net for the three months ended September 30, 2020 was primarily a result of a $5.0 million impairment of a non-marketable investment.

Other expense, net in the comparable period in 2019 was primarily a result of losses on non-marketable investments.

Other expense, net for the nine months ended September 30, 2020 was $(14.5) million, compared to other income, net of $41.5 million in the same period in 2019.

Other expense, net for the nine months ended September 30, 2020 was primarily a result of a $15.5 million in impairment of non-marketable investments.

Other income, net in the comparable period in 2019 was primarily a result of a gain of $39.9 million on the divestiture of Placed, as well as gains on non-marketable investments.

Income Tax Benefit (Expense)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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Effective Tax Rate

Income tax benefit for the three and six months ended June 30, 2020 was $1.0 million and $0.4 million, respectively, compared to an income tax expense of $(1.1) million and $(1.4) million, respectively, for the same periods in 2019.

Income tax expense for the three and nine months ended September 30, 2020 was $(0.9) million and $(0.5) million, respectively, compared to an income tax benefit of $1.3 million and a tax expense of $(0.1) million, respectively, for the same periods in 2019.

Our effective tax rate differs from the U.S.

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Net Loss and Adjusted EBITDA

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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Adjusted EBITDA as a percentage change

Net loss for the three and six months ended June 30, 2020 was $(326.0) million and $(631.9) million, respectively, compared to $(255.2) million and $(565.6) million, respectively, for the same period in 2019.

Adjusted EBITDA for the three and six months ended June 30, 2020 was $(95.6) million and $(176.8) million, respectively, compared to $(78.7) million and $(202.2) million, respectively, for the same period in 2019.

Adjusted EBITDA for the three months ended June 30, 2020, decreased $16.9 million compared to the same periods in 2019 due to an increase in cost of revenue attributable to DAU growth and an increase in personnel expenses, partially offset by an increase in revenue.

Adjusted EBITDA for the six months ended June 30, 2020, increased $25.4 million compared to the same period in 2019 driven by increased revenues, partially offset by increased cost of revenue and other operating expenses.

Additionally, the increase in net loss for the three and six months ended June 30, 2020, was primarily due to the $39.9 million gain from the Placed divestiture recognized in the prior periods.

Net loss for the three and nine months ended September 30, 2020 was $(199.9) million and $(831.7) million, respectively, compared to $(227.4) million and $(793.0) million, respectively, for the same periods in 2019.

Adjusted EBITDA for the three and nine months ended September 30, 2020 was $56.4 million and $(120.4) million, respectively, compared to $(42.4) million and $(244.5) million, respectively, for the same periods in 2019.

Adjusted EBITDA for the three and nine months ended September 30, 2020 increased $98.7 million and $124.1 million, respectively, compared to the same periods in 2019 due to an increase in revenue partially offset by an increase in cost of revenue attributable to DAU growth and an increase in personnel expenses.

The increase in net loss for the nine months ended September 30, 2020 was primarily due to the $39.9 million gain from the Placed divestiture recognized in the prior periods.

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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The following table presents a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure, for each of the periods presented:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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The following table presents a reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure, for each of the periods presented:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

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Liquidity and Capital Resources

Cash, cash equivalents, and marketable securities were $2.8 billion as of June 30, 2020, primarily consisting of cash on deposit with banks and highly liquid investments in U.S.

Cash, cash equivalents, and marketable securities were $2.7 billion as of September 30, 2020, primarily consisting of cash on deposit with banks and highly liquid investments in U.S.

government and agency securities, corporate debt securities, certificates of deposit, and commercial paper.

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

The 2025 Notes were not convertible as of June 30, 2020.

The 2025 Notes were not convertible as of September 30, 2020.

In August 2019, we issued the 2026 Notes with an aggregate principal amount of $1.265 billion.

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

The 2026 Notes were not convertible as of June 30, 2020.

The 2026 Notes were not convertible as of September 30, 2020.

In July 2016, we entered into a five-year senior unsecured revolving credit facility, or the Credit Facility, with lenders some of which are affiliated with certain members of the underwriting syndicate for our Convertible Notes offering, that allows us to borrow up to $1.1 billion to fund working capital and general corporate-purpose expenditures.

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In April 2020, we amended the Credit Facility to revise the covenants that restrict the incurrence of indebtedness to permit the 2025 Capped Call Transactions and issuance of the 2025 Notes.

As of June 30, 2020, no amounts were outstanding under the Credit Facility.

As of June 30, 2020, we had $25.2 million in the form of outstanding standby letters of credit.

As of September 30, 2020, no amounts were outstanding under the Credit Facility.

As of September 30, 2020, we had $25.4 million in the form of outstanding standby letters of credit.

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.

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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.

As of June 30, 2020, approximately 4% of our cash, cash equivalents, and marketable securities was held outside the United States.

As of September 30, 2020, approximately 5% of our cash, cash equivalents, and marketable securities was held outside the United States.

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

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The following table sets forth the major components of our consolidated statements of cash flows for the periods presented:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash used in investing activities

Net cash provided by financing activities

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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.”

Three and Six Months Ended June 30, 2020 and 2019

Three and Nine Months Ended September 30, 2020 and 2019

Net Cash Used in Operating Activities

Net cash used in operating activities decreased $29.2 million in the three months ended June 30, 2020, compared to the same period in 2019.

Net cash used in operating activities was $(66.6) million for three months ended June 30, 2020, resulting primarily from net loss, adjusted for non-cash items, primarily stock-based compensation expense of $186.2 million and depreciation and amortization expense of $20.9 million.

Net cash used in operating activities for the three months ended June 30, 2020 was partially offset by an increase in the accounts receivable balance of $15.7 million due to an increase in revenue and a $14.9 million increase in accrued expenses and other current liabilities primarily due to the timing of payments.

Net cash used in operating activities decreased $101.7 million in the six months ended June 30, 2020, compared to the same period in 2019.

Net cash used in operating activities was $(60.3) million for the six months ended June 30, 2020, resulting primarily from net loss, adjusted for non-cash items, primarily stock-based compensation expense of $358.2 million and depreciation and amortization expense of $42.1 million.

Net cash used operating activities for the six months ended June 30, 2020 was also partially offset by an increase in the accounts receivable balance of $108.5 million due to an increase in revenue and a $32.8 million increase in accrued expenses and other current liabilities primarily due to the timing of payments.

Net Cash Provided by (Used in) Investing Activities

Net cash used in investing activities was $(492.1) million for the three months ended June 30, 2020, compared to net cash provided by investing activities of $184.7 million for the same period in 2019.

Our investing activities in the three months ended June 30, 2020 consisted of cash used in the purchase of marketable securities of $875.9 million and non-marketable investments of $56.3 million, partially offset by the maturities of marketable securities of $476.6 million.

Net cash provided by investing activities in the prior period consisted of $73.8 million of net proceeds from the divestiture of Placed and sales and maturities of marketable securities of $401.5 million, partially offset by the purchase of marketable securities of $283.5 million.

Net cash used in investing activities was $(120.5) million for the six months ended June 30, 2020, compared to net cash provided by investing activities of $103.8 million for the same period in 2019.

Our investing activities in the six months ended June 30, 2020 consisted of cash used in the purchase of marketable securities of $1.4 billion and non-marketable investments of $91.8 million, partially offset by the sales and maturities of marketable securities of $1.4 billion.

Net cash provided by investing activities in the prior period c onsisted of $73.8 million of net proceeds from the divestiture of Placed and sales and maturities of marketable securities of $860.1 million, partially offset by the purchase of marketable securities of $809.0 million.

Net cash used in operating activities decreased $21.3 million in the three months ended September 30, 2020, compared to the same period in 2019.

Net cash used in operating activities was $(54.8) million for three months ended September 30, 2020, resulting primarily from net loss, adjusted for non-cash items, primarily stock-based compensation expense of $192.1 million and depreciation and amortization expense of $21.8 million.

Net cash used in operating activities for the three months ended September 30, 2020 was also driven by an increase in the accounts receivable balance of $151.9 million due to an increase in revenue, partially offset by a $61.6 million increase in accrued expenses and other current liabilities primarily due to the timing of payments.

Net cash used in operating activities decreased $123.0 million in the nine months ended September 30, 2020, compared to the same period in 2019.

Net cash used in operating activities was $(115.1) million for the nine months ended September 30, 2020, resulting primarily from net loss, adjusted for non-cash items, primarily stock-based compensation expense of $550.3 million and depreciation and amortization expense of $63.9 million.

Net cash used in operating activities for the nine months ended September 30, 2020 was also driven by an increase in the accounts receivable balance of $43.3 million due to an increase in revenue, partially offset by a $94.4 million increase in accrued expenses and other current liabilities primarily due to the timing of payments.

Net Cash Used in Investing Activities

Net cash used in investing activities was $(375.3) million for the three months ended September 30, 2020, compared to net cash used in investing activities of $(688.3) million for the same period in 2019.

Our investing activities in the three months ended September 30, 2020 consisted of cash used in the purchase of marketable securities of $1.1 billion, partially offset by the maturities of marketable securities of $668.9 million and sales of marketable securities of $155.9 million.

Net cash used in investing activities in the prior period consisted of t he purchase of marketable securities of $1.1 billion, partially offset by the maturities of marketable securities of $411.0 million.

Net cash used in investing activities was $(495.8) million for the nine months ended September 30, 2020, compared to net cash provided by investing activities of $584.5 million for the same period in 2019.

Our investing activities in the nine months ended September 30, 2020 consisted of cash used in the purchase of marketable securities of $2.6 billion and non-marketable investments of $95.3 million, partially offset by the maturities of marketable securities of $1.9 billion and sales of marketable securities of $373.9 million.

Net cash used in investing activities in the prior period c onsisted of the purchase of marketable securities of $1.9 billion, partially offset by maturities of marketable securities of $1.2 billion and sales of marketable securities of $102.4 million.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $909.1 million and $912.2 million for the three months and six months ended June 30, 2020, respectively, compared to net cash provided by financing activities of $1.3 million and $6.9 million for the same periods in 2019.

Our financing activities for the three and six months ended June 30, 2020 consisted primarily of net proceeds of $988.6 million from the issuance of the Convertible Notes, offset by the purchase of the Capped Calls of $100.0 million.

Net cash provided by financing activities was $2.4 million and $914.6 million for the three months and nine months ended September 30, 2020, respectively, compared to net cash provided by financing activities of $1.2 billion for the same periods in 2019.

Our financing activities for the nine months ended September 30, 2020 consisted primarily of net proceeds of $888.6 million from the issuance of the 2025 Notes and the purchase of the 2025 Capped Call Transactions.

Net cash provided by financing activities in the prior period consisted primarily of net proceeds of $1.15 billion from the issuance of the 2026 Notes and the purchase of the 2026 Capped Call Transactions.

Net cash provided by financing activities in all periods presented includes proceeds from the exercise of stock options.

Free Cash Flow

Free Cash Flow was $(82.3) million and $(103.4) million in the three months ended June 30, 2020 and 2019, respectively, and was composed of net cash used in operating activities, resulting primarily from net loss, adjusted for non-cash items as well as changes in working capital and other operating assets and liabilities.

Free Cash Flow also included purchases of property and equipment of $15.8 million and $7.6 million for the three months ended June 30, 2020 and 2019, respectively.

Free Cash Flow was $(86.9) million and $(181.4) million in the six months ended June 30, 2020 and 2019, respectively, and was composed of net cash used in operating activities, resulting primarily from net loss, adjusted for non-cash items as well as changes in working capital and other operating assets and liabilities.

Free Cash Flow also included purchases of property and equipment of $(26.7) million and $(19.4) million for the three months ended June 30, 2020 and 2019, respectively.

Free Cash Flow was $(69.6) million and $(84.1) million in the three months ended September 30, 2020 and 2019, respectively, and was composed of net cash used in operating activities, resulting primarily from net loss, adjusted for non-cash items as well as changes in working capital and other operating assets and liabilities.

Free Cash Flow also included purchases of property and equipment of $14.7 million and $7.9 million for the three months ended September 30, 2020 and 2019, respectively.

Free Cash Flow was $(156.5) million and $(265.5) million in the nine months ended September 30, 2020 and 2019, respectively, and was composed of net cash used in operating activities, resulting primarily from net loss, adjusted for non-cash items as well as changes in working capital and other operating assets and liabilities.

Free Cash Flow also included purchases of property and equipment of $(41.4) million and $(27.4) million for the three months ended September 30, 2020 and 2019, respectively.

Off-Balance Sheet Arrangements

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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.

The following table summarizes our contractual obligations as of June 30, 2020:

The following table summarizes our contractual obligations as of September 30, 2020:

(Remainder of

30 unchanged sentences

Interest Rate Risk

We had cash and cash equivalents totaling $1.3 billion and $520.3 million at June 30, 2020 and December 31, 2019, respectively.

We had marketable securities totaling $1.6 billion and $1.6 billion at June 30, 2020 and December 31, 2019, respectively.

We had cash and cash equivalents totaling $824.1 million and $520.3 million at September 30, 2020 and December 31, 2019, respectively.

We had marketable securities totaling $1.9 billion and $1.6 billion at September 30, 2020 and December 31, 2019, respectively.

Our cash and cash equivalents consist of cash in bank accounts and marketable securities consisting of U.S.

25 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis