What changed in this filing

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Item 1. Financial Statements

2022-07-22 compared with 2022-04-22 · 128 added, 85 removed, 479 unchanged (31% of the section changed)

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cash flows from operating activities

13 unchanged sentences

Other liabilities

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities

1 unchanged sentence

Purchases of strategic investments

Sales of strategic investments

Cash paid for acquisitions, net of cash acquired

2 unchanged sentences

Maturities of marketable securities

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities

2 unchanged sentences

Proceeds from the exercise of stock options

Net cash provided by financing activities

Payments of debt issuance costs

Net cash provided by (used in) financing activities

Change in cash, cash equivalents, and restricted cash

7 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Costs and expenses:

7 unchanged sentences

Interest expense

Other (expense) income, net

Other income (expense), net

Loss before income taxes

Income tax expense

Income tax benefit (expense)

Net loss per share attributable to Class A, Class B, and Class C

4 unchanged sentences

(in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Other comprehensive income (loss), net of tax

29 unchanged sentences

3,000,000 shares

authorized, 1,378,259 shares issued and outstanding at March 31, 2022, and

authorized, 1,390,709 shares issued and outstanding at June 30, 2022, and

3,000,000 shares authorized, 1,364,887 shares issued and outstanding

2 unchanged sentences

700,000 shares authorized,

22,677 shares issued and outstanding at March 31, 2022, and 700,000 shares

22,638 shares issued and outstanding at June 30, 2022, and 700,000 shares

authorized, 22,769 shares issued and outstanding at December 31, 2021.

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260,888 shares authorized,

231,627 shares issued and outstanding at March 31, 2022, and 260,888 shares

231,627 shares issued and outstanding at June 30, 2022, and 260,888 shares

authorized, 231,627 shares issued and outstanding at December 31, 2021.

7 unchanged sentences

(in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Class A non-voting common stock

7 unchanged sentences

units and restricted stock awards, net

Issuance of Class A non-voting common stock for the induced conversion related to convertible senior notes

Conversion of Class B voting common

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stock in connection with acquisitions

Issuance of Class A non-voting common stock for the induced conversion related to convertible senior notes

Purchase of capped calls

29 unchanged sentences

None of these reclassifications had a material impact on our consolidated financial statements.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022.

There have been no changes to our significant accounting policies described in our Annual Report that have had a material impact on our consolidated financial statements and related notes.

6 unchanged sentences

Recent Accounting Pronouncements

In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, Government Assistance (Topic 832):

In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies the guidance when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820.

The guidance is effective for annual periods beginning after December 15, 2023, with early adoption permitted.

Effective April 1, 2022 , we early adopted ASU 2022-03 on a prospective basis.

The impact of adoption of this standard on our consolidated financial statements, including accounting policies, processes, and systems, was not material.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832):

Disclosure by Business Entities about Government Assistance , which improves the transparency of government assistance received by requiring the disclosure of:

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(2) the accounting for such assistance;

and (3) the effect of the assistance on an entity's financial statements.

and (3) the effect of the

assistance on a n entity's financial statements.

The guidance is effective for annual periods beginning after December 15, 2021, with early adoption permitted.

4 unchanged sentences

Under ASU 2021-08, an acquirer must recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) .

The guidance is effective for interim and annual periods beginning after December

15, 2022, with early adoption permitted.

The guidance is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted.

Effective January 1, 2022 , we early adopted ASU 2021-08 on a prospective basis.

27 unchanged sentences

The following table represents our revenue disaggregated by geography based on the billing address of the advertising customer:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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North America includes Mexico, the Caribbean, and Central America.

United States revenue was $ 727.4 million and $ 514.6 million for the three months ended March 31, 2022 and 2021, respectively.

United States revenue was $ 751.5 million and $ 637.0 million for the three months ended June 30, 2022 and 2021, respectively, and $ 1,478.9 million and $ 1,151.6 million for the six months ended June 30, 2022 and 2021, respectively.

Europe includes Russia and Turkey.

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

Net Loss per Share

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We have three classes of authorized common stock for which voting rights differ by class.

Basic net loss per share is computed by dividing net loss attributable to each class of stockholders by the weighted-average number of shares of stock outstanding during the period, adjusted for v ested restricted stock units (“RSUs”) that have not been settled and restricted stock awards (“RSAs”) for which the risk of forfeiture has not yet lapsed.

Basic net loss per share is computed by dividing net loss attributable to each class of stockholders by the weighted-average number of shares of stock outstanding during the period, adjusted for restricted stock awards (“RSAs”) for which the risk of forfeiture has not yet lapsed.

For the calculation of diluted net loss per share, net loss per share attributable to common stockholders for basic net loss per share is adjusted by the effect of dilutive securities, including awards under our equity compensation plans.

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The Convertible Notes would have a dilutive impact on net income per share when the average market price of Class A common stock for a given period exceeds the respective conversion price of the Convertible Notes.

For the periods presented, our potentially dilutive shares relating to stock options, RSUs, RSAs, and Convertible Notes were not included in the computation of diluted net loss per share as the effect of including these shares in the calculation would have been anti-dilutive.

The numerators and denominators of the basic and diluted net loss per share computations for our common stock are calculated as follows for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

For the periods presented, our potentially dilutive shares relating to stock options, restricted stock units (“RSUs”), RSAs, and Convertible Notes were not included in the computation of diluted net loss per share as the effect of including these shares in the calculation would have been anti-dilutive.

The numerators and denominators of the basic and diluted net loss per share computations for our common stock are calculated as follows for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands, except per share data)

11 unchanged sentences

The following potentially dilutive shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:

As of March 31,

Three and Six Months Ended June 30,

(in thousands)

7 unchanged sentences

Restricted Stock Units and Restricted Stock Awards

The following table summarizes the RSU and RSA activity during the three months ended March 31, 2022:

The following table summarizes the RSU and RSA activity during the six months ended June 30, 2022:

(in thousands, except per share data)

Unvested at December 31, 2021

Unvested at March 31, 2022

Unvested at June 30, 2022

All RSUs and RSAs vest on the satisfaction of a service-based condition.

Total unrecognized compensation cost related to outstanding RSUs and RSAs was $ 1.9 billion as of March 31, 2022 and is expected to be recognized over a weighted-average period of 2.2 years.

Total unrecognized compensation cost related to outstanding RSUs and RSAs was $ 2.3 billion as of June 30, 2022 and is expected to be recognized over a weighted-average period of 2.1 years.

The service condition for RSUs and RSAs granted prior to February 2018 is generally satisfied over four years , 10 % after the first year of service, 20 % over the second year, 30 % over the third year, and 40 % over the fourth year.

2 unchanged sentences

Stock Options

The following table summarizes the stock option award activity under the Stock Plans during the three months ended March 31, 2022:

The following table summarizes the stock option award activity under the Stock Plans during the six months ended June 30, 2022:

(in thousands, except per share data)

Outstanding at December 31, 2021

Outstanding at March 31, 2022

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the closing market price of our Class A common stock as of December 31, 2021 and March 31, 2022, respectively.

Total unrecognized compensation cost related to unvested stock options was $ 1.6 million as of March 31, 2022 and is expected to be recognized over a weighted-average period of 1.1 years.

Outstanding at June 30, 2022

Total unrecognized compensation cost related to unvested stock options was $ 0.6 million as of June 30, 2022 and is expected to be recognized over a weighted-average period of 2.2 years.

Stock-Based Compensation Expense by Function

Total stock-based compensation expense by function was as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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2022 Acquisitions

In the three months ended March 31, 2022, we completed acquisitions to enhance our existing platform, technology, and workforce.

In the six months ended June 30, 2022, we completed acquisitions to enhance our existing platform, technology, and workforce.

The aggregate purchase consideration was $ 108.8 million, which included $ 6.1 million in cash, $ 44.0 million in shares of our Class A common stock, and $ 58.7 million recorded in other liabilities on the consolidated balance sheet.

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In May 2021, we acquired Wave Optics Limited (“Wave Optics”), a display technology company that supplies light engines and diffractive waveguides for augmented reality displays.

The total consideration was $ 541.8 million, of which $ 510.4 million represents purchase consideration and primarily consists of 4.7 million shares of our Class A common stock with a fair value of $ 252.0 million, cash of $ 13.7 million, and a $ 238.4 million payable due no later than May 2023 in either cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our

The remaining $ 31.4 million of total consideration transferred represents compensation for future employment services.

The allocation of purchase price is subject to change based on information received related to the assets and liabilities that existed as of the acquisition date.

The allocation of the total purchase consideration for this acquisition is estimated as follows:

The total consideration was $ 541.8 million, of which $ 510.4 million represented purchase consideration and primarily consisted of 4.7 million shares of our Class A common stock with a fair value of $ 252.0 million, cash of $ 13.7 million, and a $ 238.4 million payable due no later than May 2023 in either cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election.

The remaining $ 31.4 million of total consideration transferred represented compensation for future employment services.

The allocation of the total purchase consideration for this acquisition was as follows:

(in thousands)

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In March 2021, we acquired Fit Analytics GmbH (“Fit Analytics”), a sizing technology company that powers solutions for retailers and brands, to grow our e-commerce and shopping offerings.

The purchase consideration for Fit Analytics was $ 124.4 million, which primarily represents current and future cash consideration payments.

The allocation of purchase price is based on information received related to the assets and liabilities that existed as of the acquisition date.

The allocation of the total purchase consideration for this acquisition is as follows:

The purchase consideration for Fit Analytics was $ 124.4 million, which primarily represented current and future cash consideration payments.

The allocation of the total purchase consideration for this acquisition was as follows:

(in thousands)

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Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the three months ended March 31, 2022 were as follows:

The changes in the carrying amount of goodwill for the six months ended June 30, 2022 were as follows:

(in thousands)

2 unchanged sentences

Foreign currency translation

Balance as of March 31, 2022

Balance as of June 30, 2022

Intangible assets consisted of the following:

As of March 31, 2022

As of June 30, 2022

Useful Life -

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Customer relationships

Amortization of intangible assets was $ 22.5 million and $ 10.4 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the estimated intangible asset amortization expense for the next five years and thereafter is as follows:

Amortization of intangible assets was $ 64.1 million and $ 14.4 million for the three months ended June 30, 2022 and 2021, respectively, and $ 86.6 million and $ 24.8 million for the six months ended June 30, 2022 and 2021, respectively.

In the second quarter of 2022, we revised the useful lives of certain customer relationships and trademarks, which resulted in a $ 41.7 million increase to amortization expense for the second quarter.

As of June 30, 2022, the estimated intangible asset amortization expense for the next five years and thereafter is as follows:

(in thousands)

Remainder of 2022

Convertible Notes

Long-Term Debt

In February 2022, we entered into a purchase agreement with certain counterparties for the sale of an aggregate of $ 1.50 billion principal amount of convertible senior notes due in 2028 (the “2028 Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).

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The Exchange Agreements were accounted for as an induced conversion with the fair value of 0.7 million Exchange Shares, less accrued interest, recognized as an inducement expense in other income (expense), net in our consolidated statements of operations and included as an adjustment to reconcile net loss to net cash provided by (used in) operating activities in our consolidated statements of cash flows.

There was no inducement expense recorded for the three months ended March 31, 2022 or 2021.

Inducement expense for the three and six months ended June 30, 2021 was $ 37.0 million.

There was no inducement expense recorded for the three and six months ended June 30, 2022.

The common stock consideration issued under the original terms of the 2025 Notes and the 2026 Notes was accounted for under the general conversion accounting guidance with the net carrying amount of $ 1,132.6 million recorded in additional paid-in-capital and as a non-cash transaction excluded from cash activities on the consolidated statements of cash flows.

The Convertible Notes consisted of the following:

March 31, 2022

June 30, 2022

December 31, 2021

2 unchanged sentences

Net carrying amount

As of March 31, 2022, the debt issuance costs on the 2025 Notes, the 2026 Notes, the 2027 Notes, and the 2028 Notes will be amortized over the remaining period of approximately 3.1 years, 4.3 years, 5.1 years, and 5.9 years, respectively.

Interest expense related to the amortization of debt issuance costs was $ 1.4 million and $ 1.0 million for the three months ended March 31, 2022 and 2021, respectively.

Contractual interest expense was $ 2.0 million and $ 3.0 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the if-converted value of the 2025 Notes and the 2026 Notes exceeded the principal amount by $ 187.5 million and $ 484.7 million, respectively.

As of March 31, 2022, the if-converted value of the 2027 Notes and the 2028 Notes did not exceed the principal amount.

The sale price for conversion was satisfied as of March 31, 2022 for the 2025 Notes and the 2026 Notes, and as a result, the 2025 Notes and 2026 Notes will continue to be eligible for optional conversion during the second quarter of 2022.

The 2027 Notes and the 2028 Notes were not eligible for conversion as of

March 31 , 202 2 .

As of June 30, 2022, the debt issuance costs on the 2025 Notes, the 2026 Notes, the 2027 Notes, and the 2028 Notes will be amortized over the remaining period of approximately 2.8 years, 4.1 years, 4.8 years, and 5.7 years, respectively.

Interest expense related to the amortization of debt issuance costs was $ 1.7 million and $ 3.1 million for the three and six months ended June 30, 2022, respectively.

Interest expense related to the amortization of debt issuance costs was $ 1.1 million and $ 2.2 million for the three and six months ended June 30, 2021, respectively.

Contractual interest expense was $ 2.2 million and $ 4.2 million for the three and six months ended June 30, 2022, respectively.

Contractual interest expense was $ 2.3 million and $ 5.3 million for the three and six months ended June 30, 2021, respectively.

As of June 30, 2022, the if-converted value of the Convertible Notes did not exceed the principal amount.

The sale price for conversion was not satisfied as of June 30, 2022 for the Convertible Notes, and as a result, the Convertible Notes will not be eligible for optional conversion during the third quarter of 2022.

No sinking fund is provided for the Convertible Notes, which means that we are not required to redeem or retire them periodically.

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The Capped Call Transactions will not be remeasured as long as they continue to meet the conditions for equity classification.

As of March 31, 2022, the 2025 Capped Call Transactions and 2026 Capped Call Transactions were in-the-money.

As of June 30, 2022, the Capped Call Transactions were out-of-the-money.

Credit Facility

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

The prior revolving credit facility entered into in July 2016 (as amended) was terminated concurrently with the entry into the Credit Facility.

Loans bear interest, at our option, at a rate equal to (i) a term secured overnight financing rate (“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, and (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 .

The Credit Facility also contains an annual commitment fee of 0.10 % on the daily undrawn balance of the facility.

As of June 30, 2022, we had $ 26.6 million in the form of outstanding standby letters of credit, with no amounts outstanding under the Credit Facility .

Commitments and Contingencies

We have non-cancelable contractual agreements primarily related to the hosting of our data storage processing, storage, and other computing services, as well as lease, content and developer partner, and other commitments.

We had $ 4.4 billion in commitments as of March 31, 2022, primarily due within three years.

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 $ 4.2 billion in commitments as of June 30, 2022, primarily due within three years.

For additional discussion on leases, see Note 9 to our consolidated financial statements.

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These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments may not be subject to a cap.

We have not incurred material costs to defend lawsuits or settle claims related to these indemnifications as of March 31, 2022.

We believe the fair value of these liabilities is immaterial and accordingly have no liabilities recorded for these agreements at March 31, 2022.

We have not incurred material costs to defend lawsuits or settle claims related to these indemnifications as of June 30, 2022.

We believe the fair value of these liabilities is immaterial and accordingly have no liabilities recorded for these agreements at June 30, 2022.

We have various non-cancelable lease agreements for certain of our offices with original lease periods expiring between 2022 and 2042.

2 unchanged sentences

The components of lease cost were as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

4 unchanged sentences

The weighted-average remaining lease term (in years) and discount rate related to the operating leases were as follows:

Three Months Ended March 31,

Six Months Ended June 30,

Weighted-average remaining lease term

2 unchanged sentences

Maturity of Lease Liabilities

The present value of our operating lease liabilities as of March 31, 2022 were as follows:

The present value of our operating lease liabilities as of June 30, 2022 were as follows:

Operating Leases

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Present value of lease liabilities

As of March 31, 2022, we have additional operating leases for facilities that have not yet commenced with lease obligations of $ 60.1 million.

These operating leases will commence between 2022 and 2024 with lease terms of greater than two years to eleven years .

As of June 30, 2022, we have additional operating leases for facilities that have not yet commenced with lease obligations of $ 38.7 million.

These operating leases will commence between 2022 and 2023 with lease terms of 7 years to 11 years .

Other Information

Cash payments included in the measurement of our o perating lease liabilities were $ 23.5 million and $ 17.0 million for the three months ended March 31, 2022 and 2021, respectively.

Lease liabilities arising from obtaining operating lease right-of-use assets were $ 122.2 million and $ 9.4 million for the three months ended March 31, 2022 and 2021, respectively.

Cash payments included in the measurement of our o perating lease liabilities were $ 22.7 million and $ 18.0 million for the three months ended June 30, 2022 and 2021, respectively, and $ 46.2 million and $ 35.0 million for the six months ended June 30, 2022 and 2021, respectively.

Lease liabilities arising from obtaining operating lease right-of-use assets were $ 12.6 million and $ 134.8 million for the three and six months ended June 30, 2022, respectively.

Lease liabilities arising from obtaining operating lease right-of-use assets were $ 38.3 million and $ 47.7 million for the three and six months ended June 30, 2021, respectively.

Strategic Investments

We hold strategic investments in privately held companies with a carrying value of $ 275.9 million and $ 262.7 million as of March 31, 2022 and December 31, 2021, respectively, which consist primarily of equity securities, and to a lesser extent, debt securities.

We hold strategic investments in privately held companies with a carrying value of $ 221.2 million and $ 262.7 million as of June 30, 2022 and December 31, 2021, respectively, which consist primarily of equity securities, and to a lesser extent, debt securities.

These strategic investments are primarily recorded at fair value on a non-recurring basis.

The estimation of fair value for these privately held strategic investments requires the use of significant unobservable inputs, such as the issuance of new equity by the company, and as a result, we deem these assets as Level 3 financial instruments within the fair value measurement framework.

We recognized unrealized gains on investments in privately held companies of $ 13.3 million and $ 23.3 million for the three months ended March 31, 2022 and 2021, respectively.

We recognized unrealized gains on investments in privately held companies of $ 6.4 million and $ 19.7 million for the three and six months ended June 30, 2022, respectively, and $ 45.9 million of realized gains for the three and six months ended June 30, 2022.

We recognized unrealized gains on investments in privately held companies of $ 52.1 million and $ 75.4 million for the three and six months ended June 30, 2021, respectively, and $ 27.8 million of realized gains for the three and six months ended June 30, 2021.

In the second quarter of 2022, we reclassified a publicly traded strategic investment to marketable securities.

See Note 11 for further information.

The carrying value of this publicly traded company was $ 16.2 million as of June 30, 2022.

We recognized unrealized losses on this investment of $ 25.9 million for the three months ended June 30, 2022.

The realized gains on this investment for the three months ended June 30, 2022 were not material.

Unrealized and realized gains on all strategic investments are included within other income (expense), net on the consolidated statements of operations and included as an adjustment to reconcile net loss to net cash provided by (used in) operating activities in our consolidated statements of cash flows.

Strategic investments are included within other assets on the consolidated balance sheets.

In the fourth quarter of 2021, we reclassified a publicly traded strategic investment to marketable securities.

See Note 11 for further information.

A ll strategic investments are reviewed periodically for impairment.

Impairment expense recorded for the three months ended March 31, 2022 and 2021 was not material.

Impairment expense recorded for the three and six months ended June 30, 2022 and 2021, respectively, was not material.

Fair Value Measurements

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We classify our cash equivalents and marketable securities within Level 1 or Level 2 because we use quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value.

The following tables set forth our financial assets as of March 31, 2022 and December 31, 2021 that are measured at fair value on a recurring basis during the period:

March 31, 2022

The following tables set forth our financial assets as of June 30, 2022 and December 31, 2021 that are measured at fair value on a recurring basis during the period:

June 30, 2022

Amortized Cost

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Certificates of deposit

(1) In the second quarter of 2022, we reclassified a strategic investment from Level 3 to Level 1 at its fair value using the

beginning-of-period approach, following the commencement of public market trading of the investment during the

period (which was subject to short-term lock-up restrictions as of June 30, 2022).

See Note 10 for further information.

December 31, 2021

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Certificates of deposit

We held an investment in a publicly traded company with a carrying value of $ 101.1 million and $ 193.2 million as of March 31, 2022 and December 31, 2021, respectively, recorded as a marketable security.

We recorded $ 92.1 million in unrealized losses related to this investment for the three months ended March 31, 2022 within other income (expense), net on the consolidated statements of operations.

This investment was reclassified from strategic investments to marketable securities in the fourth quarter of 2021.

Gross unrealized losses were not material for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, we considered any decreases in fair value on our marketable securities to be driven by factors other than credit risk, including market risk.

As of March 31, 2022, $ 175.3 million of our total $ 2.6 billion in marketable debt securities have contractual maturities between one and five years .

We held investments in publicly traded companies with an aggregate carrying value of $ 79.3 million and $ 193.2 million as of June 30, 2022 and December 31, 2021, respectively, recorded as marketable securities.

We recorded $ 63.9 million and $ 156.0 million in unrealized losses related to these investments for the three and six months ended June 30, 2022 within other income (expense), net on the consolidated statements of operations.

These investments were reclassified from strategic investments to marketable securities in the fourth quarter of 2021 and second quarter of 2022, following commencement of public market trading.

Gross unrealized losses on marketable debt securities were not material for the three months and six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, we considered any decreases in fair value on our marketable debt securities to be driven by factors other than credit risk, including market risk.

As of June 30, 2022, $ 233.5 million of our total $ 2.5 billion in marketable debt securities have contractual maturities between one and five years .

All other marketable debt securities have contractual maturities less than one year.

W e carry the Convertible Notes at face value less the unamortized debt issuance costs on our consolidated balance sheets and present the fair value for disclosure purposes only.

As of March 31, 2022, the fair value of the 2025 Notes, the 2026 Notes, the 2027 Notes, and the 2028 Notes was $ 508.6 million, $ 1.5 billion, $ 986.1 million, and $ 1.5 billion, respectively.

As of June 30, 2022, the fair value of the 2025 Notes, the 2026 Notes, the 2027 Notes, and the 2028 Notes was $ 283.4 million, $ 805.6 million, $ 816.3 million, and $ 1.0 billion, respectively.

As of December 31, 2021, the fair value of the 2025 Notes, the 2026 Notes, and the 2027 Notes was $ 650.1 million, $ 1.9 billion, and $ 1.1 billion, respectively.

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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.

Income tax expense was $ 8.5 million and $ 1.4 million for the three months ended March 31, 2022 and 2021, respectively.

Income tax expense was $ 7.0 million and $ 15.5 million for the three and six months ended June 30, 2022, respectively, compared to an income tax benefit of $ 1.9 million and $ 0.4 million for the three and six months ended June 30, 2021, respectively.

Accumulated Other Comprehensive Income (Loss)

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Net current period OCI

Balance at March 31, 2022

Balance at June 30, 2022

(1) Realized gains and losses on marketable securities are reclassified from AOCI into other income (expense), net in the consolidated statements of operations.

1 unchanged sentence

The following table lists property and equipment, net by geographic area:

March 31, 2022

June 30, 2022

December 31, 2021

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No individual country exceeded 10% of our total property and equipment, net for any period presented.

Subsequent Events

In July 2022, our Board of Directors authorized a 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, either through open market transactions (including pre-set trading plans) or through other transactions in accordance with applicable securities laws.

Repurchases have been authorized for the next 12 months but the program may be modified, suspended, or terminated at any time.

In July 2022, we entered into a series of agreements with Evan Spiegel, our Chief Executive Officer, and Robert Murphy, our Chief Technology Officer, which included:

(i) employment agreements pursuant to which each individual will continue to serve in their respective roles at the company for an initial term ending on January 1, 2027, (ii) the future declaration and payment of a special dividend of one share of Class A common stock on each outstanding share of our common stock, which shall not be declared and paid until the later of June 30, 2023 and the first business day following the date on which the average of the volume weighted average price per share of Class A common stock equals or exceeds $ 40 per share for 65 consecutive trading days by July 21, 2032, and (iii) (a) the requirement under certain circumstances to convert an equal number of shares of Class B common stock or Class C common stock into Class A common stock in connection with sales by such individual of shares of Class A common stock received in the special dividend, (b) conversion of such individual’s remaining shares of Class C common stock into Class B common stock at such time as such Class C

common stock represents in the aggregate less than 60 % of such individual’s Base Class C Common Stock (as such term is defined in our amended and restated certification of incorporation) and (c) in the event of any sale or liquidation of Snap Inc.

following the special dividend, shares of Class A common stock, Class B common stock, and Class C common stock are to be treated identically, equally and ratably, on a per share basis, with respect to any consideration received.

In July 2022, we amended our certificate of incorporation in connection with the matters described in the preceding paragraph.

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 1. Financial Statements