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Item 1A. Risk Factors

2022-07-22 compared with 2022-04-22 · 123 added, 110 removed, 979 unchanged (19% of the section changed)

You should carefully consider the risks and uncertainties described below, together with all the other information in this Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes.

If any of the following risks actually occurs, our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed.

If any of the following risks actually occurs, (or if any of those discussed elsewhere in this Quarterly Report on Form 10-Q occurs), our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed.

The risks and uncertainties described below are not the only ones we face.

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Below we summarize what we believe are the principal risk factors but these risks are not the only ones we face, and you should carefully review and consider the full discussion of our risk factors in the section titled “Risk Factors”, together with the other information in this Quarterly Report on Form 10-Q.

If any of the following risks actually occurs (or if any of those listed elsewhere in this Quarterly Report on Form 10-Q occurs), our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed.

Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business.

Our Strategy and Advertising Business

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Although we recently achieved profitability in certain periods, we have a history of operating losses and, as a result of our long-term focus, we may prioritize investments and expenses we believe are necessary for our long-term growth over achieving short-term profitability.

Investments in our future, including through new products or acquisitions, are inherently risky and may not pay off, which would adversely affect our ability to settle the principal and interest payments on our outstanding convertible senior notes or other indebtedness when due, and further delay or hinder our ability to attain and sustain profitability.

This in turn would hinder our ability to secure additional financing to meet our current and future financial needs on favorable terms, or at all.

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Our advertising business is most effective when our advertisers succeed.

Driving their success requires continual investment in our advertising products and may be hindered by competitive challenges and various legal, regulatory, and operating system changes that make it more difficult for us to

achieve and demonstrate a meaningful return for our advertisers.

For example, on-going changes to privacy laws and mobile operating systems have made it more difficult for us to measure the effectiveness of advertisements on our services, and alternative methods will take time to develop and become more widely adopted by our advertisers, and may not be as effective as prior methods.

We believe that this impact on our targeting, measurement, and optimization capabilities has negatively affected our operating results.

In addition, our advertising business is seasonal and volatile, which could result in fluctuations in our quarterly revenues and operating results, including the expectations of our business prospects.

Our business and operations have been, and could in the future be, adversely affected by events beyond our control, such as health epidemics, including the COVID-19 pandemic, geo-political events (including the conflict in Ukraine), and economic and macro-economic factors like labor shortages, supply chain disruptions, and inflation impacting the markets and communities in which we and our partners, advertisers, and users operate.

We believe that this impact on our targeting, measurement, and optimization capabilities has

negatively affected our operating results.

In addition, our advertising business is seasonal, volatile, and cyclical, which could result in fluctuations in our quarterly revenues and operating results, including the expectations of our business prospects.

Our business and operations have been, and could in the future be, adversely affected by events beyond our control, such as health epidemics, including the COVID-19 pandemic, and geo-political events, including the conflict in Ukraine.In addition, macro-economic factors like labor shortages, supply chain disruptions, and inflation continue to cause logistical challenges, increased input costs, and inventory constraints for our advertisers, which in turn may also halt or decrease advertising spending, and harm our business.

Our Community and Competition

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If our community does not see the value in our products or brand, or if competitors offer better alternatives, our community could easily switch to other services.

While we have experienced rapid growth in our community over the last few years, we have also experienced declines and there can be no assurance that won’t happen again.

Although we have experienced rapid growth in our community over the last few years, we have also experienced declines and there can be no assurance that won’t happen again.

We have and expect to continue to expand organically and through acquisitions, including in international markets, which we may not be able to effectively manage or scale.

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We primarily rely on Google, Apple, and Amazon to operate our service and provide the mobile operating systems for our applications.

If these partners do not provide their services as we expect, terminate their services, or change or interpret the terms of our agreements or the functionality of their operating systems in ways that are adverse to us, our service may be interrupted and our product experience could be degraded, and these may harm our reputation, increase our costs, or make it harder for us to attain or sustain profitability.

Many other parts of our business depend on partners, including content partners and advertising partners, so our success depends on our ability to attract and retain these partners.

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We may also fail to maintain effective processes that report our metrics or financial results.

Given the complexity of the systems involved and the rapidly changing nature of mobile devices and systems, we expect to encounter issues, particularly if we continue to expand in parts of the world where mobile data systems and connections are less stable.

Given the complexity of the systems involved and the rapidly changing nature of mobile devices and operating systems, we expect to encounter issues, particularly if we continue to expand in parts of the world where mobile data systems and connections are less stable.

We are also subject to complex and evolving federal, state, local, and foreign laws and regulations regarding privacy, data protection, content, taxes, and other matters, which are subject to change and have uncertain interpretations.

Any actual or perceived failure to comply with such legal and regulatory obligations, including in connection with our consent decree with the U.S.

Federal Trade Commission, or any economic or political instability, may adversely impact our business.

Federal Trade Commission, may adversely impact our business.

We also must actively protect our intellectual property.

From time to time, we are subject to various legal proceedings, claims, inquiries, and investigations, including class actions and matters involving intellectual property, that may be costly or distract management.

We are subject to various legal proceedings, claims, class actions, inquiries, and investigations, which may be costly or distract management.

We also rely on a variety of statutory and common-law frameworks for the content we provide our users, including the Digital Millennium Copyright Act, the Communications Decency Act, and the fair-use doctrine, each of which has been subject to adverse judicial, political, and regulatory scrutiny in recent times.

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We need to attract and retain a high caliber team to maintain our competitive position.

We may incur significant costs and expenses in maintaining and growing our team, and may lose valuable members of our team as we compete globally,

including with many of our competitors, for key talent.

We may incur significant costs and expenses in maintaining and growing our team, and may lose valuable members of our team as we compete globally, including with our competitors, for key talent.

A substantial portion of our employment costs is paid in our common stock, the price of which has been volatile, and our ability to attract and retain talent may be adversely affected if our shares decline in value.

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Our ecosystem of users, advertisers, and partners depends on the engagement of our user base.

We have seen the growth rate of our user base decline in the past and it may do so again in the future.

Our user base growth rate has declined in the past and it may do so again in the future.

If we fail to retain current users or add new users, or if our users engage less with Snapchat, our business would be seriously harmed.

We had 332 million DAUs on average in the quarter ended March 31, 2022.

We had 347 million DAUs on average in the quarter ended June 30, 2022.

We view DAUs as a critical measure of our user engagement, and adding, maintaining, and engaging DAUs have been and will continue to be necessary.

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users engage more with competing products instead of ours;

our competitors continue to mimic our products or improve on them, which could harm our user engagement and growth;

our competitors continue to mimic our products or improve on them;

we fail to introduce new and exciting products and services or those we introduce or modify are poorly received;

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there are concerns about the privacy implications, safety, or security of our products;

our partners who provide content to Snapchat do not create content that is engaging, useful, or relevant to users;

our partners who provide content to Snapchat decide not to renew agreements or devote the resources to create engaging content, or do not provide content exclusively to us;

our content partners do not create content that is engaging, useful, or relevant to users;

our content partners decide not to renew agreements or devote the resources to create engaging content, or do not provide content exclusively to us;

advertisers and partners display ads that are untrue, offensive, or otherwise fail to follow our guidelines;

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Because Snapchat is used primarily on mobile devices, the application must remain interoperable with popular mobile operating systems, primarily Android and iOS, application stores, and related hardware, including mobile-device cameras.

The owners and operators of such operating systems and application stores, primarily Google and Apple, each have approval authority over our products and provide consumers with products that compete with ours, and there is no guarantee that any approval will not be rescinded in the future.

The owners and operators of such operating systems and application stores, primarily Google and Apple, each have approval authority over our products and provide consumers with other products that compete with ours, and there is no guarantee that any approval will not be rescinded in the future.

Additionally, mobile devices and mobile-device cameras are manufactured by a wide array of companies.

Those companies have no obligation to test the interoperability of new mobile devices, mobile-device cameras, or related devices with Snapchat, and may produce new products that are incompatible with or not optimal for Snapchat.

We have no control over these operating systems, application stores, or hardware, and any changes to these systems or hardware that degrade our products’ functionality, or give preferential treatment to competitive products, or actions by government authorities that impact our access to these systems or hardware, could seriously harm Snapchat usage.

Our competitors that control the operating systems and related hardware our application runs on could make interoperability of our products with those mobile operating systems more difficult or display their competitive offerings more prominently than ours.

Additionally, our competitors that control the standards for the application stores for their operating systems could make Snapchat, or certain features of Snapchat, inaccessible for a potentially significant period of time or require us to make changes to maintain access.

We plan to continue to introduce new products and features regularly, including some features that may only work on the latest systems and hardware, and have experienced that it takes time to optimize such products and features to function with the variety of existing operating systems, hardware, and standards, impacting the popularity of such products, and we expect this trend to continue.

We have no control over these operating systems, application stores, or hardware, and any changes may degrade our products’ functionality, or give preferential treatment to competitive products.

Actions by government authorities may also impact our access to these systems or hardware and could seriously harm Snapchat usage.

Our competitors that control the operating systems and related hardware could make interoperability of our products more difficult or display their competitive offerings more prominently than ours.

Additionally, our competitors that control the standards for the application stores could make Snapchat, or certain features of Snapchat, inaccessible for a potentially significant period of time or require us to make changes to maintain access.

We plan to continue to introduce new products and features regularly, including some features that may only work on the latest systems and hardware, and have experienced that it takes time to optimize new products and features to function with the variety of existing operating systems, hardware, and standards, impacting the popularity of such products, and we expect this trend to continue.

Moreover, our products require high-bandwidth data capabilities.

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The core aspects of that order have been upheld by the United States Court of Appeals for the District of Columbia Circuit, but a number of states have adopted or are considering legislation or executive actions to impose state-level open internet rules, and those actions have been or can be expected to be challenged in court.

More recently, U.S.

President Biden issued an executive order encouraging the FCC to restore the open internet rules.

More recently, President Biden issued an executive order encouraging the FCC to restore the open internet rules.

We cannot predict whether the FCC order or state initiatives regulating providers will ultimately be upheld, modified, overturned, or vacated by further legal action, federal legislation, or the FCC, or the degree to which such outcomes would adversely affect our business, if at all.

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We expect this trend to continue for the foreseeable future.

Although we have and continue to try to establish longer-term advertising commitments with advertisers, most advertisers do not have long-term advertising commitments with us, and our efforts to establish long-term commitments may not succeed.

Although we try to establish longer-term advertising commitments with advertisers, most advertisers do not have long-term advertising commitments with us, and our efforts to establish long-term commitments may not succeed.

We are still early in developing our advertising business.

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Advertisers will not continue to do business with us if we do not deliver advertisements in an effective manner, or if they do not believe that their investment in advertising with us will generate a competitive return relative to other alternatives.

As our business continues to develop, including globally, there may be new or existing advertisers or resellers, or advertisers or resellers from different geographic regions that contribute more significantly to our total revenue.

Any economic or political instability, whether as a result of the COVID-19 pandemic, the conflict in Ukraine, or otherwise, in a specific country or region may negatively impact the global or local economy, advertising ecosystem, our customers and their budgets with us, or our ability to forecast our advertising revenue, and our business would be seriously harmed.

As our business continues to develop, there may be new or existing advertisers or resellers, or advertisers or resellers from different geographic regions that contribute more significantly to our total revenue.

Any economic or political instability, whether as a result of the COVID-19 pandemic, the conflict in Ukraine, the macro-economic climate, or otherwise, in a specific country or region may negatively impact the global or local economy, advertising ecosystem, our customers and their budgets with us, or our ability to forecast our advertising revenue, and our business would be seriously harmed.

Moreover, we rely heavily on our ability to collect and disclose data and metrics to our advertisers so we can attract new advertisers and retain existing advertisers.

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The CCPA and CPRA also provide for civil penalties for violations, as well as a private right of action for data breaches, which may increase the likelihood and cost of data breach litigation.

The potential effects of this legislation, including any regulations implemented by the legislation, are far-reaching, uncertain, and evolving, and may require us to modify our data processing practices and policies and incur substantial costs and expenses in an effort to comply.

The potential effects of these laws, including any related regulations, are far-reaching, uncertain, and evolving, and may require us to modify our data processing practices and policies and incur substantial costs and expenses in an effort to comply.

Other state, federal, and foreign legislative and regulatory bodies have also implemented or may implement similar legislation regarding the handling of personal data.

For example, in the United States, the Commonwealth of Virginia enacted the Consumer Data Protection Act and the State of Colorado enacted the Colorado Privacy Act, both of which take effect January 1, 2023 and may impose obligations similar to or more stringent than those we may face under other data protection laws.

For example, in the United States, Virginia enacted the Consumer Data Protection Act and Colorado enacted the Colorado Privacy Act, both of which take effect January 1, 2023 and may impose obligations similar to, more stringent than, or in conflict with those we may face under other data protection laws.

Further, changes in the European Union’s Electronic Communications Code, which became effective in December 2020, may result in the expanded applicability of the European Union’s ePrivacy Directive over parts of our services, requiring us to make changes to how we process and store certain types of communications data of users in the European Union, which could have a material impact on the availability of data we rely on to improve and personalize our products and features.

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While we implement alternative solutions, we are subject to rules and standards set by the owners of such operating systems which may be unclear, change or be interpreted in a manner adverse to us and require us to halt or change our solutions, any of which could seriously harm our business.

In addition, if we are unable to mitigate these and future developments, and alternative methods do not become widely adopted by our advertisers, then our targeting, measurement, and optimization capabilities will be materially and adversely affected, which would in turn continue to negatively impact our advertising revenue.

In addition, if we are unable to mitigate these and future developments, and alternative solutions do not become widely adopted by our advertisers, then our targeting, measurement, and optimization capabilities will be materially and adversely affected, which would in turn continue to negatively impact our advertising revenue.

Any adverse effects could be particularly material to us because we are still early in building our advertising business.

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lack of ad creative availability by our advertising partners;

a decline in our available content, including if our partners who provide content do not renew agreements, devote the resources to create engaging content, or provide content exclusively to us;

a decline in our available content, including if our content partners do not renew agreements, devote the resources to create engaging content, or provide content exclusively to us;

decreases in the perceived quantity, quality, usefulness, or relevance of the content provided by us, our community, or partners;

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Our two co-founders have control over all stockholder decisions because they control a substantial majority of our voting stock.

Our two co-founders, Evan Spiegel and Robert Murphy, control over 99% of the voting power of our outstanding capital stock as of March 31, 2022, and Mr.

Our two co-founders, Evan Spiegel and Robert Murphy, control over 99% of the voting power of our outstanding capital stock as of June 30, 2022, and Mr.

Spiegel alone can exercise voting control over a majority of our outstanding capital stock.

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In addition, in October 2016, we issued a dividend of one share of non-voting Class A common stock to all our equity holders, which will prolong our co-founders’ voting control because our co-founders are able to liquidate their holdings of non-voting Class A common stock without diminishing their voting control.

In the future, our board of directors may, from time to time, decide to issue special or regular stock dividends in the form of Class A common stock, and if we do so our co-founders’ control could be further prolonged.

Furthermore, in July 2022, we announced the future declaration and payment of a special dividend of one share of Class A Common stock on each outstanding share of Snap’s common stock, which will be subject to certain triggering conditions.

In the future, our board of directors may, from time to time, decide to issue additional special or regular stock dividends in the form of Class A common stock, and if we do so our co-founders’ control could be further prolonged.

This concentrated control could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that our other stockholders support.

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The global COVID-19 pandemic adversely impacted, and may continue to adversely impact, many aspects of our business.

As some of our advertisers experience downturns or uncertainty in their own business operations and revenue because of the economic effects resulting from the spread of COVID-19 and the emergence of variants, they halted or decreased or may halt, decrease, or continue to decrease, temporarily or permanently, their advertising spending or may focus their advertising spending more on other platforms, all of which may result in decreased advertising revenue.

shortages, supply chain disruptions, and inflation continue to cause logistical challenges, increased input costs, and inventory constraints for our advertisers, which in turn may also halt or decrease advertising spending.

decreased or may halt, decrease, or continue to decrease, temporarily or permanently, their advertising spending or may focus their advertising spending more on other platforms, all of which may result in decreased advertising revenue.

Labor shortages, supply chain disruptions, and inflation continue to cause logistical challenges, increased input costs, and inventory constraints for our advertisers, which in turn may also halt or decrease advertising spending.

Furthermore, a portion of our advertising revenue is related to in-person events or activities, such as sporting events, music festivals, and in-person learning, which were postponed, cancelled, or limited during the COVID-19 pandemic.

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In addition, while the potential impact and duration of the COVID-19 pandemic on the global economy and our business in particular may be difficult to assess or predict, the COVID-19 pandemic has resulted in, and may continue to result in, significant volatility and disruption of global financial markets, which could negatively affect our liquidity in the future.

The global impact of COVID-19 has and continues to rapidly evolve, and we will continue to monitor the situation closely.

While there have been vaccines developed and administered, and the spread of COVID-19 may eventually be contained or mitigated, we cannot predict the rate of vaccine adoption, the roll-out globally, or the efficacy of such vaccines, including against variants that emerge, and we do not yet know how businesses, advertisers, or our partners will operate in a post-COVID-19 environment.

The global impact of COVID-19 continues to evolve, and we will continue to monitor the situation closely.

Although the spread of COVID-19 may eventually be contained or mitigated, we do not yet know how businesses, advertisers, or our partners will operate in a post-COVID-19 environment.

Our users may change how they use our products and services in an environment where the perceived risk of COVID-19 and regulations surrounding it have changed.

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We expect to continue this support in the future.

In addition, we have offices, hardware, and other assets in Ukraine that may be at risk of destruction or theft.

We have incurred, and will likely continue to incur, costs to

support our team members and reorganize our operations to address these ongoing challenges.

In addition, we have offices, hardware, and other

assets in Ukraine that may be at risk of destruction or theft.

We have incurred, and will likely continue to incur, costs to support our team members and reorganize our operations to address these ongoing challenges.

In addition, our management has spent significant time and attention on these and related events.

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In 2018, we believe our DAUs declined primarily due to changes in the design of our application and continued performance issues with the Android version of our application.

The short- and long-term impact of any major change, like our early 2018 application redesign and the rewrite of our application for Android users in 2019, or even a less significant change such as a refresh of the application or a feature change, is difficult to predict.

The short- and long-term impact of any major change, like our 2018 application redesign and the rewrite of our application for Android users in 2019, or even a less significant change such as a refresh of the application or a feature change, is difficult to predict.

Although we believe that these decisions will benefit the aggregate user experience and improve our financial performance over the long term, we may experience disruptions or declines in our DAUs or user activity broadly or concentrated on certain portions of our application.

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These new behaviors, such as swiping and tapping in the Snapchat application, are not always intuitive to users.

This can create a lag in adoption of new products and new user additions related to new products.

We believe this has not hindered our user growth or engagement, but that may be the result

of a large portion of our user base being in a younger demographic and more willing to invest the time to learn to use our products most effectively.

This can create a lag in adoption of new products and new user

additions related to new products.

We believe this has not hindered our user growth or engagement, but that may be the result of a large portion of our user base being in a younger demographic and more willing to invest the time to learn to use our products most effectively.

To the extent that future users, including those in older demographics, are less willing to invest the time to learn to use our products, and if we are unable to make our products easier to learn to use, our user growth or engagement could be affected, and our business could be harmed.

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In addition, we have invested, and expect to continue to invest, in new lines of business, new products, and other initiatives to increase our user base and user activity, and attempt to monetize the platform.

For example, in 2019 we launched Snap Games, a live, multi-player gaming experience, and in November 2020 we launched Spotlight, a new entertainment platform for user-generated content within Snapchat.

Such new lines of business, new products, and other initiatives may be costly, difficult to operate, increase product liability and litigation risk, and divert management’s attention, and there is no guarantee that they will be positively received by our community or provide positive returns on our investment.

For example, in 2020 we launched Spotlight, a new entertainment platform for user-generated content within Snapchat, in June 2022 we launched Snapchat+, a subscription product that gives subscribers access to exclusive, experimental, and pre-release features, and in July 2022, we launched Snapchat for Web, a browser-based product that brings Snapchat’s signature calling and ephemeral messaging capabilities to the web.

Such new lines of business, new products, and other initiatives may be costly, difficult to operate and monetize, increase product liability and litigation risk, and divert management’s attention, and there is no guarantee that they will be positively received by our community or provide positive returns on our investment.

In certain cases, new products that we develop may require regulatory approval prior to launch or may require us to comply with additional regulations or legislation.

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We believe that our ability to compete effectively depends on many factors, many of which are beyond our control, including:

the usefulness, novelty, performance, and reliability of our products compared to our competitors;

the usefulness, novelty, performance, and reliability of our products compared to our competitors’ products;

the number and demographics of our DAUs;

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We began commercial operations in 2011 and we have historically experienced net losses and negative cash flows from operations.

As of March 31, 2022, we had an accumulated deficit of $8.6 billion and for the three months ended March 31, 2022, we experienced a net loss of $359.6 million.

As of June 30, 2022, we had an accumulated deficit of $9.1 billion and for the six months ended June 30, 2022, we experienced a net loss of $422.1 million.

We expect our operating expenses to increase in the future as we expand our operations.

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If our security is compromised or if our platform is subjected to attacks that frustrate or thwart our users’ ability to access our products and services, our users, advertisers, and partners may cut back on or stop using our products and services altogether, which could seriously harm our business.

Our efforts to protect the information that our users and advertisers have shared with us may be unsuccessful due to the actions of third parties, software bugs or other technical malfunctions, employee error or malfeasance, or other factors.

Our efforts to protect the information that our users, advertisers, and partners have shared with us may be unsuccessful due to the actions of third parties, software bugs or other technical malfunctions, employee error or malfeasance, or other factors.

In addition, third parties may attempt to fraudulently induce employees, users, or advertisers to disclose information to gain access to our data or our users’ or advertisers’ data.

In a hybrid or remote working environment, we and our employees may be more susceptible to such attacks.

If any of these events occur, our or our users’ or advertisers’ information could be accessed or disclosed improperly.

We have previously suffered the loss of employee information related to an employee error.

If any of these events occur, our or our users’, advertisers’, or employees’ information could be accessed or disclosed improperly.

We have previously suffered the loss of confidential information related to employee error and vendor breaches.

Our Privacy Policy governs how we may use and share the information that our users have provided us.

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Any of these occurrences could seriously harm our business.

Cyberattacks and ransomware attacks are becoming increasingly prevalent and severe.

Cyberattacks and cyberextortion incidents are becoming increasingly prevalent and severe.

To alleviate the financial, operational, and reputational impact of these attacks, it may be preferable to make extortion payments, but we may be unwilling or unable to do so, including, for example, if applicable laws or regulations prohibit such payments.

And, even if we make such payments, cyber threat actors may still disclose data, engage in further extortion, or otherwise harm our systems or data.

Similarly, supply chain attacks have increased in frequency and severity, and we cannot guarantee that third parties in our supply chain have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our platform, systems, and networks or the systems and networks of third parties that support us and our services.

Any such attack, or the perception that one has occurred, could result in a loss of our users’ or advertisers’ confidence in the security of our platform and damage to our brand, reduce the demand for our products and services, disrupt business operations, result in the exfiltration of proprietary data, including source code, require us to spend material resources to investigate or correct the breach and to prevent future security breaches and incidents, expose us to legal liabilities, including litigation, regulatory enforcement, and indemnity obligations, claims by our customers or other relevant parties that we have failed to comply with contractual obligations, and seriously harm our business.

We are also reliant on third party and open source software that may contain bugs, vulnerabilities, or errors that could be exploited or disclosed before a patch or fix is available.

Any attacks on our supply chain or software, or the perception that one has occurred, could result in a loss of our users’ or advertisers’ confidence in the security of our platform and damage to our brand, reduce the demand for our products and services, disrupt business operations, result in the exfiltration of employee, personal, or proprietary data, including source code, require us to spend material resources to investigate or correct the breach and to prevent future security breaches and incidents, expose us to legal liabilities, including litigation, regulatory enforcement, and indemnity obligations, claims by our customers or other relevant parties that we have failed to comply with contractual obligations or our policies, and seriously harm our business.

While we maintain a bug bounty program to assist us in identifying vulnerabilities in our products before they are launched or exploited by cyber threat actors, there is no guarantee that we will be able to discover all such threats to our service.

Cyber threat actors have also increased the complexity of their attempts to compromise user accounts, despite our defenses and detection mechanisms to prevent these account takeovers.

User credentials may be obtained through breaches of non-Snap platforms and services, password stealing malware, social engineering, or other tactics and techniques and used to launch coordinated attacks.

These attacks may involve using our service to spam or abuse other users, download user personal data, further compromise additional user accounts, or to compromise employee account credentials or social engineer employees into granting further access to our systems.

If these cyber threat actors are successful or there is a perception that such an attack has occurred, we may be required to notify our users and regulators, and such attacks may disrupt our business operations and users’ access to the platform, harm other users, expose us to legal liabilities, and cause us to lose the trust of our users.

We also are or may in the future be subject to many federal, state, local, and foreign laws and regulations, including those related to privacy, rights of publicity, content, data protection, intellectual property, health and safety, competition, protection of minors, consumer protection, employment, money transmission, import and export restrictions, gift cards, electronic funds transfers, anti-money laundering, advertising, algorithms, encryption, and taxation.

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We regularly review metrics, including our DAUs and ARPU metrics, to evaluate growth trends, measure our performance, and make strategic decisions.

These metrics are calculated using internal company data gathered on an analytics

platform that we developed and operate and our methodology has not been validated by an independent third party.

These metrics are calculated using internal company data gathered on an analytics platform that we developed and operate and our methodology has not been validated by an independent third party.

While these metrics are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring how our products are used across large populations globally.

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This generally occurs because of technical issues, for instance when our systems do not record data from a user’s application or when a user opens the Snapchat application and contacts our servers but is not recorded as an active user.

We continually seek to address these technical issues and improve our accuracy, such as comparing our active users and other metrics with data received from other pipelines, including data recorded by our servers and systems.

We continually seek to address these technical issues and improve our accuracy, such as comparing our active users and other metrics with data received from other pipelines, including data

recorded by our servers and systems.

But given the complexity of the systems involved and the rapidly changing nature of mobile devices and systems, we expect these issues to continue, particularly if we continue to expand in parts of the world where mobile data systems and connections are less stable.

If advertisers, partners, or investors do not perceive our user, geographic, or other demographic metrics to be accurate representations of our user base, or if we discover material inaccuracies in our user, geographic, or other demographic metrics, our reputation may be seriously harmed.

Our advertisers and partners may also be less willing to allocate their budgets or resources to Snapchat, which could seriously harm our business.

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We cannot be certain that the technologies that we have developed to repel spamming attacks will be able to eliminate all spam messages from our products.

Our actions to combat spam may also require diversion of significant time and focus from improving our products.

Our actions to combat spam may also divert significant time and focus from improving our products.

As a result of spamming activities, our users may use our products less or stop using them altogether, and result in continuing operational cost to us.

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Combating these bad actors requires our teams to divert significant time and focus from improving our products.

we may not be able to control or stop Snapchat from becoming the preferred application of use by these bad actors, which may become public knowledge and seriously harm our reputation or lead to lawsuits or attention from regulators.

In addition, we may not be able to control or stop Snapchat from becoming the preferred application of use by these bad actors, which may become public knowledge and seriously harm our reputation or lead to lawsuits or attention from regulators.

If these activities increase on Snapchat, our reputation, user growth and user engagement, and operational cost structure could be seriously harmed.

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Many of these laws, regulations, and executive actions are subject to change and uncertain interpretation, and could result in investigations, claims, changes to our business practices, increased cost of operations, and declines in user growth, retention, or engagement, any of which could seriously harm our business.

We are subject to a variety of laws, regulations, and executive actions in the United States and other countries that involve matters central to our business, including user privacy, security, rights of publicity, data protection, content, intellectual property, distribution, electronic contracts and other communications, competition, protection of minors, consumer protection, taxation, and online-payment services.

We are subject to a variety of laws, regulations, and executive actions that involve matters central to our business, including user privacy, security, rights of publicity, data protection, content, intellectual property, distribution, electronic contracts and other communications, competition, protection of minors, consumer protection, taxation, and online-payment services.

These laws, regulations, and executive actions can be particularly restrictive in countries outside the United States.

Both in the United States and abroad, these laws, regulations, and executive actions constantly evolve, remain subject to significant change, and may be issued with limited advance notice.

Both in the United States and abroad, these laws, regulations, and executive actions constantly evolve, and may be issued or changed with limited advance notice.

For example, an executive order under the prior U.S.

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our ability to attract and retain advertisers in a particular period;

seasonal or other fluctuations in spending by our advertisers and product usage by our users, each of which may change as our product offerings evolve or as our business grows or as a result of unpredictable events such as the COVID-19 pandemic, inflationary pressures, or the conflict in Ukraine;

the number of advertisements shown to users;

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the effect of war or other armed conflict on our workforce, operations, or the global economy;

changes in domestic and global business or macro-economic conditions, including as a result of the current COVID-19 pandemic or the conflict in Ukraine, and resulting labor shortages, supply chain disruptions, and inflation.

changes in domestic and global business or macro-economic conditions, including as a result of the COVID-19 pandemic or the conflict in Ukraine, and resulting labor shortages, supply chain disruptions, and inflation.

If we are unable to continue to successfully grow our user base and further monetize our products, our business will suffer.

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We are continuously seeking to balance the objectives of our users and advertisers with our desire to provide an optimal user experience.

We do not seek to monetize all of our products nor do we focus our efforts on users with higher ARPU, and we may not be successful in achieving a balance that continues to attract and retain users and advertisers.

We do not seek to monetize all of our products nor do we solely focus our efforts on users with higher ARPU, and we may not be successful in achieving a balance that continues to attract and retain users and advertisers.

We focus on growing engagement across our service, and from time to time our efforts may reduce user activity with certain monetizable products in favor of other products we do not currently monetize.

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Additionally, we may not succeed in further monetizing Snapchat.

We currently monetize Snapchat by displaying in the application advertisements that we sell and advertisements sold by our partners.

We currently monetize Snapchat by displaying advertisements sold by us and our partners.

As a result, our financial performance and ability to grow revenue could be seriously harmed if:

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Global climate change could also result in natural disasters occurring more frequently or with more intense effects, which could cause business interruptions.

Wars or other armed conflicts, including Russia’s invasion of Ukraine, could damage or diminish our access to our technology infrastructure or regional networks, disrupting our services which could seriously harm our business and financial performance.

Wars or other armed conflicts, including Russia’s invasion of Ukraine, could damage or

diminish our access to our technology infrastructure or regional networks, disrupting our services which could seriously harm our business and financial performance.

Substantially all of our network infrastructure is provided by third parties, including Google Cloud and AWS.

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We will also continue to attempt to find effective ways to show our community new and existing products and alert them to events, holidays, relevant content, and meaningful opportunities to connect with their friends.

These methods may provide temporary increases in

engagement that may ultimately fail to attract and retain users.

These methods may provide temporary increases in engagement that may ultimately fail to attract and retain users.

Our culture also prioritizes our long-term user engagement over short-term financial condition or results of operations.

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In any of these cases, we may be required to expend significant time and expense to prevent infringement or to enforce our rights.

Although we have taken measures to protect our proprietary rights, there can be no assurance that others will not offer products or concepts that are substantially similar to ours and compete with our business.

Although we have taken measures to protect our proprietary rights, there can be

no assurance that others will not offer products or concepts that are substantially similar to ours and compete with our business.

If we are unable to protect our proprietary rights or prevent unauthorized use or appropriation by third parties, the value of our brand and other intangible assets may be diminished, and competitors may be able to more effectively mimic our service and methods of operations .

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Foreign data protection, privacy, consumer protection, content regulation, and other laws and regulations are often more restrictive than those in the United States.

Foreign governments may censor Snapchat in their countries, restrict access to

Snapchat from their countries entirely, impose other restrictions that may affect their citizens’ ability to access Snapchat for an extended period of time or even indefinitely, require data localization, or impose other laws or regulations that we cannot comply with, would be difficult for us to comply with, or would require us to rebuild our products or the infrastructure for our products.

Foreign governments may censor Snapchat in their countries, restrict access to Snapchat from their countries entirely, impose other restrictions that may affect their citizens’ ability to access Snapchat for an extended period of time or even indefinitely, require data localization, or impose other laws or regulations that we cannot comply with, would be difficult for us to comply with, or would require us to rebuild our products or the infrastructure for our products.

Such restrictions may also be implemented or lifted selectively to target or benefit other companies or products, which may result in sudden or unexpected fluctuations in competition in regions where we operate.

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Because many of our users join Snapchat on the invitation or recommendation of a friend or family member, one of our primary focuses is on ensuring that our users continue to view Snapchat and our brand favorably so that these referrals continue.

Maintaining and enhancing our brand will depend largely on our ability to continue to provide useful, novel, fun, reliable, trustworthy, and innovative products, which we may not do successfully.

Maintaining and enhancing our brand will

depend largely on our ability to continue to provide useful, novel, fun, reliable, trustworthy, and innovative products, which we may not do successfully.

We may introduce new products, make changes to existing products and services, or require our users to agree to new terms of service related to new and existing products that users do not like, which may negatively affect our brand in the short term, long term, or both.

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If we fail to successfully promote and maintain our brand or if we incur excessive expenses in this effort, our business may be seriously harmed.

We and our founders also receive a high degree of media coverage globally.

In the past, we have experienced, and we expect that we will continue to experience, media, legislative, and regulatory scrutiny.

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We have been, are currently, and may in the future be subject to regulatory inquiries, investigations, and proceedings in the future, which could cause us to incur substantial costs or require us to change our business practices in a way that could seriously harm our business.

We have been, are currently, and may in the future be subject to investigations and inquiries from government entities.

These investigations and inquiries, and our compliance with any associated regulatory orders or consent decrees, may require us to change our policies or practices, subject us to substantial monetary fines or other penalties or sanctions, result in increased operating costs, divert management’s attention, harm our reputation, and require us to incur significant legal and other expenses, any of which could seriously harm our business.

We have been, are currently, and may in the future be subject to inquiries, investigations, and proceedings instituted by government entities.

These actions, and our compliance with any associated regulatory orders or consent decrees, may require us to change our policies or practices, subject us to substantial monetary fines or other penalties or sanctions, result in increased operating costs, divert management’s attention, harm our reputation, and require us to incur significant legal and other expenses, any of which could seriously harm our business.

We are currently, and expect to be in the future, party to patent lawsuits and other intellectual property claims that are expensive and time-consuming.

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District Court for the District of Delaware against us, our subsidiary Zenly, and certain of our respective employees alleging that we misappropriated various trade secrets regarding map technology used in Snapchat’s and Zenly’s map products and that the Snapchat and Zenly applications infringe a You Map patent.

we believe we have meritorious defenses to these claims, an unfavorable outcome in these and other similar lawsuits could seriously harm our business.

While we believe we have meritorious defenses to these claims, an unfavorable outcome in these and other similar lawsuits could seriously harm our business.

If these or other matters continue in the future or we need to enter into licensing arrangements, which may not be available to us or on terms favorable to us, it may increase our costs and decrease the value of our products, and our business could be seriously harmed.

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Congress and the Executive branch were enacted, such changes may decrease the protections provided by the CDA and expose us to lawsuits, penalties, and additional compliance obligations.

If courts begin to interpret the CDA more narrowly than they have historically done, this could expose us to additional lawsuits and potential judgments and seriously harm our business.

Moreover, some of these statutes and doctrines that we rely on provide protection only or primarily in the United States.

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We anticipate that we will continue to be a target for lawsuits in the future.

Because we have millions of users, class-action lawsuits against us that are purportedly filed by or on behalf of users typically claim enormous monetary damages in the aggregate even if the alleged per-user harm is small or non-existent.

Because we have millions of users, class-action lawsuits against us that are purportedly filed by or on behalf of users typically claim

enormous monetary damages in the aggregate even if the alleged per-user harm is small or non-existent.

For example, in November 2020, a putative class filed an action against us in Illinois, alleging that we violated Illinois’ Biometric Information Privacy Act, or BIPA, with respect to many Illinois users of Snapchat and that we are liable to those users for statutory damages.

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Some plaintiffs’ attorneys have also indicated a desire to initiate arbitrations against us, arguing that we violated BIPA, in some cases on behalf of large numbers of Illinois users.

We believe we have meritorious defenses to these lawsuits and arbitrations, but an unfavorable outcome in these lawsuits or arbitrations could seriously harm our business.

We believe we have meritorious defenses to these lawsuits and arbitrations and are actively engaged in resolving these matters , but an unfavorable outcome in these lawsuits or arbitrations could seriously harm our business.

Similarly, because we have a large number of stockholders, class-action lawsuits on securities theories typically claim enormous monetary damages in the aggregate even if the alleged loss per stockholder is small.

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For example, we do not monitor or edit the vast majority of content that is communicated through Snapchat, and such content may expose us to lawsuits.

This risk is enhanced in certain jurisdictions outside the United States where our protection from liability for third-party actions may be unclear or evolving and where we may be less protected under local laws than we are in the United States.

This risk is enhanced in certain jurisdictions outside the United States where our protection from liability for third-party actions may be less than the protection that exists in the United States.

For example, in April 2019, the European Union passed a directive expanding online platform liability for copyright infringement and regulating certain uses of news content online, which member states were required to implement by June 2021.

In addition, legislation in Germany may impose significant fines for failure to comply with certain content removal and

disclosure obligations.

In addition, legislation in Germany may impose significant fines for failure to comply with certain content removal and disclosure obligations.

Numerous other countries in Europe, the Middle East, Asia-Pacific, and Latin America are considering or have implemented similar legislation imposing penalties for failure to remove certain types of content or follow certain processes.

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In the future, as our international operations increase, or more of our expenses are denominated in currencies other than the U.S.

dollar, our operating results may be more greatly affected by fluctuations in the exchange rates of the currencies in which we do business.

dollar, our operating results may be more greatly affected by fluctuations in the exchange rates of the currencies in which we do

In addition, as our international operations and sales continue to grow, we are subject to a variety of risks inherent in doing business internationally, including:

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As part of our business strategy, we have made and intend to make acquisitions to add specialized team members and complementary companies, products, and technologies, as well as investments in public and private companies in furtherance of our strategic objectives.

Our ability to acquire and successfully integrate larger or more complex companies, products, and technologies is unproven.

Our ability to acquire and successfully integrate larger or more complex companies, products, and

technologies is unproven.

In the future, we may not be able to find other suitable acquisition or investment candidates, and we may not be able to complete acquisitions or investments on favorable terms, if at all.

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Goodwill is required to be tested for impairment at least annually.

As of March 31, 2022, we had recorded a total of $1.9 billion of goodwill and intangible assets, net related to our acquisitions.

As of June 30, 2022, we had recorded a total of $1.9 billion of goodwill and intangible assets, net related to our acquisitions.

An adverse change in market conditions, particularly if such change has the effect of changing one of our critical assumptions or estimates, could result in a change to the estimation of fair value that could result in an impairment charge to our goodwill or intangible assets.

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If we sell shares on behalf of our team members, although those newly issued shares should not be dilutive, such sales to the market could result in a decline to our stock price.

If we use our existing cash, or if our cash reserves are not sufficient, we may choose to issue equity securities or borrow funds under our revolving credit facility.

If we use our existing cash, or if our cash reserves are not sufficient,

we may choose to issue equity securities or borrow funds under our revolving credit facility.

In such an event, we cannot assure you that we will be able to successfully match the proceeds of any such equity financing to the then applicable tax liability, and any such equity financing could result in a decline in our stock price and be dilutive to existing stockholders.

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Furthermore, any adverse change in our suppliers’ or contract manufacturers’ financial or business condition or our relationship with them could disrupt our ability to supply our products.

If we change our suppliers or contract manufacturers, or shift to more internal manufacturing operations, we may lose revenue, incur increased costs, and damage our reputation

If we change our suppliers or contract manufacturers, or shift to more internal manufacturing operations, we may lose revenue, incur increased costs, and damage our reputation and brand.

Qualifying and commencing operations with a new supplier or contract manufacturer is expensive and time-consuming.

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Unless there is an exemption, we must obtain regulatory approval from the FDA and corresponding agencies, or other applicable governmental authorities, before we can market or sell a new regulated product or make a significant modification to an existing product.

Obtaining regulatory clearances to market a medical device or other regulated products can be costly and time-consuming, and we may not be able to obtain these clearances or approvals on a timely basis, or at all, for future products.

Obtaining regulatory clearances to market a medical device or other regulated products can be costly and time-consuming, and we may not be able

to obtain these clearances or approvals on a timely basis, or at all, for future products.

Any delay in, or failure to receive or maintain, clearance or approval for any products under development could prevent us from launching new products.

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In addition, we may incur significant costs to accommodate a hybrid environment, as we may need to expend resources to keep both an office environment and remote work environment available to our employees.

A remote or hybrid environment may also make our systems and technology more susceptible to cyberattacks, viruses, and other intrusions as we will have a more distributed employee technology and

network structure.

A remote or hybrid environment may also make our systems and technology more susceptible to cyberattacks, viruses, and other intrusions as we will have a more distributed employee technology and network structure.

Any such issues caused or amplified by a remote or hybrid work environment could increase our costs and negatively impact our operations.

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We cannot be certain that additional financing will be available on reasonable terms when needed, or at all, which could seriously harm our business.

We have incurred net losses and negative cash flow from operations in prior periods, and we may not achieve or maintain profitability.

We have incurred net losses and negative cash flow from operations in prior periods, and we may not maintain profitability.

As a result, we may need additional financing.

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As a result, all matters submitted to stockholders will be decided by the vote of holders of Class B common stock and Class C common stock.

As of March 31, 2022, Mr.

As of June 30, 2022, Mr.

Spiegel and Mr.

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Shares of Class A common stock were sold in our IPO in March 2017 at a price of $17.00 per share.

Since then, the trading price of our Class A common stock has ranged from $4.82 to $83.34 through March 31, 2022.

Since then, the trading price of our Class A common stock has ranged from $4.82 to $83.34 through June 30, 2022.

Declines or volatility in our trading price could make it more difficult to attract and retain talent, adversely impact employee retention and morale, and may require us to issue more equity to incentivize team members which could dilute stockholders.

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Any litigation could subject us to substantial costs, divert resources and the attention of management from our business, and seriously harm our business.

We may not realize the anticipated long-term stockholder value of our stock repurchase program and any failure to repurchase our Class A common stock after we have announced our intention to do so may negatively impact our stock price.

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.

Any failure to repurchase stock after we have announced our intention to do so may negatively impact our reputation and investor confidence in us and may negatively impact our stock price.

The existence of a stock repurchase program could cause our stock price to trade higher than it otherwise would be and could potentially reduce the market liquidity for our stock.

Although our stock repurchase program is intended to enhance long-term stockholder value, there is no assurance it will do so because the market price of our Class A common stock may decline below the levels at which we repurchased shares and short-term stock price fluctuations could reduce the effectiveness of this program.

Repurchasing our Class A common stock will reduce the amount of cash we have available to fund working capital, capital expenditures, strategic acquisitions or business opportunities, and other general corporate purposes, and we may fail to realize the anticipated long-term stockholder value of the stock repurchase program.

Conversions or exchanges of the Convertible Notes may dilute the ownership interest of our stockholders or may otherwise affect the market price of our Class A common stock.

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On conversion of the Convertible Notes, we have the option to pay or deliver, as the case may be, cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock.

If we elect to settle our conversion

obligation in shares of our Class A common stock or a combination of cash and shares of our Class A common stock, any sales in the public market of our Class A common stock issuable on such conversion could adversely affect prevailing market prices of our Class A common stock.

If we elect to settle our conversion obligation in shares of our Class A common stock or a combination of cash and shares of our Class A common stock, any sales in the public market of our Class A common stock issuable on such conversion could adversely affect prevailing market prices of our Class A common stock.

In addition, the existence of the Convertible Notes may encourage short selling by market participants because the conversion of the Convertible Notes could be used to satisfy short positions, or anticipated conversion of the Convertible Notes into shares of our Class A common stock, any of which could depress the market price of our Class A common stock.

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The Convertible Notes are convertible at the option of the holder.

In the event the conditions for optional conversion of the 2025 Notes, 2026 Notes, 2027 Notes, or 2028 Notes by holders are met before the close of business on the business day immediately preceding February 1, 2025, May 1, 2026, February 1, 2027, or December 1, 202 7 , respectively, holders of the applicable Convertible Notes will be entitled to convert the Convertible Notes at any time during specified periods at their option.

If one or more holders elect to convert their Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A common stock (other than paying cash in lieu of delivering any fractional share), we may settle all or a portion of our conversion obligation in cash, which could adversely affect our liquidity.

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The counterparties to these hedging positions or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our Class A common stock or purchasing or selling our Class A common stock in secondary market transactions prior to the maturity of the Convertible Notes (and are likely to do so during any observation period related to a conversion of Convertible Notes or following any repurchase of Convertible Notes by us on any fundamental change repurchase date or otherwise).

This activity could cause or avoid an increase or a decrease in the

market price of our Class A common stock or the Convertible Notes.

This activity could cause or avoid an increase or a decrease in the market price of our Class A common stock or the Convertible Notes.

In addition, if any such hedging positions fail to become effective, the counterparties to these hedging positions or their respective affiliates may unwind their hedge positions, which could adversely affect the value of our Class A common stock.

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For example, the Indentures require us, at the holders’ election, to repurchase the Convertible Notes for cash on the occurrence of a fundamental change and, in certain circumstances, to increase the conversion rate for a holder that converts its Convertible Notes in connection with a make-whole fundamental change.

A takeover of us may trigger the requirement that we repurchase the Convertible Notes or increase the conversion rate, which could make it more costly for a third party to acquire us.

takeover of us may trigger the requirement that we repurchase the Convertible Notes or increase the conversion rate, which could make it more costly for a third party to acquire us.

The Indentures also prohibit us from engaging in a merger or acquisition unless, among other things, the surviving entity assumes our obligations under the Convertible Notes and the Indentures.

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If our existing stockholders, including employees and service providers who obtain equity, sell, or indicate an intention to sell, substantial amounts of our Class A common stock in the public market, the trading price of our Class A common stock could decline.

As of March 31, 2022, we had outstanding a total of 1.4 billion shares of Class A common stock, 22.7 million shares of Class B common stock, and 231.6 million shares of Class C common stock.

In addition, as of March 31, 2022, 74.4 million shares of Class A common stock and 0.6 million shares of Class B common stock were subject to outstanding stock options and RSUs.

As of June 30, 2022, we had outstanding a total of 1.4 billion shares of Class A common stock, 22.6 million shares of Class B common stock, and 231.6 million shares of Class C common stock.

In addition, as of June 30, 2022, 91.5 million shares of Class A common stock and 0.6 million shares of Class B common stock were subject to outstanding stock options and RSUs.

As a result of our capital structure, holders who are not required to file reports under Section 16 of the Exchange Act are not obligated to disclose changes in ownership of our Class A common stock, so there can be no assurance that you, or we, will be notified of any such changes.

All of our outstanding shares are eligible for sale in the public market, except approximately 372.9 million shares (including options exercisable and RSAs subject to forfeiture as of March 31, 2022) held by directors, executive officers, and other affiliates that are subject to volume limitations under Rule 144 of the Securities Act.

All of our outstanding shares are eligible for sale in the public market, except approximately 371.0 million shares (including options exercisable and RSAs subject to forfeiture as of June 30, 2022) held by directors, executive officers, and other affiliates that are subject to volume limitations under Rule 144 of the Securities Act.

Our employees, other service providers, and directors are subject to our quarterly trading window closures.

In addition, we have reserved shares for issuance under our equity incentive plans.

We may also issue shares of our

Class A common stock or securities convertible into our Class A common stock from time to time in connection with a financing, acquisition, investment, or otherwise.

We may also issue shares of our Class A common stock or securities convertible into our Class A common stock from time to time in connection with a financing, acquisition, investment, or otherwise.

When these shares are issued and subsequently sold, it would be dilutive to existing stockholders and the trading price of our Class A common stock could decline.

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If we are unable to comply with these requirements in a timely manner, if we assert that our internal control over financial reporting is ineffective, if we identify material weaknesses in our internal control over financial reporting, or if our independent registered public accounting firm is unable to express an opinion or expresses a qualified or adverse opinion about the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock could be negatively affected.

In addition, we could become subject to investigations by the NYSE, the SEC, and other regulatory authorities, which could require additional financial and management resources.

addition, we could become subject to investigations by the NYSE, the SEC, and other regulatory authorities, which could require additional financial and management resources.

The requirements of being a public company may strain our resources, result in more litigation, and divert management’s attention.

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The lawsuit alleges that we and certain of our officers made false or misleading statements and omissions concerning the impact that Apple’s ATT framework would have on our business.

We believe we have meritorious defenses to this lawsuit, but an unfavorable outcome could seriously

harm our business.

We believe we have meritorious defenses to this lawsuit, but an unfavorable outcome could seriously harm our business.

Shareholder litigation can subject us to substantial costs and divert resources and the attention of management from our business and, if the claims are successful, our business could be seriously harmed.

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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-Q

Item 1A. Risk Factors