What changed in this filing

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Item 1. Financial Statements

2022-10-21 compared with 2022-07-22 · 142 added, 115 removed, 492 unchanged (34% of the section changed)

2 unchanged sentences

(in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Cash flows from operating activities

4 unchanged sentences

Losses (gains) on debt and equity securities, net

Induced conversion expense related to convertible notes

Change in operating assets and liabilities, net of effect of

22 unchanged sentences

Payments of debt issuance costs

Repurchases of Class A non-voting common stock

Net cash provided by (used in) financing activities

8 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Costs and expenses:

16 unchanged sentences

(in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive income (loss), net of tax

6 unchanged sentences

(in thousands, except par value)

September 30,

Current assets

21 unchanged sentences

3,000,000 shares

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

at December 31, 2021.

authorized, 1,402,916 shares issued, 1,351,604 shares outstanding at September

30, 2022, and 3,000,000 shares authorized, 1,364,887 shares issued and

outstanding at December 31, 2021.

Class B voting common stock, $ 0.00001 par value.

700,000 shares authorized,

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

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

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

1 unchanged sentence

260,888 shares authorized,

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

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

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

Treasury stock, at cost.

51,312 shares of Class A non-voting common stock at

September 30, 2022.

Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated deficit

Accumulated other comprehensive income (loss)

Total stockholders’ equity

3 unchanged sentences

(in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Class A non-voting common stock

3 unchanged sentences

compensation plans

Issuance of Class A non-voting common stock in connection with acquisitions

Issuance of Class A non-voting common

stock in connection with acquisitions

Issuance of Class A non-voting common

stock for vesting of restricted stock

units and restricted stock awards, net

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

Issuance of Class A non-voting common

stock for the induced conversion

related to convertible senior notes

Conversion of Class B voting common

stock to Class A non-voting common

Repurchases of Class A non-voting

Balance, end of period

4 unchanged sentences

compensation plans

Conversion of Class C voting common

stock to Class B voting common stock

Conversion of Class B voting common

3 unchanged sentences

Balance, beginning of period

Issuance of Class C voting common stock

for settlement of restricted stock units,

Conversion of Class C voting common

stock to Class B voting common

Issuance of Class C voting common

stock for settlement of restricted stock

Balance, end of period

Treasury stock

Balance, beginning of period

Repurchases of Class A non-voting

Balance, end of period

Additional paid-in capital

8 unchanged sentences

stock in connection with acquisitions

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

Issuance of Class A non-voting common

stock for the induced conversion

related to convertible senior notes

Purchase of capped calls

5 unchanged sentences

Balance, end of period

Accumulated other comprehensive income (loss)

Accumulated other comprehensive

income (loss)

Balance, beginning of period

21 unchanged sentences

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

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.

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

Other than described below, 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.

Use of Estimates

4 unchanged sentences

On an ongoing basis, management evaluates our estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities .

Future Stock Split to be Effected in the Form of a Stock Dividend

In July 2022, our board of directors determined that it was advisable and in our best interest to approve a stock split to be effected in the form of a special dividend of one share of Class A common stock on each outstanding share of our common stock at a future date (the “Future Stock Split”).

In connection with the Future Stock Split, we entered into certain agreements (the “Co-Founder Agreements”) with Evan Spiegel and Robert Murphy, our co-founders, and certain of their respective affiliates requiring them, among other things, to convert shares of Class B common stock and Class C common stock into Class A common stock under certain circumstances.

The Future Stock Split will be not be declared and paid until the later of (i) June 30, 2023 and (ii) 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.

If this does not occur by July 21, 2032, the Future Stock Split will not be declared and paid, and the Co-Founder Agreements will terminate.

No adjustments have been made to share or per share

amounts for Class A common stock in the accompanying consolidated financial statements for the effects of the Future Stock Split as these triggering conditions have not been met.

Recent Accounting Pronouncements

8 unchanged sentences

(2) the accounting for such assistance;

and (3) the effect of the

assistance on a n entity's financial statements.

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

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

31 unchanged sentences

For the periods presented, revenue for arrangements where we are the agent was not material.

We also generate revenue from sales of hardware products.

For the periods presented, revenue from the sales of hardware products was not material.

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

For the periods presented, all such revenue was not material.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

3 unchanged sentences

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

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.

United States revenue was $ 779.1 million and $2,258.0 million for the three and nine months ended September 30, 2022, respectively, and $ 750.1 million and $1,901.7 million for the three and nine months ended September 30, 2021 , respectively.

Europe includes Russia and Turkey.

9 unchanged sentences

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,

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 nine months ended September 30, 2022 and 2021:

Three Months Ended September 30,

Nine Months Ended September 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:

Three and Six Months Ended June 30,

Three and Nine Months Ended September 30,

(in thousands)

7 unchanged sentences

Restricted Stock Units and Restricted Stock Awards

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

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

(in thousands, except per share data)

Unvested at December 31, 2021

Unvested at June 30, 2022

Unvested at September 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 $ 2.3 billion as of June 30, 2022 and is expected to be recognized over a weighted-average period of 2.1 years.

Total unrecognized compensation cost related to outstanding RSUs and RSAs was $ 1.8 billion as of September 30, 2022 and is expected to be recognized over a weighted-

average period of 1.6 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 six months ended June 30, 2022:

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

(in thousands, except per share data)

Outstanding at December 31, 2021

Outstanding at June 30, 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 June 30, 2022, respectively.

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.

Outstanding at September 30, 2022

Total unrecognized compensation cost related to unvested stock options was $ 1.1 million as of September 30, 2022 and is expected to be recognized over a weighted-average period of 1.3 years.

Stock-Based Compensation Expense by Function

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

3 unchanged sentences

General and administrative

Stock Repurchases

In July 2022, our board of directors authorized a stock repurchase program of up to $ 500.0 million of our Class A common stock, which was completed in the third quarter of 2022.

During the three months ended September 30, 2022, we repurchased 51.3 million shares of our Class A common stock under the program for an aggregate of $ 500.5 million, representing the entire amount approved by our board of directors and including costs associated with the repurchases.

These shares are recorded as treasury stock on our consolidated balance sheets.

Business Acquisitions

2022 Acquisitions

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.

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

The aggregate purchase consideration was $ 120.5 million, which included $ 17.7 million in cash, $ 44.0 million in shares of our Class A common stock, and $ 58.8 million recorded in other liabilities on our consolidated balance sheets.

Of the aggregate purchase consideration, $ 69.3 million was allocated to goodwill and the remainder primarily to identifiable intangible assets.

24 unchanged sentences

For the year ended December 31, 2021, we completed other acquisitions to enhance our existing platform, technology, and workforce.

The aggregate purchase consideration was $ 266.1 million, which included $ 139.5 million in cash, $ 93.7 million in shares of our Class A common stock, and $ 32.9 million recorded in other liabilities on the consolidated balance sheet.

The aggregate allocation of purchase consideration was as follows:

6 unchanged sentences

Goodwill and Intangible Assets

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

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

(in thousands)

2 unchanged sentences

Foreign currency translation

Balance as of June 30, 2022

Balance as of September 30, 2022

Intangible assets consisted of the following:

As of June 30, 2022

As of September 30, 2022

Useful Life -

5 unchanged sentences

Customer relationships

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:

Amortization of intangible assets was $ 20.9 million and $ 107.6 million for the three and nine months ended September 30, 2022, respectively, and $ 18.1 million and $ 43.0 million for the three and nine months ended September 30, 2021 , respectively.

In the second and third quarters of 2022, we revised the useful lives of certain customer relationships, trademarks, domain names, and technology, which resulted in a $ 43.6 million increase to amortization expense for the nine months ended September 30, 2022.

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

(in thousands)

48 unchanged sentences

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.

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.

Inducement expense for the three and nine months ended September 30, 2021 was $ 4.5 million and $ 41.5 million, respectively.

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

The Convertible Notes consisted of the following:

June 30, 2022

December 31, 2021

As of September 30, 2022

As of December 31, 2021

(in thousands)

1 unchanged sentence

Net carrying amount

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.

As of September 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 2.6 years, 3.8 years, 4.6 years, and 5.4 years, respectively.

Interest expense related to the amortization of debt issuance costs was $ 1.7 million and $ 4.8 million for the three and nine months ended September 30, 2022, respectively, and $ 1.1 million and $ 3.3 million for the three and nine months ended September 30, 2021, respectively.

Contractual interest expense was $ 2.2 million and $ 6.4 million for the three and nine months ended September 30, 2022, respectively, and $ 1.9 million and $ 7.2 million for the three and nine months ended September 30, 2021, respectively.

As of September 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 September 30, 2022 for the Convertible Notes, and as a result, the Convertible Notes will not be eligible for optional conversion during the fourth 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.

8 unchanged sentences

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

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

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

Credit Facility

5 unchanged sentences

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 .

As of September 30, 2022 , we had $ 32.4 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 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.

We had $ 4.0 billion in commitments as of September 30, 2022, primarily due within three years.

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

16 unchanged sentences

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

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

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 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:

Six Months Ended June 30,

Nine Months Ended September 30,

Weighted-average remaining lease term

2 unchanged sentences

Maturity of Lease Liabilities

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

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

Operating Leases

4 unchanged sentences

Present value of lease liabilities

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

As of September 30, 2022 , we have additional operating leases for facilities that have not yet commenced with lease obligations of $ 40.2 million.

These operating leases will commence between 2022 and 2023 with lease terms of 5 years to 11 years.

Other Information

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.

Cash payments included in the measurement of our o perating lease liabilities were $ 20.6 million and $ 66.8 million for the three and nine months ended September 30, 2022 , respectively, and $ 19.1 million and $ 54.1 million for the three and nine months ended September 30, 2021 , respectively.

Lease liabilities arising from obtaining operating lease right-of-use assets were $ 134.8 million for the nine months ended September 30, 2022.

There were no lease liabilities arising from obtaining operating lease right-of-use assets during the three months ended September 30, 2022.

Lease liabilities arising from obtaining operating lease right-of-use assets were $ 8.4 million and $ 56.1 million for the three and nine months ended September 30, 2021, respectively.

Strategic Investments

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.

We hold strategic investments in privately held companies with a carrying value of $ 226.7 million and $ 262.7 million as of September 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 $ 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.

There were no gains or losses recognized on our strategic investments in privately held companies for the three months ended September 30, 2022.

We recognized $ 19.7 million of unrealized gains and $ 45.9 million of realized gains on investments in privately held companies for the nine months ended September 30, 2022 .

We recognized unrealized gains on investments in privately held companies of $ 60.6 million and $ 136.0 million for the three and nine months ended September 30, 2021 , respectively, and $ 27.8 million of realized gains for the nine months ended September 30, 2021.

Unrealized and realized gains on all strategic investments are included within other income (expense), net on 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.

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

A ll strategic investments are reviewed periodically for impairment.

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

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

Fair Value Measurements

4 unchanged sentences

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 June 30, 2022 and December 31, 2021 that are measured at fair value on a recurring basis during the period:

June 30, 2022

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

September 30, 2022

Amortized Cost

9 unchanged sentences

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.

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 (a portion of which was subject to short-term lock-up restrictions as of September 30, 2022).

December 31, 2021

10 unchanged sentences

Certificates of deposit

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 .

We held investments in publicly traded companies with an aggregate carrying value of $ 116.9 million and $ 193.2 million as of September 30, 2022 and December 31, 2021, respectively, recorded as marketable securities.

We recorded total gains of $ 76.2 million and total losses of $ 79.8 million related to these investments for the three and nine months ended September 30, 2022, respectively, within other income (expense), net on our consolidated statements of operations.

Unrealized gains related to publicly traded equity securities still held as of September 30, 2022 were $ 53.5 million for the three months ended September 30, 2022 and unrealized losses were $ 69.7 million for the nine months ended September 30, 2022.

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

As of September 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 September 30, 2022, $ 0.2 million of our total $ 2.4 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 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 September 30, 2022, the fair value of the 2025 Notes, the 2026 Notes, the 2027 Notes, and the 2028 Notes was $ 262.6 million, $ 725.6 million, $ 798.0 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.

3 unchanged sentences

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 $ 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.

Income tax expense was $ 9.2 million and $ 24.8 million for the three and nine months ended September 30, 2022, respectively, compared to an income tax expense of $ 1.0 million and $ 0.6 million for the three and nine months ended September 30, 2021 , respectively.

Accumulated Other Comprehensive Income (Loss)

7 unchanged sentences

Net current period OCI

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.

Balance at September 30, 2022

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

Property and Equipment, Net

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

June 30, 2022

December 31, 2021

As of September 30, 2022

As of December 31, 2021

(in thousands)

4 unchanged sentences

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

Restructuring

In the third quarter of 2022, we initiated a strategic reprioritization plan, which included a reduction of our global employee headcount by approximately 20 %.

We expect to incur total restructuring charges of up to $ 190 million, primarily through December 31, 2022.

The following table summarizes the restructuring charges (benefits) in our consolidated statements of operations for the three months ended September 30, 2022:

Severance and Related Charges (1)

Stock-Based Compensation Expense (Benefit)

Lease Exit and Related Charges

(in thousands)

Cost of revenue

Research and development

Sales and marketing

General and administrative

Severance and related charges include cash severance expense and other termination benefits.

The majority of cash paid for restructuring in the third quarter of 2022 was related to severance and benefits.

Other includes impairment and contract termination charges.

The liabilities related to the reprioritization plan were $ 42.1 million as of September 30, 2022.

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.

In October 2022, our board of directors authorized a stock repurchase program of up to $ 500.0 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