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​ Introduction ​ ​Last​ ​fall,​ ​we​ ​embarked​ ​on​ ​a​ ​new​ ​chapter​ ​for​ ​our​ ​company​ ​with​ ​the​ ​articulation​ ​of​ ​the​ ​Crucible​ ​Moment​ ​faced​ ​by​ ​our​ ​business.​​At​​that​​time,​​we​​laid​​out​​our​​plans​​to​​accelerate​​and​​diversify​​our​​revenue​​growth,​​pivot​​our​​business​​toward​​more​ ​profitable​​growth,​​and​​deliver​​on​​the​​commercial​​launch​​of​​Specs​​in​​2026.​​The​​impacts​​of​​this​​strategic​​direction​​began​​to​ ​manifest in the operating results of our business in Q4, and we are excited to build on this momentum in the year ahead.​ ​Over​ ​the​ ​last​ ​3​ ​years,​ ​we​ ​have​ ​grown​ ​Monthly​ ​Active​ ​Users​​(MAU)​​by​​more​​than​​150​​million,​​reaching​​946​​million​​in​​the​ ​most​ ​recent​ ​quarter,​ ​and​ ​bringing​ ​us​ ​within​ ​striking​ ​distance​ ​of​ ​our​ ​goal​ ​to​ ​reach​ ​1​​billion​​global​​MAU.​​We​​have​​already​ ​achieved​​immense​​reach​​and​​depth​​of​​engagement​​in​​many​​of​​the​​world’s​​most​​attractive​​advertising​​geographies,​​and​​we​ ​believe​​this​​affords​​us​​a​​significant​​opportunity​​to​​grow​​our​​topline​​and​​expand​​average​​revenue​​per​​user​​(ARPU)​​over​​time.​ ​Growing​ ​our​ ​community​ ​in​ ​these​ ​prosperous​ ​geographies​ ​remains​ ​a​​priority,​​and​​we​​remain​​committed​​to​​our​​long​​term​ ​goal​ ​of​ ​reaching​​1​​billion​​MAU,​​but​​going​​forward​​we​​will​​seek​​to​​strike​​a​​better​​balance​​between​​the​​pace​​of​​community​ ​growth and rate of topline growth in order to pivot our business to more profitable growth.​ ​For​ ​the​ ​advertising​ ​business,​ ​our​ ​focus​ ​will​ ​be​ ​on​ ​three​​core​​initiatives.​​The​​first​​is​​fostering​​direct​​connections​​between​ ​Brands​​and​​Snapchatters​​by​​leveraging​​our​​core​​product​​capabilities​​across​​Snapchat.​​The​​second​​will​​be​​making​​it​​easier​ ​and​ ​more​ ​performant​ ​for​ ​advertisers​ ​to​ ​connect​ ​with​ ​Snapchatters​ ​by​ ​leveraging​ ​AI​ ​tooling​ ​and​ ​capabilities​ ​end-to-end​ ​through​​our​​ad​​platform​​including​​creative​​development,​​campaign​​set​​up,​​and​​performance​​optimization.​​Finally,​​we​​plan​​to​ ​grow​ ​our​ ​advertiser​ ​base​ ​by​ ​scaling​ ​and​ ​optimizing​ ​our​ ​go-to-market​ ​operations​ ​that​ ​support​ ​the​ ​success​ ​of​ ​small​ ​and​ ​medium​​sized​​businesses​​(SMBs).​​Ultimately,​​we​​will​​grade​​the​​performance​​of​​our​​advertising​​business​​based​​on​​the​​rate​ ​of growth in advertising revenue, with a focus on gaining share over time.​ ​The​ ​Other​ ​Revenue​ ​portion​ ​of​ ​our​ ​business​ ​has​ ​become​ ​an​ ​outsized​ ​source​ ​of​ ​growth,​ ​and​ ​is​ ​playing​ ​a​ ​critical​ ​role​ ​in​ ​diversifying​ ​our​ ​topline.​​In​​the​​year​​ahead,​​we​​will​​focus​​on​​growing​​existing​​subscription​​offers,​​including​​Snapchat+​​and​ ​Memories​ ​Storage​ ​Plans,​ ​while​ ​innovating​ ​to​ ​bring​ ​compelling​ ​new​ ​offers​ ​to​ ​our​ ​platform.​ ​This​ ​momentum​ ​is​ ​already​ ​materializing,​ ​with​ ​subscribers​ ​growing​ ​71%​ ​year-over-year​ ​to​ ​reach​ ​24​ ​million​ ​in​ ​Q4.​ ​In​ ​the​ ​year​ ​ahead,​ ​growth​ ​in​ ​subscribers​ ​will​ ​be​ ​a​ ​critical​ ​input​ ​metric​ ​to​ ​track​ ​our​ ​progress,​ ​and​ ​we​ ​will​ ​ultimately​ ​grade​ ​our​​performance​​based​​on​ ​growth of the annualized run rate for Other Revenue.​ ​We​​are​​focusing​​on​​three​​significant​​catalysts​​for​​gross​​margin​​expansion​​to​​drive​​profitable​​growth.​​First,​​with​​community​ ​growth​​focused​​on​​monetizable​​markets,​​and​​with​​our​​cost​​to​​serve​​increasingly​​calibrated​​to​​the​​monetization​​potential​​of​ ​each​​market,​​we​​expect​​that​​our​​infrastructure​​costs​​will​​pivot​​from​​being​​a​​source​​of​​gross​​margin​​pressure​​to​​become​​a​ ​margin​ ​accretive​ ​investment.​ ​Second,​ ​as​ ​more​ ​of​ ​our​ ​ad​ ​revenue​ ​is​ ​derived​ ​from​ ​higher​ ​margin​ ​placements​ ​such​ ​as​ ​Sponsored​​Snaps​​and​​Promoted​​Places,​​we​​expect​​advertising​​margins​​to​​improve.​​Third,​​we​​expect​​that​​the​​growing​​scale​ ​of​ ​our​ ​subscription​ ​business,​ ​which​ ​is​ ​built​ ​on​ ​a​ ​foundation​ ​of​ ​existing​ ​engagement​ ​and​ ​infrastructure​ ​investment,​ ​will​ ​become​ ​increasingly​ ​accretive​​to​​overall​​gross​​margins.​​In​​the​​Crucible​​Moment​​letter​​shared​​last​​fall,​​we​​set​​a​​near​​term​ ​goal​​to​​achieve​​60%​​gross​​margins.​​We​​have​​already​​made​​meaningful​​progress​​toward​​that​​goal​​by​​achieving​​a​​59%​​gross​ ​margin in Q4, and we believe there is a clear path to exceed this goal in 2026.​ ​We​ ​are​ ​excited​ ​about​ ​our​ ​plans​ ​to​ ​accelerate​ ​topline​​growth,​​diversify​​our​​revenue​​streams,​​and​​build​​a​​more​​financially​ ​efficient​ ​business​ ​in​ ​the​ ​year​ ​ahead.​ ​Ultimately,​ ​we​ ​will​ ​grade​ ​our​ ​performance​ ​on​ ​our​ ​progress​ ​toward​ ​achieving​ ​SNAP INC. | Q4 2025 | INVESTOR LETTER​ ​1​

 
​meaningful​​Net​​Income​​profitability​​over​​the​​medium​​term.​​Importantly,​​we​​believe​​we​​can​​deliver​​on​​this​​profitable​​growth​ ​path as we continue to invest in the future of augmented reality and support the consumer launch of Specs later this year.​ ​ Community ​ ​For​ ​our​ ​community,​ ​we​ ​are​ ​focused​ ​on​ ​strengthening​ ​engagement​ ​in​ ​the​ ​world’s​ ​most​ ​developed​ ​advertising​ ​geographies,​​by​​building​​experiences​​across​​Snapchat​​that​​spark​ ​conversations​ ​and​ ​deepen​ ​relationships​ ​between​ ​Snapchatters.​ ​The​ ​connections​ ​between​​friends​​and​​family​​are​​what​​unify​​our​​camera,​​messaging,​​Snap​​Map,​​and​​content​ ​experiences​​and​​enable​​our​​platform​​to​​enrich​​the​​lives​​of​​Snapchatters​​around​​the​​world.​ ​By​ ​prioritizing​ ​features​ ​that​ ​encourage​ ​creativity,​​discovery,​​and​​interaction​​across​​these​ ​surfaces,​ ​we​ ​aim​ ​to​ ​increase​ ​the​ ​relevance​ ​and​ ​durability​ ​of​ ​engagement​ ​in​ ​ways​ ​that​ ​support long-term community growth and monetization.​ ​Our​ ​camera​​remains​​central​​to​​how​​Snapchatters​​communicate​​and​​express​​themselves,​ ​and​ ​it​ ​is​ ​often​ ​the​ ​starting​ ​point​ ​for​ ​conversations​ ​on​ ​Snapchat.​ ​We​ ​are​ ​enhancing​ ​our​ ​camera​ ​with​ ​AI-powered​ ​capabilities​ ​that​ ​make​ ​creation​ ​more​ ​intuitive,​ ​dynamic,​ ​and​ ​social.​ ​Recent​ ​breakthroughs​ ​in​ ​our​ ​proprietary​ ​models​ ​allow​ ​us​ ​to​ ​deliver​ ​high-quality​ ​generative​ ​AI​ ​camera​ ​experiences​ ​efficiently​ ​at​ ​scale​ ​by​ ​running​ ​our​​models​​on-device.​ ​AI-driven​ ​Lenses​ ​represent​ ​a​ ​meaningful​ ​evolution​ ​from​ ​traditional​ ​Lenses,​ ​shifting​ ​the​ ​experience​ ​from​ ​applying​ ​a​ ​fixed​ ​set​ ​of​ ​visual​ ​overlays​ ​to​ ​creating​ ​images​ ​and​ ​scenes​ ​dynamically​​through​​generative​​AI.​​Snapchatters​​can​​now​​prompt,​​explore,​​and​​co-create​ ​personalized​​content​​in​​real​​time,​​and​​this​​shift​​is​​already​​resonating​​with​​our​​community.​ ​More​ ​than​ ​700​​million​​Snapchatters​​have​​engaged​​with​​generative​​AI​​Lenses​​more​​than​ ​17​ ​billion​ ​times,​ ​often​ ​discovering​ ​and​ ​sharing​ ​these​ ​Lenses​ ​through​​conversations​​with​ ​friends​​and​​family.​​Our​​Imagine​​Lens,​​launched​​in​​September,​​has​​already​​been​​engaged​ ​with​ ​nearly​ ​two​ ​billion​ ​times,​ ​highlighting​ ​strong​ ​early​ ​traction​ ​and​ ​repeat​ ​usage.​ ​This​ ​momentum​ ​is​ ​supported​ ​by​ ​a​ ​global​ ​creator​ ​and​ ​developer​ ​ecosystem​ ​that​ ​is​ ​unmatched​ ​in​ ​scale.​ ​More​ ​than​ ​450,000​ ​creators​ ​from​ ​nearly​ ​every​ ​country​ ​have​ ​built​ ​over​ ​5​ ​million​ ​Lenses​ ​using​ ​our​ ​industry-leading​ ​AR​ ​and​ ​AI​ ​tools,​​helping​ ​ensure that camera experiences remain fresh, relevant, and closely aligned with how our community builds relationships.​ ​Sharing​​Snaps​​with​​friends​​and​​family​​remains​​the​​foundation​​of​​Snapchat​​and​​a​​core​​driver​​of​​engagement,​​retention,​​and​ ​long-term​ ​value​ ​creation.​ ​Our​ ​platform​ ​is​ ​designed​ ​around​ ​visual​ ​communication​ ​that​ ​enables​ ​frequent​ ​interactions​ ​and​ ​helps​​our​​community​​maintain​​close​​relationships​​over​​time.​​We​​continue​​to​​see​​strong​​momentum​​in​​direct​​communication​ ​between​ ​friends​ ​and​ ​family,​ ​with​ ​messaging​ ​behaviors​ ​reflecting​ ​the​ ​durability​ ​of​ ​Snapchat’s​​core​​value​​proposition.​​For​ ​example,​ ​average​ ​daily​ ​messages​ ​sent​ ​increased​ ​5%​ ​year-over-year,​ ​and​ ​the​ ​number​ ​of​ ​bidirectional​ ​communicators​ ​increased​ ​5%​ ​year-over-year​ ​in​ ​Q4.​ ​We​ ​are​ ​investing​ ​in​ ​product​ ​experiences​ ​that​ ​make​ ​it​ ​easier​ ​to​ ​start​ ​conversations,​ ​sustain​ ​them​ ​over​ ​time,​ ​and​ ​introduce​ ​new​ ​ways​​for​​friends​​and​​family​​to​​interact.​​For​​example,​​in​​Q4,​​we​​began​​testing​ ​Topic​ ​Chats,​ ​a​ ​new​ ​feature​ ​that​ ​allows​ ​Snapchatters​ ​to​ ​participate​ ​in​ ​public​ ​conversations​ ​around​ ​trending​ ​topics​ ​and​ ​events,​​discover​​shared​​interests,​​and​​explore​​what’s​​happening​​visually​​across​​our​​community.​​We​​also​​began​​rolling​​out​ ​new​​two​​player​​turn-based​​games​​designed​​to​​create​​playful,​​low-friction​​ways​​for​​friends​​and​​family​​to​​connect,​​such​​as​​2​ ​SNAP INC. | Q4 2025 | INVESTOR LETTER​ ​2​

 
​Player​​Mini​​Golf​​and​​Magic​​Jump​​.​​In​​Q4,​​these​​experiences​​contributed​​to​​more​​than​​200​ ​million​​Snapchatters​​playing​​Games​​every​​month​​on​​average,​​representing​​an​​increase​​of​ ​90% year-over-year.​ ​The​ ​Snap​ ​Map​ ​has​ ​become​ ​an​ ​increasingly​ ​important​ ​driver​ ​of​ ​engagement​​by​​helping​ ​Snapchatters​ ​stay​ ​connected​ ​to​ ​friends,​​local​​communities,​​and​​places​​in​​the​​real​​world.​ ​Snapchatters​​use​​the​​Snap​​Map​​to​​see​​where​​friends​​are​​spending​​time,​​discover​​what​​is​ ​happening​ ​nearby,​ ​and​ ​engage​ ​with​ ​local​ ​businesses​ ​and​ ​events.​ ​Monthly​ ​active​ ​Snap​ ​Map​​users​​reached​​435​​million​​in​​Q4,​​up​​6%​​year-over-year,​​creating​​natural​​opportunities​ ​for​​both​​organic​​engagement​​and​​monetization​​through​​ad​​placements​​such​​as​​Promoted​ ​Places.​ ​We​​have​​built​​a​​differentiated​​content​​platform​​powered​​by​​authentic​​content​​that​​is​​native​ ​to​ ​Snapchat​ ​and​ ​that​ ​reinforces​ ​human​ ​connection​ ​through​ ​content​ ​sharing​ ​as​ ​a​ ​conversation​ ​starter.​ ​Our​ ​systems​ ​increasingly​ ​surface​ ​timely,​ ​relevant​ ​content​ ​by​ ​identifying​ ​emerging​ ​trends​ ​and​ ​original​ ​formats​ ​across​ ​Spotlight​ ​and​ ​Stories​ ​and​ ​matching​ ​them​ ​to​ ​the​ ​right​ ​audiences.​ ​In​ ​Q4,​ ​enhancements​ ​to​ ​our​ ​ranking​ ​and​ ​trend-detection​​models​​contributed​​to​​improved​​content​​freshness​​and​​engagement.​​For​ ​example,​​the​​number​​of​​Spotlight​​reposts​​and​​shares​​increased​​69%​​year-over-year​​in​​the​ ​US,​​reflecting​​our​​ability​​to​​surface​​timely​​content​​at​​scale.​​In​​addition,​​Snapchat​​continues​ ​to​ ​be​ ​a​ ​platform​ ​where​ ​both​ ​established​ ​and​ ​emerging​ ​creators​ ​can​ ​grow​​an​​audience​ ​and​ ​build​ ​a​ ​sustainable​ ​business.​ ​For​ ​example,​ ​Randa​​Adami,​​a​​nail​​designer​​and​​travel​ ​creator,​​grew​​her​​follower​​base​​by​​more​​than​​20x​​over​​the​​last​​six​​months​​by​​consistently​ ​posting​ ​to​ ​Spotlight​ ​and​ ​leveraging​ ​engagement​ ​tools​ ​such​ ​as​ ​Q&A​ ​and​ ​Spotlight​ ​comments to strengthen connections with her viewers.​ ​As​ ​we​ ​continue​ ​to​ ​innovate​ ​across​ ​these​ ​surfaces,​ ​we​ ​are​ ​seeing​ ​the​ ​impact​ ​of​ ​better​ ​calibrating​ ​our​ ​investments​ ​in​ ​community​ ​growth​ ​and​ ​cost​ ​to​ ​serve​ ​with​ ​the​ ​long​ ​term​ ​monetization​​potential​​of​​each​​market.​​In​​Q4,​​global​​monthly​​active​​users​​increased​​by​​3​ ​million​​quarter-over-quarter​​to​​946​​million,​​while​​global​​daily​​active​​users​​declined​​by​​3​​million​​quarter-over-quarter​​to​​474​ ​million​​5​​.​ ​The​ ​decline​ ​in​ ​Global​ ​DAU​ ​in​ ​Q4​ ​reflects,​ ​in​ ​part,​ ​our​ ​decision​ ​to​ ​substantially​ ​reduce​ ​our​ ​community​ ​growth​ ​marketing​ ​investments​ ​in​​order​​to​​focus​​on​​more​​profitable​​growth.​​Improving​​ARPU​​through​​more​​direct​​monetization​​of​ ​our​​core​​product​​remains​​a​​key​​priority,​​including​​continued​​growth​​in​​Snapchat+,​​the​​expansion​​of​​Sponsored​​Snaps​​and​ ​Promoted​ ​Places,​ ​the​ ​launch​ ​of​ ​Lens+,​ ​and​ ​Memories​ ​Storage​ ​Plans.​ ​While​ ​these​ ​initiatives​ ​involve​ ​trade-offs​ ​with​ ​engagement,​ ​they​ ​are​ ​strengthening​ ​topline​ ​performance,​ ​supporting​ ​more​ ​stable​ ​and​ ​retentive​ ​subscription-based​ ​revenue streams, and improving the gross margin profile of our business.​ ​The​​regulatory​​environment​​also​​presents​​near-term​​risk​​to​​engagement​​metrics.​​In​​Q4,​​we​​implemented​​platform-level​​age​ ​verification​​in​​Australia​​in​​accordance​​with​​a​​new​​law​​requiring​​users​​to​​be​​at​​least​​16​​years​​old,​​resulting​​in​​the​​removal​​of​ ​approximately​​400,000​​accounts.​​We​​have​​since​​begun​​testing​​new​​signals​​from​​Apple’s​​Declared​​Age​​Range​​API,​​and​​we​ ​plan​​to​​test​​Google’s​​solution​​once​​it​​becomes​​available.​​While​​these​​actions​​may​​adversely​​affect​​engagement​​metrics​​as​ ​SNAP INC. | Q4 2025 | INVESTOR LETTER​ ​3​

 
​implementation​ ​progresses,​ ​we​ ​believe​ ​it​ ​is​ ​the​ ​right​ ​thing​ ​to​ ​do​ ​to​ ​maintain​ ​the​ ​long​ ​term​ ​trust​ ​of​ ​our​ ​community​ ​and​ ​partners, and we remain committed to our long-term goal of serving more than 1 billion global monthly active users.​ ​ Specs ​ ​Our​ ​long-term​​vision​​for​​augmented​​reality​​extends​​beyond​​the​​smartphone​​to​​a​​future​​where​​computing​​is​​more​​natural,​ ​contextual,​​and​​seamlessly​​integrated​​into​​the​​real​​world.​​For​​more​​than​​a​​decade,​​we​​have​​invested​​in​​building​​a​​platform​ ​that​ ​brings​ ​digital​ ​experiences​ ​closer​ ​to​ ​how​ ​people​ ​see,​ ​move​ ​through,​ ​and​ ​interact​ ​with​​their​​everyday​​environments.​ ​Specs​​are​​central​​to​​this​​vision.​​After​​five​​generations​​of​​development​​and​​refinement,​​we​​plan​​to​​launch​​Specs​​publicly​​in​ ​2026,​ ​which​ ​we​ ​believe​ ​represents​ ​a​ ​significant​​step​​forward​​in​​human-centered​​computing​​and​​the​​evolution​​of​​our​​AR​ ​platform.​ ​As​ ​we​ ​prepare​ ​for​ ​launch,​ ​we​ ​have​ ​continued​ ​to​ ​strengthen​ ​both​ ​the​ ​platform​ ​and​ ​the​ ​ecosystem​ ​that​ ​is​ ​designed​ ​to​ ​support​​adoption​​at​​scale.​​We​​began​​testing​​Snap​​Cloud,​​powered​​by​​Supabase,​​to​​make​​advanced​​backend​​capabilities​ ​more​​accessible​​within​​Lens​​Studio,​​enabling​​developers​​to​​build​​richer,​​more​​dynamic​​AR​​experiences.​​We​​also​​announced​ ​that​ ​all​ ​Lenses​ ​built​ ​today​ ​for​ ​Spectacles​ ​will​ ​be​ ​compatible​ ​with​ ​Specs​ ​at​ ​launch,​ ​providing​ ​continuity​ ​and​ ​scale​ ​for​ ​developers from day one.​ ​Partners​​and​​developers​​are​​already​​building​​compelling​​AR​​experiences​​that​​demonstrate​​the​​breadth​​of​​what​​is​​possible​ ​on​ ​Specs.​ ​Star​ ​Wars:​ ​Holocron​ ​Histories​ ​from​ ​ILM​ ​is​ ​now​ ​live​ ​on​​Spectacles,​​highlighting​​the​​power​​of​​smart​​glasses​​for​ ​immersive​​storytelling​​with​​one​​of​​the​​world’s​​most​​beloved​​franchises.​​This​​experience​​showcases​​the​​studio’s​​continued​ ​innovation​ ​in​ ​technology​ ​and​​platforms​​through​​an​​extension​​of​​the​​Star​​Wars​​galaxy.​​In​​addition,​​developer​​Harry​​Banda​ ​created​ ​Card​ ​Master,​ ​a​ ​multiplayer​ ​AR​ ​card​ ​game​ ​that​ ​lets​ ​players​ ​face​ ​AI​ ​opponents​ ​in​ ​classic​ ​card​ ​games,​ ​with​ ​tutorials​ ​and​ ​achievements,​ ​evolving​ ​into​ ​a​ ​broader​ ​suite​ ​of​ ​AR​ ​card​ ​experiences​ ​for​ ​Specs.​ ​We​ ​believe​ ​Snap​ ​is​ ​uniquely​ ​positioned​​to​​lead​​the​ ​next​ ​wave​ ​of​ ​spatial​ ​computing.​ ​With​ ​Snap​ ​OS​​2.0,​ ​Lens​ ​Studio,​ ​Snap​ ​Cloud,​ ​and​ ​a​ ​global​ ​developer​ ​ecosystem,​​we​​have​​built​​an​​end-to-end​​AR​​platform​ ​spanning​ ​software,​ ​tools,​ ​and​ ​hardware.​ ​Together,​ ​these​ ​capabilities​ ​position​ ​us​ ​to​ ​deliver​ ​fully​ ​standalone,​ ​human-centered​ ​eyewear​ ​that​ ​expands​ ​creative​ ​expression​ ​and​ ​unlocks​ ​new​ ​ways​ ​for​ ​people to engage with the world around them.​ ​ Advertising Platform ​ ​In​ ​Q4,​ ​we​ ​made​ ​meaningful​ ​progress​ ​executing​ ​against​ ​the​ ​three​ ​priorities​ ​guiding​ ​the​ ​evolution​ ​of​ ​our​ ​advertising​ ​business:​​fostering​​more​​direct​​connections​​between​​brands​​and​​Snapchatters,​​making​​advertising​​on​​Snapchat​​easier​​and​ ​more​ ​performant​ ​through​ ​our​ ​AI-driven​ ​ad​ ​platform,​ ​and​ ​expanding​ ​our​ ​advertiser​ ​base​ ​by​ ​scaling​ ​and​ ​optimizing​ ​our​ ​go-to-market​ ​operations​ ​for​ ​small​ ​and​ ​medium-sized​ ​businesses.​ ​Together,​ ​these​ ​efforts​ ​delivered​ ​measurable​ ​improvements in advertiser performance, positioning us for more durable growth as we enter 2026.​ ​SNAP INC. | Q4 2025 | INVESTOR LETTER​ ​4​

 
​We​ ​are​ ​focused​ ​on​ ​fostering​ ​more​ ​direct​ ​connections​ ​between​ ​brands​ ​and​ ​Snapchatters​ ​by​ ​enabling​ ​advertisers​ ​to​ ​participate​​natively​​in​​the​​experiences​​our​​community​​use​​every​​day​​on​​Snapchat,​​including​​messaging,​​the​​Snap​​Map,​​our​ ​AI-powered​​camera,​​and​​creator-led​​content.​​These​​surfaces​​allow​​brands​​to​​show​​up​​in​​ways​​that​​feel​​timely,​​relevant,​​and​ ​aligned with how our community communicates and discovers the world around them.​ ​High-impact,​ ​conversation-driven​ ​placements​ ​are​ ​playing​ ​an​ ​increasingly​ ​important​ ​role​ ​across​ ​both​ ​upper-​ ​and​ ​lower-funnel​ ​objectives.​ ​Sponsored​ ​Snaps​ ​continued​ ​to​ ​gain​ ​traction​​in​​Q4​​as​​one​​of​​our​​most​​differentiated​​ad​​placements,​​allowing​​brands​​to​​engage​ ​directly​ ​with​ ​Snapchatters.​ ​Sponsored​ ​Snaps​ ​revenue​ ​grew​ ​meaningfully​ ​quarter-over-quarter,​ ​supported​ ​by​ ​in-app​ ​optimizations​ ​and​ ​early​ ​testing​ ​of​ ​Dynamic​ ​Product​​Ad​​(DPA)​​integrations.​​Advertisers​​are​​seeing​​strong​​results​​from​​this​​placement:​ ​in​ ​Q4,​ ​Sponsored​ ​Snaps​ ​click-through​ ​rates​ ​grew​ ​7%​ ​and​ ​click-through​​purchases​​grew​ ​17%​ ​from​ ​Q3​ ​to​ ​Q4,​ ​during​ ​which​ ​numerous​ ​format​ ​and​ ​ranking​ ​improvements​ ​were​ ​introduced.​ ​For​ ​example,​ ​global​ ​travel​ ​company​ ​Contiki​ ​used​​Sponsored​​Snaps​​to​​drive​ ​lower-funnel​ ​bookings,​ ​achieving​ ​a​ ​283%​ ​increase​​in​​ROAS​​and​​a​​72%​​reduction​​in​​cost​ ​per​ ​purchase,​ ​highlighting​ ​the​ ​format’s​ ​ability​ ​to​ ​connect​ ​creativity​ ​with​ ​measurable​ ​outcomes.​​In​​addition,​​SHEIN​​used​​Sponsored​​Snaps​​as​​part​​of​​a​​total​​takeover​​campaign​ ​to​ ​amplify​ ​the​ ​launch​ ​of​ ​its​ ​2025​ ​Collection,​ ​connecting​ ​an​ ​online-to-offline​ ​event​ ​with​ ​high-impact,​ ​camera-native​ ​creative​ ​that​ ​drove​ ​engagement​ ​beyond​ ​digital​​impressions.​ ​The​ ​campaign​ ​exceeded​ ​impression​ ​benchmarks​ ​by​ ​20%​ ​while​ ​delivering​ ​CPMs​ ​below​ ​standard​ ​benchmarks,​ ​demonstrating​ ​strong​ ​efficiency,​ ​scale,​ ​and​ ​the​ ​effectiveness​ ​of​ ​clear​ ​product-led​ ​creative​ ​with​ ​a​ ​direct​ ​call​ ​to​ ​action.​ ​We​ ​are​ ​also​ ​seeing​ ​advertisers​ ​amplify​ ​lower-funnel​ ​outcomes​ ​by​ ​combining​ ​complementary​ ​ad​ ​formats​ ​across​ ​the​ ​Snapchat​​experience.​​For​​example,​​Saudi​​QSR​​brand​​KUDU​​combined​​creative​​AR​​Lenses​ ​with​​Sponsored​​Snaps​​to​​drive​​full-funnel​​performance,​​achieving​​up​​to​​49.5%​​lower​​cost​ ​per​​sign-up,​​3.76x​​more​​app​​installs​​at​​76%​​lower​​CPI,​​and​​38x​​more​​purchases​​at​​an​​84%​ ​lower cost per purchase.​ ​Promoted​ ​Places​ ​further​ ​extends​ ​this​ ​strategy​ ​by​ ​translating​ ​digital​ ​engagement​ ​into​ ​real-world​ ​action.​ ​Early​ ​results​ ​from​ ​our​ ​Promoted​ ​Places​ ​beta​ ​saw​ ​an​ ​average​ ​65%​ ​reduction​​in​​cost​​per​​incremental​​visit​​and​​an​​average​​double-digit​​visitation​​lift​​according​ ​to third-party foot traffic measurement by InMarket.​ ​We​​continue​​to​​leverage​​AI​​to​​make​​it​​easier​​for​​advertisers​​to​​connect​​with​​Snapchatters​ ​while​ ​delivering​ ​stronger​ ​performance​ ​and​ ​more​ ​consistent​ ​returns.​ ​By​ ​embedding​ ​AI​ ​across​ ​our​ ​advertising​ ​platform,​ ​from​ ​creative​ ​development​ ​and​ ​campaign​ ​setup​ ​to​ ​delivery​ ​and​ ​optimization,​ ​we​​are​​reducing​​friction​​for​​advertisers​​and​​improving​​ROAS​​at​​scale,​​particularly​​across​​Direct​ ​Response use cases.​ ​A​ ​central​ ​focus​ ​of​ ​our​ ​AI​ ​strategy​ ​is​ ​simplifying​ ​how​ ​advertisers​ ​plan,​ ​launch,​​and​​manage​​campaigns​​on​​Snapchat.​​Our​ ​Smart​ ​Campaign​ ​Solutions​ ​suite,​ ​including​ ​Smart​ ​Targeting​ ​and​ ​Smart​ ​Budget,​​uses​​AI​​to​​identify​​incremental​​high-value​ ​audiences​ ​and​ ​dynamically​ ​allocates​ ​spend​ ​across​ ​objectives,​ ​reducing​ ​the​ ​need​ ​for​ ​manual​ ​setup​ ​and​ ​ongoing​ ​optimization.​ ​We​ ​also​ ​began​ ​early​ ​testing​ ​of​ ​Smart​ ​Ads,​ ​which​ ​automatically​ ​assemble​ ​and​ ​iterate​ ​creative​ ​elements​ ​to​ ​identify​ ​the​ ​highest-performing​ ​combinations.​ ​These​ ​tools​ ​are​ ​designed​ ​to​ ​reduce​ ​creative​ ​friction,​ ​accelerate​ ​learning​ ​cycles, and shorten time to spend.​ ​SNAP INC. | Q4 2025 | INVESTOR LETTER​ ​5​

 
​Improving​​Direct​​Response​​performance​​remains​​a​​core​​priority​​within​​this​​effort.​​In​​Q4,​​we​ ​delivered​ ​meaningful​ ​progress​ ​across​ ​both​ ​DPA​ ​and​ ​App​ ​advertising.​ ​For​ ​DPA,​ ​targeted​ ​ranking,​​format,​​and​​delivery​​improvements​​delivered​​a​​55%​​reduction​​in​​cost​​per​​action​​for​ ​7-0​​conversions​​and​​a​​45%​​reduction​​in​​cost​​per​​action​​for​​1-0​​conversions​​amongst​​all​​Pixel​ ​Purchase​​GBBs,​​based​​on​​cumulative​​internal​​testing​​over​​the​​past​​year.​​DPA​​revenue​​grew​ ​19%​ ​year-over-year,​ ​supported​ ​by​ ​expanded​ ​adoption​ ​among​ ​large​ ​advertisers​ ​and​ ​continued​ ​migration​ ​to​ ​higher-performing​ ​dynamic​ ​solutions.​ ​For​ ​example,​ ​WOLFpak,​ ​a​ ​North​ ​America​ ​retail​ ​fashion​ ​&​ ​apparel​ ​brand,​ ​leveraged​ ​Dynamic​ ​Product​ ​Ads​ ​to​ ​drive​ ​lower-funnel​​performance,​​delivering​​90%​​higher​​return​​on​​ad​​spend​​compared​​to​​non-DPA​ ​campaigns.​ ​Our​ ​App​ ​advertising​ ​business​ ​also​ ​accelerated​ ​meaningfully​ ​in​ ​Q4.​ ​Revenue​​from​​In-App​ ​Optimizations​ ​grew​ ​89%​ ​year-over-year,​ ​supported​ ​by​ ​advances​ ​in​ ​foundational​ ​app​ ​models,​ ​broader​ ​adoption​ ​of​ ​the​ ​App​ ​Power​ ​Pack,​ ​and​ ​new​ ​immersive​ ​formats​ ​such​ ​as​ ​Playables.​ ​For​ ​example,​ ​our​ ​partnership​ ​with​ ​Triumph​ ​Arcade​ ​delivered​ ​2.6x​ ​more​ ​app​ ​installs​ ​at​ ​37%​ ​lower​ ​CPI​ ​and​ ​94%​ ​more​ ​purchases​ ​at​ ​a​ ​15%​ ​lower​ ​cost​ ​per​ ​purchase,​ ​demonstrating how native formats can drive strong lower-funnel outcomes.​ ​We​​are​​growing​​our​​advertiser​​base​​by​​scaling​​and​​optimizing​​go-to-market​​operations​​that​ ​support​​the​​success​​of​​small​​and​​medium-sized​​businesses.​​SMBs​​contributed​​the​​majority​ ​of​ ​advertising​ ​revenue​ ​growth​ ​for​ ​the​ ​sixth​ ​consecutive​ ​quarter,​ ​underscoring​ ​sustained​ ​product-market​ ​fit​ ​and​ ​the​ ​impact​ ​of​ ​our​ ​investments.​ ​In​ ​Q4,​ ​total​ ​active​ ​advertisers​ ​increased​​28%​​year-over-year,​​driven​​in​​part​​by​​simplified​​onboarding,​​improved​​campaign​ ​workflows,​ ​and​ ​increased​ ​performance.​ ​We​ ​reduced​ ​setup​ ​friction​ ​by​ ​enhancing​ ​Ads​ ​Manager​ ​workflows​ ​and​ ​expanding​ ​integrations​ ​across​ ​the​ ​commerce​ ​and​ ​measurement​ ​ecosystem,​ ​enabling​ ​advertisers​ ​to​ ​launch​ ​campaigns​ ​directly​ ​from​​partner​​platforms.​​We​ ​also​ ​strengthened​ ​our​ ​SMB​ ​offering​ ​through​ ​new​ ​partnerships,​ ​including​ ​a​ ​global​ ​integration​​with​​Wix,​​which​​allows​​ecommerce​​businesses​​to​​more​​easily​​create​​campaigns,​ ​manage​ ​catalogs,​ ​and​ ​improve​ ​measurement.​ ​In​ ​addition,​ ​we​ ​are​ ​investing​ ​in​ ​AI​ ​agents​ ​designed​ ​to​ ​accelerate​ ​SMB​ ​activation​ ​through​ ​automated​ ​recommendations​ ​and​ ​onboarding​ ​optimizations​ ​that​ ​reduce​ ​decision friction and improve performance.​ ​Our​ ​Q4​ ​results​ ​reinforce​ ​our​ ​confidence​ ​in​ ​the​ ​strategic​ ​direction​ ​outlined​ ​in​ ​our​ ​2026​ ​plan.​ ​By​ ​fostering​ ​deeper​ ​connections​ ​between​ ​brands​ ​with​ ​Snapchatters,​ ​improving​ ​advertiser​ ​performance​ ​through​ ​AI,​ ​and​ ​expanding​ ​our​ ​advertiser​​base​​with​​greater​​discipline,​​we​​are​​building​​a​​more​​resilient​​and​​competitive​​advertising​​business.​​As​​we​​move​ ​into​ ​2026,​ ​we​​will​​continue​​to​​grade​​our​​progress​​based​​on​​growth​​in​​conversions,​​improvements​​in​​ROAS,​​expansion​​of​ ​our active advertiser base, and ultimately the rate of growth in advertising revenue and share over time.​ ​ Financials ​ ​Q4​ ​was​ ​a​ ​pivotal​ ​quarter​ ​for​ ​our​ ​business​ ​as​ ​we​ ​began​​to​​see​​the​​impact​​of​​our​ ​strategic​ ​focus​ ​on​ ​profitable​ ​growth​ ​translate​ ​into​ ​further​ ​revenue​ ​diversification,​ ​meaningful​ ​gross​ ​margin​ ​expansion,​ ​elevated​ ​flow​ ​through​ ​of​ ​topline​ ​growth​ ​to​ ​adjusted​ ​EBITDA,​ ​the​ ​achievement​ ​of​ ​Net​ ​Income​ ​profitability,​ ​and​ ​substantially​ ​improved free cash flow generation.​ ​SNAP INC. | Q4 2025 | INVESTOR LETTER​ ​6​

 
​Total​ ​revenue​ ​was​ ​$1.72​ ​billion​ ​in​ ​Q4,​ ​up​ ​10%​ ​year-over-year.​ ​Advertising​ ​revenue​ ​reached​ ​$1.48​ ​billion​ ​in​ ​Q4,​ ​up​ ​5%​ ​year-over-year,​​driven​​primarily​​by​​growth​​in​​DR​​advertising​​revenue.​​The​​growth​​in​​DR​​advertising​​revenue​​was​​driven​​by​ ​strong​​demand​​for​​our​​Pixel​​Purchase​​and​​App​​Purchase​​optimizations,​​as​​well​​as​​continued​​strength​​from​​the​​SMB​​client​ ​segment.​​Other​​Revenue​​increased​​62%​​year-over-year​​to​​$232​​million​​in​​Q4,​​with​​subscribers​​growing​​71%​​year-over-year​ ​to reach 24 million in Q4.​ ​Global​ ​impression​ ​volume​ ​increased​ ​approximately​ ​14%​ ​year-over-year,​ ​driven​ ​in​ ​large​ ​part​ ​by​ ​expanded​ ​advertising​ ​delivery​ ​across​ ​Sponsored​ ​Snaps​ ​and​ ​Spotlight.​ ​Total​ ​eCPMs​ ​declined​ ​approximately​​8%​​year-over-year,​​with​​the​​rate​​of​ ​decline​ ​moderating​ ​by​ ​5​ ​percentage​ ​points​ ​quarter-over-quarter,​ ​driven​ ​by​ ​growing​ ​demand​ ​for​ ​Sponsored​ ​Snaps​ ​that​ ​helped​ ​boost​ ​yields​ ​for​ ​this​ ​new​ ​placement.​ ​We​ ​are​ ​encouraged​ ​to​ ​see​ ​our​ ​advertising​ ​partners​ ​experience​ ​strong​ ​advertising​​performance​​alongside​​this​​supply​​growth,​​and​​that​​the​​improvements​​in​​pricing​​and​​performance​​are​​bringing​ ​increased demand to the platform.​ ​Adjusted​ ​Cost​ ​of​ ​Revenue​ ​was​ ​$699​ ​million​ ​in​ ​Q4,​ ​up​ ​4%​ ​year-over-year,​ ​but​ ​growing​ ​at​ ​less​ ​than​ ​half​ ​the​ ​rate​ ​of​ ​our​ ​topline.​​Infrastructure​​cost​​per​​DAU​​was​​$0.86​​in​​Q4​​and​​below​​the​​top​​end​​of​​our​​full​​year​​cost​​structure​​guidance​​range​ ​as​​we​​began​​to​​experience​​the​​initial​​benefits​​of​​better​​calibrating​​our​​cost​​to​​serve​​relative​​to​​the​​long​​term​​monetization​ ​potential​ ​of​ ​the​ ​geographies​ ​in​ ​which​ ​we​ ​operate.​ ​The​ ​remaining​ ​components​ ​of​ ​Adjusted​​Cost​​of​​Revenue​​were​​$289​ ​million​​in​​Q4,​​or​​17%​​of​​revenue,​​which​​is​​below​​the​​low​​end​​of​​our​​full​​year​​cost​​structure​​guidance​​range,​​due​​in​​large​​part​ ​to​​the​​outsized​​growth​​of​​higher​​margin​​ad​​placements,​​including​​Sponsored​​Snaps​​and​​Spotlight.​​With​​the​​combination​​of​ ​Revenue​ ​growth​ ​outpacing​ ​Infrastructure​ ​cost​ ​growth,​ ​and​ ​a​ ​favorable​ ​shift​ ​in​ ​impression​ ​delivery​ ​mix,​ ​Adjusted​ ​Gross​ ​Margin reached 59% in Q4, up from 55% in Q3 and 57% in Q4 of the prior year.​ ​Adjusted​​Operating​​Expenses​​were​​$660​​million​​in​​Q4,​​up​​8%​​year-over-year,​​but​​growing​​2​​percentage​​points​​slower​​than​ ​revenue.​ ​Personnel​ ​costs​ ​increased​ ​8%​ ​year-over-year,​ ​driven​ ​primarily​ ​by​​a​​7%​​increase​​in​​headcount​​with​​hiring​​tightly​ ​focused​ ​on​ ​our​ ​core​ ​strategic​ ​priorities.​ ​Higher​ ​legal​ ​costs,​ ​including​ ​litigation​ ​and​ ​regulatory​ ​compliance​ ​related​ ​costs,​ ​were​​an​​additional​​driver​​of​​operating​​expense​​growth​​in​​Q4.​​These​​factors​​were​​partially​​offset​​by​​reductions​​in​​community​ ​growth​ ​marketing​ ​spending​ ​as​ ​we​ ​began​ ​to​ ​execute​ ​on​ ​our​ ​strategic​ ​initiative​ ​to​ ​better​ ​calibrate​ ​our​ ​investments​ ​in​ ​community growth with the long term monetization potential of each geography.​ ​Adjusted​​EBITDA​​was​​$358​​million​​in​​Q4,​​an​​improvement​​of​​$82​​million​​compared​​to​​the​​prior​​year.​​Adjusted​​EBITDA​​flow​ ​through,​​or​​the​​percentage​​of​​year-over-year​​revenue​​growth​​that​​flowed​​through​​to​​Adjusted​​EBITDA,​​was​​51%​​in​​Q4​​and​ ​contributed​ ​to​ ​Adjusted​ ​EBITDA​ ​margins​ ​expanding​ ​9​ ​percentage​ ​points​ ​to​ ​reach​ ​21%​ ​in​ ​Q4.​ ​Importantly,​ ​we​ ​delivered​ ​positive​ ​Net​ ​income​ ​of​ ​$45​ ​million​​in​​Q4,​​up​​from​​$9M​​in​​prior​​year.​​The​​$36​​million​​year-over-year​​improvement​​largely​ ​reflects​ ​the​ ​flow-through​​in​​Adjusted​​EBITDA,​​offset​​by​​a​​$31​​million​​increase​​in​​interest​​expense​​reflecting​​the​​high​​yield​ ​notes​​issued​​earlier​​in​​the​​year.​​Stock​​based​​compensation​​and​​related​​payroll​​expenses​​(SBC)​​were​​$265​​million​​in​​Q4,​​or​ ​approximately​​flat​​year-over-year,​​as​​progress​​toward​​a​​flatter​​and​​leaner​​leadership​ ​structure helped power the business to Net Income profitability in Q4.​ ​Free​ ​Cash​ ​Flow​ ​was​ ​$206​ ​million​ ​in​ ​Q4​ ​while​ ​Operating​ ​Cash​ ​Flow​ ​was​ ​$270​ ​million.​ ​Over​ ​the​ ​trailing​ ​twelve​ ​months,​ ​Free​ ​Cash​ ​Flow​ ​was​ ​$437​ ​million​ ​and​ ​Operating​ ​Cash​ ​Flow​ ​was​ ​$656​ ​million,​ ​as​ ​we​ ​continue​ ​to​ ​execute​ ​on​ ​translating​ ​topline growth into sustained growth in cash flow.​ ​SNAP INC. | Q4 2025 | INVESTOR LETTER​ ​7​

 
​We​​continued​​to​​manage​​our​​share​​count​​carefully,​​with​​share​​repurchases​​completed​​throughout​​2025​​helping​​limit​​share​ ​count​ ​growth​ ​to​ ​3%​ ​in​ ​Q4.​ ​We​ ​ended​​Q4​​with​​approximately​​$2.9​​billion​​in​​cash​​and​​marketable​​securities,​​and​​just​​$47​ ​million​ ​in​ ​convertible​ ​notes​ ​set​ ​to​ ​mature​ ​in​ ​fiscal​ ​2026.​ ​Given​ ​the​ ​strength​ ​of​ ​our​​balance​​sheet,​​our​​progress​​towards​ ​sustained​​free​​cash​​flow​​generation,​​and​​our​​desire​​to​​opportunistically​​manage​​our​​share​​count​​for​​the​​benefit​​of​​our​​long​ ​term shareholders, we have authorized a new share repurchase program in the amount of $500 million.​ ​For​ ​the​ ​full​ ​year,​ ​we​ ​generated​ ​$5.93​​billion​​in​​revenue,​​reflecting​​11%​​year-over-year​​growth,​​driven​​by​​a​​combination​​of​ ​ongoing​ ​strength​ ​in​ ​our​ ​SMB​​advertising​​segment​​as​​well​​as​​the​​rapid​​growth​​in​​our​​subscription​​business.​​We​​delivered​ ​$689​​million​​in​​Adjusted​​EBITDA,​​representing​​Adjusted​​EBITDA​​flow-through​​of​​32%​​in​​2025.​​Importantly,​​we​​came​​within​ ​or​​below​​our​​full-year​​cost​​structure​​guidance​​across​​all​​key​​metrics​​as​​we​​managed​​our​​investment​​levels​​in​​balance​​with​ ​the rate of revenue growth realized by our business throughout the year.​ ​ Financial Outlook ​ ​As​ ​we​ ​begin​ ​2026,​ ​we​ ​are​ ​focused​ ​on​ ​accelerating​ ​topline​ ​growth,​ ​further​​diversifying​​our​​revenue​​streams,​​expanding​ ​gross​ ​margins,​ ​and​ ​making​ ​meaningful​ ​progress​ ​toward​ ​Net​ ​Income​ ​profitability.​ ​Our​ ​investment​ ​plans​ ​for​ ​2026​ ​reflect​ ​these​ ​priorities,​ ​and​ ​our​ ​intention​ ​is​ ​to​ ​calibrate​ ​our​ ​investments​ ​to​ ​revenue​ ​growth​ ​as​ ​we​ ​move​ ​through​ ​the​ ​year.​ ​Our​ ​Infrastructure​ ​investment​​levels​​for​​2026​​will​​be​​driven​​by​​our​​strategic​​initiative​​to​​better​​align​​our​​cost​​to​​serve​​with​​the​ ​long​​term​​monetization​​potential​​of​​each​​geography​​in​​which​​we​​operate.​​As​​a​​result,​​our​​full​​year​​cost​​structure​​guidance​ ​range​​for​​Infrastructure​​costs​​is​​$1.6​​billion​​to​​$1.65​​billion,​​which​​would​​represent​​flat​​year-over-year​​infrastructure​​costs​​at​ ​the​ ​low​ ​end.​ ​We​​estimate​​that​​the​​remaining​​components​​of​​Adjusted​​Cost​​of​​Revenue​​will​​be​​a​​combined​​16%​​to​​17%​​of​ ​revenue​ ​in​ ​each​ ​quarter​ ​of​ ​2026,​ ​which​ ​would​ ​represent​ ​a​ ​1-2​ ​percentage​​point​​improvement​​over​​2025,​​driven​​by​​the​ ​benefit of outsized growth in higher margin ad placements.​ ​Personnel​​costs​​are​​the​​largest​​component​​of​​Adjusted​​Operating​​Expenses​​and​​we​​expect​​headcount​​growth​​in​​2026​​to​ ​be​ ​roughly​ ​inline​ ​with​ ​the​ ​7%​ ​headcount​ ​growth​ ​we​ ​experienced​ ​in​ ​Q4​ ​2025,​ ​with​ ​hiring​ ​tightly​ ​focused​ ​on​ ​our​ ​core​ ​strategic​ ​priorities.​ ​We​ ​anticipate​​continued​​elevated​​legal​​and​​regulatory​​related​​costs,​​and​​we​​plan​​to​​make​​meaningful​ ​proactive​ ​investments​ ​in​ ​community​ ​safety​ ​that​ ​will​ ​contribute​ ​to​ ​Adjusted​ ​Operating​ ​Expense​ ​growth.​ ​In​ ​addition,​ ​our​ ​Adjusted​ ​Operating​ ​Expense​​range​​for​​2026​​includes​​incremental​​investments​​in​​product​​development​​and​​go-to-market​ ​support​ ​for​ ​the​ ​consumer​ ​launch​ ​of​ ​Specs​ ​later​ ​this​ ​year.​ ​These​ ​factors​ ​will​ ​be​ ​partially​ ​offset​ ​by​ ​reduced​ ​spending​​on​ ​community​​growth​​marketing​​as​​we​​adjust​​these​​investments​​to​​better​​reflect​​the​​long​​term​​monetization​​potential​​of​​each​ ​geography.​​As​​a​​result,​​we​​estimate​​that​​full-year​​Adjusted​​Operating​​Expenses​​will​​be​​approximately​​$3.0​​billion.​​For​​SBC​ ​and related expenses, we estimate approximately $1.2 billion in 2026.​ ​For​​Q1​​specifically,​​our​​guidance​​range​​for​​revenue​​is​​$1.50​​billion​​to​​$1.53​​billion.​​Our​​Q1​​revenue​​guidance​​range​​excludes​ ​any​​potential​​revenue​​from​​the​​Perplexity​​integration​​as​​we​​have​​yet​​to​​mutually​​agree​​on​​a​​path​​to​​a​​broader​​roll​​out.​​Given​ ​this​​revenue​​range,​​and​​our​​investment​​plans​​for​​the​​year​​ahead,​​we​​estimate​​that​​Adjusted​​EBITDA​​will​​be​​between​​$170​ ​million​​and​​$190​​million​​in​​Q1.​​As​​we​​begin​​2026,​​we​​are​​excited​​to​​execute​​on​​our​​pivot​​toward​​profitable​​growth​​and​​to​ ​make​​incremental​​progress​​toward​​our​​medium​​term​​goal​​of​​delivering​​meaningful​​Net​​Income​​profitability.​​The​​impacts​​of​ ​this​​strategic​​direction​​are​​already​​evident​​in​​our​​Q4​​results,​​and​​we​​are​​incredibly​​proud​​of​​the​​work​​our​​team​​is​​doing​​to​ ​build on this momentum in Q1.​ ​SNAP INC. | Q4 2025 | INVESTOR LETTER​ ​8​

 
​1.​ ​Adjusted​ ​Gross​ ​Profit​ ​is​ ​a​ ​non-GAAP​ ​measure,​ ​which​ ​we​ ​define​ ​as​ ​GAAP​ ​revenue​​less​​Adjusted​​Cost​​of​​Revenue.​​Adjusted​​Gross​​Margin​​is​​a​​non-GAAP​​measure,​​which​ ​we​ ​define​ ​as​ ​GAAP​ ​revenue​ ​less​ ​Adjusted​ ​Cost​ ​of​ ​Revenue​ ​divided​ ​by​ ​GAAP​ ​revenue.​ ​Adjusted​ ​Cost​ ​of​ ​Revenue​ ​is​ ​a​ ​non-GAAP​ ​measure​ ​and​ ​excludes​ ​stock-based​ ​compensation​ ​expense,​ ​payroll​ ​and​ ​other​ ​tax​​expense​​related​​to​​stock-based​​compensation,​​depreciation​​and​​amortization,​​and​​certain​​other​​items​​impacting​​net​​income​ ​(loss) from time to time. See Appendix for reconciliation of GAAP Cost of Revenue to Adjusted Cost of Revenue.​ ​2.​ ​Adjusted​ ​Operating​ ​Expenses​ ​is​ ​a​ ​non-GAAP​ ​measure​ ​and​ ​excludes​ ​stock-based​ ​compensation​ ​expense,​ ​payroll​ ​and​ ​other​ ​tax​ ​expense​ ​related​ ​to​ ​stock-based​ ​compensation,​ ​depreciation​ ​and​ ​amortization,​ ​and​ ​certain​ ​other​ ​items​ ​impacting​ ​net​ ​income​ ​(loss)​ ​from​ ​time​ ​to​ ​time.​​See​​Appendix​​for​​reconciliation​​of​​GAAP​​Operating​ ​Expenses to Adjusted Operating Expenses.​ ​3.​ ​Adjusted​ ​EBITDA​ ​is​ ​a​ ​non-GAAP​ ​measure,​ ​which​ ​we​ ​define​ ​as​ ​net​ ​income​ ​(loss),​ ​excluding​ ​interest​ ​income;​ ​interest​ ​expense;​ ​other​ ​income​ ​(expense),​ ​net;​ ​income​ ​tax​ ​benefit​ ​(expense);​ ​depreciation​ ​and​ ​amortization;​ ​stock-based​ ​compensation​ ​expense;​ ​payroll​ ​and​ ​other​ ​tax​ ​expense​ ​related​ ​to​ ​stock-based​ ​compensation;​ ​and​​certain​ ​other items impacting net income (loss) from time to time. See Appendix for reconciliation of net income (loss) to Adjusted EBITDA.​ ​4.​ ​Free​ ​Cash​ ​Flow​ ​is​ ​a​ ​non-GAAP​ ​measure,​ ​which​ ​we​ ​define​ ​as​ ​net​ ​cash​ ​provided​ ​by​ ​(used​ ​in)​ ​operating​ ​activities,​​reduced​​by​​purchases​​of​​property​​and​​equipment.​​See​ ​Appendix for reconciliation of net cash provided by (used in) operating activities to Free Cash Flow.​ ​5.​ ​In​ ​the​ ​first​ ​quarter​ ​of​ ​2025,​ ​we​ ​refined​ ​our​ ​processes​ ​and​ ​controls​ ​to​ ​allow​ ​us​ ​to​ ​more​​accurately​​record​​user​​activity​​that​​would​​not​​otherwise​​be​​recorded​​during​​such​ ​period​ ​due​ ​to​ ​delays​​in​​receiving​​user​​metric​​information​​resulting​​from​​carrier​​or​​other​​user​​connectivity​​issues​​during​​the​​measurement​​period.​​For​​additional​​information​ ​concerning​ ​these​ ​refinements,​​see​​the​​“Note​​Regarding​​User​​Metrics​​and​​Other​​Data”​​in​​our​​Quarterly​​Report​​filed​​on​​Form​​10-Q​​for​​the​​first​​quarter​​of​​2025.​​As​​a​​result​​of​ ​such refinements, our DAUs may not be directly comparable to those in prior periods, as they reflect a comparison to previously reported numbers.​ ​SNAP INC. | Q4 2025 | INVESTOR LETTER​ ​9​

 
​SNAP INC. | Q4 2025 | INVESTOR LETTER​ ​10​

 
​Forward Looking Statements​ ​This​ ​letter​ ​contains​ ​forward-looking​​statements​ ​within​ ​the​​meaning​​of​ ​Section​​27A​​of​ ​the​​Securities​ ​Act​ ​of​ ​1933,​ ​as​ ​amended,​ ​or​ ​the​​Securities​​Act,​​and​ ​Section​ ​21E​ ​of​ ​the​ ​Securities​ ​Exchange​ ​Act​ ​of​ ​1934,​ ​as​ ​amended,​ ​or​ ​the​ ​Exchange​ ​Act​ ​about​ ​us​ ​and​ ​our​ ​industry​ ​that​ ​involve​ ​substantial​ ​risks​ ​and​ ​uncertainties.​ ​All​ ​statements​ ​other​ ​than​​statements​​of​​historical​​facts​​contained​​in​​this​​letter,​​including​​statements​​regarding​​guidance,​​our​​future​​results​​of​ ​operations​ ​or​ ​financial​ ​condition,​ ​future​ ​stock​ ​repurchase​ ​programs​ ​or​ ​stock​ ​dividends,​ ​business​ ​strategy​ ​and​ ​plans,​ ​user​ ​growth​ ​and​ ​engagement,​ ​product​ ​initiatives,​ ​objectives​ ​of​ ​management​ ​for​ ​future​​operations,​ ​and​​advertiser​ ​and​​partner​ ​offerings,​ ​are​​forward-looking​​statements.​​In​​some​​cases,​ ​you​ ​can​ ​identify​ ​forward-looking​ ​statements​ ​because​ ​they​ ​contain​ ​words​​such​​as​ ​“anticipate,”​ ​“believe,”​ ​“contemplate,”​ ​“continue,”​ ​“could,”​ ​“estimate,”​ ​“expect,”​ ​“going​ ​to,”​ ​“intend,”​ ​“may,”​ ​“plan,”​ ​“potential,”​ ​“predict,”​ ​“project,”​ ​“should,”​ ​“target,”​ ​“will,”​ ​or​ ​“would”​ ​or​ ​the​​negative​​of​ ​these​​words​​or​ ​other​ ​similar​ ​terms​​or​ ​expressions.​ ​We​​caution​​you​​that​ ​the​​foregoing​​may​​not​ ​include​​all​ ​of​ ​the​​forward-looking​​statements​​made​​in​​this​​letter.​​You​​should​​not​ ​rely​ ​on​​forward-looking​​statements​ ​as​ ​predictions​​of​​future​​events.​​We​​have​​based​​the​​forward-looking​​statements​​contained​​in​​this​​letter​​primarily​​on​​our​ ​current​ ​expectations​​and​​projections​​about​ ​future​​events​ ​and​​trends,​​including​​our​​financial​​outlook,​​macroeconomic​​uncertainty,​​and​​geo-political​​events​ ​and​ ​conflicts,​ ​that​ ​we​ ​believe​ ​may​ ​continue​ ​to​ ​affect​ ​our​ ​business,​ ​financial​ ​condition,​ ​results​ ​of​ ​operations,​ ​and​ ​prospects.​ ​These​ ​forward-looking​ ​statements​ ​are​ ​subject​ ​to​ ​risks​ ​and​​uncertainties​ ​related​​to:​ ​our​ ​financial​ ​performance;​ ​our​ ​ability​​to​​attain​​and​​sustain​​profitability;​​our​​ability​​to​​generate​ ​and​​sustain​ ​positive​ ​cash​​flow;​​our​​ability​​to​​attract​​and​​retain​​users,​​partners,​​and​​advertisers;​​competition​​and​​new​​market​​entrants;​​managing​​our​​growth​ ​and​​future​​expenses;​ ​compliance​​with​ ​new​​laws,​ ​regulations,​ ​and​​executive​​actions;​​our​​ability​​to​​maintain,​​protect,​​and​​enhance​​our​​intellectual​​property;​ ​our​ ​ability​ ​to​​succeed​​in​​existing​​and​​new​​market​​segments;​​our​​ability​​to​​attract​​and​​retain​​qualified​​team​​members​​and​​key​​personnel;​​our​​ability​​to​​repay​ ​or​ ​refinance​ ​outstanding​ ​debt,​ ​or​ ​to​ ​access​ ​additional​ ​financing;​ ​future​ ​acquisitions,​ ​divestitures,​ ​or​ ​investments;​ ​and​​the​​potential​ ​adverse​​impact​ ​of​ ​climate​​change,​ ​natural​ ​disasters,​ ​health​ ​epidemics,​ ​macroeconomic​ ​conditions,​ ​and​​war​ ​or​​other​​armed​​conflict,​​as​​well​​as​​risks,​​uncertainties,​​and​​other​ ​factors​ ​described​ ​in​ ​“Risk​ ​Factors”​ ​and​ ​elsewhere​ ​in​ ​our​ ​most​ ​recent​ ​periodic​ ​report​ ​filed​​with​ ​the​​U.S.​ ​Securities​ ​and​​Exchange​​Commission,​ ​or​ ​SEC,​ ​which​​is​ ​available​ ​on​​the​​SEC’s​ ​website​ ​at​ ​www.sec.gov.​ ​Additional​ ​information​​will​ ​be​​made​​available​ ​in​ ​Snap​​Inc.’s​​periodic​​report​​that​​will​​be​​filed​​with​ ​the​​SEC​​for​ ​the​​period​​covered​​by​ ​this​ ​letter​ ​and​​other​ ​filings​​that​ ​we​​make​​from​​time​​to​ ​time​​with​ ​the​​SEC.​ ​In​​addition,​​any​​forward-looking​​statements​ ​contained​ ​in​ ​this​ ​letter​ ​are​ ​based​ ​on​ ​assumptions​ ​that​ ​we​ ​believe​ ​to​ ​be​ ​reasonable​ ​as​ ​of​ ​this​ ​date.​ ​We​ ​undertake​ ​no​ ​obligation​ ​to​ ​update​ ​any​ ​forward-looking​​statements​ ​to​ ​reflect​ ​events​ ​or​ ​circumstances​​after​ ​the​​date​ ​of​ ​this​​letter​​or​​to​​reflect​​new​​information​​or​​the​​occurrence​​of​​unanticipated​ ​events, including future developments related to geo-political events and conflicts and macroeconomic conditions, except as required by law.​ ​Non-GAAP Financial Measures​ ​To​ ​supplement​ ​our​ ​consolidated​​financial​ ​statements,​ ​which​​are​ ​prepared​​and​​presented​​in​ ​accordance​​with​ ​GAAP,​ ​we​​use​​certain​ ​non-GAAP​​financial​ ​measures,​ ​as​ ​described​​below,​ ​to​ ​understand​​and​​evaluate​​our​​core​​operating​​performance.​​These​​non-GAAP​​financial​​measures,​​which​​may​​be​​different​ ​than​ ​similarly​ ​titled​ ​measures​ ​used​ ​by​ ​other​ ​companies,​ ​are​ ​presented​ ​to​ ​enhance​ ​investors’​ ​overall​ ​understanding​​of​ ​our​ ​financial​ ​performance​​and​ ​should​ ​not​ ​be​ ​considered​ ​a​ ​substitute​ ​for,​ ​or​ ​superior​ ​to,​ ​the​ ​financial​ ​information​ ​prepared​ ​and​ ​presented​ ​in​ ​accordance​ ​with​ ​GAAP.​ ​We​ ​use​ ​the​ ​non-GAAP​​financial​ ​measure​​of​ ​Free​​Cash​​Flow,​ ​which​​is​​defined​​as​​net​​cash​​provided​​by​​(used​​in)​​operating​​activities,​​reduced​​by​​purchases​​of​​property​ ​and​ ​equipment.​ ​We​ ​believe​ ​Free​ ​Cash​ ​Flow​ ​is​ ​an​ ​important​ ​liquidity​ ​measure​ ​of​ ​the​ ​cash​ ​that​ ​is​ ​available,​ ​after​ ​capital​ ​expenditures,​ ​for​ ​operational​ ​expenses​ ​and​ ​investment​ ​in​ ​our​ ​business​ ​and​ ​is​ ​a​ ​key​ ​financial​ ​indicator​ ​used​ ​by​ ​management.​ ​Additionally,​ ​we​ ​believe​ ​that​ ​Free​ ​Cash​ ​Flow​ ​is​ ​an​ ​important​ ​measure​​since​​we​​use​​third-party​ ​infrastructure​​partners​ ​to​ ​host​ ​our​ ​services​​and​​therefore​​we​​do​​not​ ​incur​​significant​​capital​​expenditures​​to​ ​support​ ​revenue​​generating​​activities.​​Free​​Cash​​Flow​​is​​useful​​to​​investors​​as​​a​​liquidity​​measure​​because​​it​​measures​​our​​ability​​to​​generate​​or​​use​​cash.​ ​Once​​our​​business​​needs​​and​​obligations​​are​​met,​​cash​​can​​be​​used​​to​​maintain​​a​​strong​​balance​​sheet​​and​​invest​​in​​future​​growth.​​We​​use​​the​​non-GAAP​ ​financial​ ​measure​ ​of​ ​Adjusted​​EBITDA,​ ​which​​is​ ​defined​​as​ ​net​ ​income​​(loss),​ ​excluding​​interest​ ​income;​ ​interest​ ​expense;​ ​other​ ​income​​(expense),​ ​net;​ ​income​​tax​ ​benefit​ ​(expense);​ ​depreciation​​and​​amortization;​ ​stock-based​​compensation​​expense;​ ​payroll​ ​and​​other​ ​tax​ ​expense​​related​​to​​stock-based​ ​compensation;​ ​and​​certain​ ​other​ ​items​​impacting​​net​ ​income​​(loss)​ ​from​​time​​to​​time.​​We​​believe​​that​​Adjusted​​EBITDA​​helps​​identify​​underlying​​trends​​in​ ​our​ ​business​ ​that​ ​could​ ​otherwise​ ​be​ ​masked​ ​by​ ​the​ ​effect​ ​of​ ​the​ ​expenses​ ​that​ ​we​ ​exclude​ ​in​ ​Adjusted​​EBITDA.​ ​We​​use​​other​ ​non-GAAP​​financial​ ​measures​ ​such​ ​as​ ​Adjusted​ ​Cost​ ​of​ ​Revenue​ ​and​ ​Adjusted​ ​Operating​​Expenses.​ ​These​​measures​​are​ ​defined​​as​ ​their​ ​respective​​GAAP​​expense​​line​ ​items,​ ​excluding​​interest​ ​income;​ ​interest​ ​expense;​​other​​income​​(expense),​​net;​​income​​tax​​benefit​​(expense);​​depreciation​​and​​amortization;​​stock-based​ ​compensation​​expense;​ ​payroll​​and​​other​​tax​​expense​​related​​to​​stock-based​​compensation;​​and​​certain​​other​​items​​impacting​​net​​income​​(loss)​​from​​time​ ​to​ ​time.​ ​We​​use​​the​​non-GAAP​​financial​ ​measure​​of​ ​Adjusted​​Gross​ ​Profit,​​which​​we​​define​​as​​GAAP​​revenue​​less​​Adjusted​​Cost​​of​​Revenue.​​We​​use​​the​ ​non-GAAP​ ​financial​ ​measure​ ​of​ ​Adjusted​ ​Gross​ ​Margin,​ ​which​​we​​define​​as​ ​GAAP​​revenue​​less​ ​Adjusted​​Cost​ ​of​ ​Revenue​​divided​​by​ ​GAAP​​revenue.​ ​Similar​​to​​Adjusted​​EBITDA,​​we​​believe​​these​​measures​​help​​identify​​underlying​​trends​​in​​our​​business​​that​​could​​otherwise​​be​​masked​​by​​the​​effect​​of​​the​ ​expenses​ ​we​ ​exclude​​in​ ​the​​measure.​ ​We​​believe​​that​ ​these​​non-GAAP​​financial​ ​measures​​provide​​useful​ ​information​​about​ ​our​ ​financial​ ​performance,​ ​enhance​​the​​overall​ ​understanding​​of​ ​our​ ​past​ ​performance​​and​​future​​prospects,​​and​​allow​​for​​greater​​transparency​​with​​respect​​to​​key​​metrics​​used​​by​ ​our​ ​management​ ​for​ ​financial​ ​and​​operational​ ​decision-making.​ ​We​​are​ ​presenting​​these​​non-GAAP​​measures​​to​ ​assist​ ​investors​ ​in​ ​seeing​​our​​financial​ ​performance​​through​​the​​eyes​​of​ ​management,​ ​and​​because​​we​​believe​​that​​these​​measures​​provide​​an​​additional​​tool​​for​​investors​​to​​use​​in​​comparing​ ​our​ ​core​​financial​ ​performance​​over​ ​multiple​ ​periods​​with​ ​other​ ​companies​ ​in​ ​our​ ​industry.​ ​For​ ​a​ ​reconciliation​​of​​these​​non-GAAP​​financial​​measures​​to​ ​the​​most​ ​directly​ ​comparable​ ​GAAP​​financial​ ​measure,​ ​please​​see​​“Reconciliation​​of​​GAAP​​to​​Non-GAAP​​Financial​​Measures”​​included​​as​​an​​Appendix​​to​ ​this​ ​letter.​ ​Snap​​Inc.,​ ​“Snapchat,”​ ​and​​our​ ​other​ ​registered​​and​​common​​law​​trade​​names,​ ​trademarks,​ ​and​​service​​marks​​are​​the​​property​​of​​Snap​​Inc.​​or​ ​our subsidiaries.​ ​SNAP INC. | Q4 2025 | INVESTOR LETTER​ ​11​

 
​Reconciliation of GAAP to Non-GAAP Financial Measures​ ​(In thousands, unaudited)​ ​1.​ ​Adjusted​ ​Gross​ ​Profit​ ​is​ ​a​ ​non-GAAP​ ​measure,​ ​which​ ​we​ ​define​​as​​GAAP​​revenue​​less​​Adjusted​​Cost​​of​​Revenue.​​Adjusted​​Cost​​of​​Revenue​​is​​a​​non-GAAP​​measure​​and​ ​excludes​ ​stock-based​ ​compensation​ ​expense,​ ​payroll​ ​and​​other​​tax​​expense​​related​​to​​stock-based​​compensation,​​depreciation​​and​​amortization,​​and​​certain​​other​​items​ ​impacting​ ​net​ ​income​ ​(loss)​ ​from​ ​time​ ​to​ ​time.​ ​Adjusted​ ​Gross​ ​Margin​ ​is​​a​​non-GAAP​​measure,​​which​​we​​define​​as​​GAAP​​revenue​​less​​Adjusted​​Cost​​of​​Revenue​​divided​ ​by GAAP revenue.​ ​2.​ ​GAAP Operating Expenses is defined as total costs and expenses, as reported on our consolidated statements of operations, minus GAAP cost of revenue.​ ​3.​ ​Adjusted​ ​Operating​ ​Expenses​ ​is​ ​a​ ​non-GAAP​ ​measure​ ​and​ ​excludes​ ​stock-based​ ​compensation​ ​expense,​ ​payroll​ ​and​ ​other​ ​tax​ ​expense​ ​related​ ​to​ ​stock-based​ ​compensation, depreciation and amortization, and certain other items impacting net income (loss) from time to time.​ ​SNAP INC. | Q4 2025 | INVESTOR LETTER​ ​12​

 
​Reconciliation of GAAP to Non-GAAP Financial Measures​ ​(In thousands, unaudited)​ ​1.​ ​Adjusted​ ​EBITDA​ ​is​ ​a​ ​non-GAAP​ ​measure,​ ​which​ ​we​ ​define​ ​as​ ​net​ ​income​ ​(loss),​ ​excluding​ ​interest​ ​income;​ ​interest​ ​expense;​ ​other​ ​income​ ​(expense),​ ​net;​ ​income​ ​tax​ ​benefit​ ​(expense);​ ​depreciation​ ​and​ ​amortization;​ ​stock-based​ ​compensation​ ​expense;​ ​payroll​ ​and​ ​other​ ​tax​ ​expense​ ​related​ ​to​ ​stock-based​ ​compensation;​ ​and​​certain​ ​other items impacting net income (loss) from time to time.​ ​2.​ ​Free Cash Flow is a non-GAAP measure, which we define as net cash provided by (used in) operating activities, reduced by purchases of property and equipment.​ ​SNAP INC. | Q4 2025 | INVESTOR LETTER​ ​13​

 
​Reconciliation of GAAP to Non-GAAP Financial Measures​ ​(In thousands, unaudited)​ ​1.​ ​Restructuring​ ​charges​ ​in​ ​2024​ ​were​ ​composed​ ​primarily​ ​of​ ​cash​ ​severance,​ ​stock-based​ ​compensation​ ​expense,​ ​and​ ​other​ ​charges​ ​associated​ ​with​ ​the​ ​2024​ ​restructuring. These charges are not reflective of underlying trends in our business.​ ​2.​ ​Adjusted​ ​EBITDA​ ​is​ ​a​ ​non-GAAP​ ​measure,​ ​which​ ​we​ ​define​ ​as​ ​net​ ​income​ ​(loss),​ ​excluding​ ​interest​ ​income;​ ​interest​ ​expense;​ ​other​ ​income​ ​(expense),​ ​net;​ ​income​ ​tax​ ​benefit​ ​(expense);​ ​depreciation​ ​and​ ​amortization;​ ​stock-based​ ​compensation​ ​expense;​ ​payroll​ ​and​ ​other​ ​tax​ ​expense​ ​related​ ​to​ ​stock-based​ ​compensation;​ ​and​​certain​ ​other items impacting net income (loss) from time to time.​ ​3.​ ​Free Cash Flow is a non-GAAP measure, which we define as net cash provided by (used in) operating activities, reduced by purchases of property and equipment.​ ​SNAP INC. | Q4 2025 | INVESTOR LETTER​ ​14​