Item 2.02 Results of Operations and Financial Condition.
On August 31, 2022, we posted an Investor Update presentation to our Investor
Relations website at investor.snap.com disclosing preliminary year-over-year
revenue growth for the third quarter of 2022 through August 29, 2022 of
approximately 8%. A copy of that Investor Update is attached as Exhibit 99.2.
Given uncertainties related to the operating environment, we are not providing
our expectations for revenue or adjusted EBITDA for the third quarter of 2022.
The information presented in this Item 2.02 is furnished and shall not be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or subject to the liabilities of that section or Sections 11 and
12(a)(2) of the Securities Act of 1933, as amended. The information shall not be
deemed incorporated by reference into any other filing with the U.S. Securities
and Exchange Commission made by Snap Inc., whether made before or after today's
date, regardless of any general incorporation language in such filing.
Item 2.05 Costs Associated with Exit or Disposal Activities.
On August 31, 2022, we announced a plan to reduce our global headcount by
approximately 20% of our global full time employees. The headcount reduction is
part of a broader strategic reprioritization by the company to focus on our top
priorities, improve cost efficiencies, and drive toward profitability and
positive free cash flow.
As a result of the strategic reprioritization, we currently estimate that we
will incur pre-tax charges in the range of $110 million to $175 million,
primarily consisting of severance and related costs, contract termination costs,
and other impairment charges, of which $95 million to $135 million are expected
to be future cash expenditures. The majority of these costs are expected to be
incurred during the third quarter of 2022. Potential position eliminations in
each country are subject to local law and consultation requirements, which may
extend this process into the fourth quarter of 2022 or beyond in certain
countries. The charges that we expect to incur are subject to a number of
assumptions, including local law requirements in various jurisdictions, and
actual expenses may differ materially from the estimates disclosed above.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
As part of the strategic planning process, Evan Spiegel, Chief Executive Officer
and Co-Founder, outlined a proposal to our board of directors to create the role
of Chief Operating Officer in order to more closely align our engineering, ad
product, and sales functions. Following those discussions, Mr. Spiegel made a
recommendation to the compensation committee of the board to nominate Jerry
Hunter, Senior Vice President of Engineering, age 57, to the newly-created role
of Chief Operating Officer. The compensation committee approved Mr. Hunter's
promotion, effective immediately, on August 30, 2022. Mr. Hunter has served as
our Senior Vice President of Engineering since November 2017 and previously
served as Vice President of Core Engineering since October 2016. In Mr. Hunter's
new role, he will oversee our engineering, sales, partnerships, and revenue
organizations. In connection with Mr. Hunter's promotion, he will be awarded
$19.5 million in new restricted stock units that will vest over the next
39 months in equal quarterly increments.
On August 26, 2022, Jeremi Gorman, our Chief Business Officer, notified us that
she will leave Snap to pursue a new opportunity. Ms. Gorman's last day at Snap
will be September 16, 2022. Ms. Gorman has agreed to continue to serve as Chief
Business Officer for an interim period to assist with an effective transition of
her duties and responsibilities. Accordingly, on August 30, 2022, we entered
into a transition agreement with Ms. Gorman. Ms. Gorman has confirmed that this
transition is not related to any disagreement with us on any matter relating to
our accounting, strategy, management, operations, policies, or practices
(financial or otherwise). The foregoing description of Ms. Gorman's transition
agreement is qualified in its entirety by reference to the full text of the
agreement, which is attached to this Current Report on Form 8-K as Exhibit 10.1
and is incorporated by reference.
Item 7.01 Regulation FD Disclosure.
On August 31, 2022, we began notifying team members affected by the strategic
reprioritization and communicated the changes to the entire company with a
letter from Evan Spiegel, our Chief Executive Officer and Co-Founder, which is
attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated
by reference.
On August 31, 2022, we posted an Investor Update presentation to our Investor
Relations website at investor.snap.com, which is attached to this Current Report
on Form 8-K as Exhibit 99.2 and is incorporated by reference.
The information presented in this Item 7.01 is furnished and shall not be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or subject to the liabilities of that section or Sections 11 and
12(a)(2) of the Securities Act of 1933, as amended. The information shall not be
deemed incorporated by reference into any other filing with the U.S. Securities
and Exchange Commission made by Snap Inc., whether made before or after today's
date, regardless of any general incorporation language in such filing.
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Forward-Looking Statements
This Current Report on Form 8-K 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 Current Report on Form 8-K, including statements
regarding our future results of operations or financial condition, our plans to
improve operational efficiencies, timing and charges associated with our
strategic reprioritization, our business strategy and plans, 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
Current Report on Form 8-K.
You should not rely on forward-looking statements as predictions of future
events. We have based the forward-looking statements contained in this Current
Report on Form 8-K primarily on our current expectations and projections about
future events and trends, including our financial outlook, geo-political
conflicts, and the COVID-19 pandemic, 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, publishers, and advertisers; competition and new market entrants;
managing our international expansion and 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
and key personnel; our ability to repay outstanding debt; future acquisitions,
divestitures or investments; our ability to achieve cost savings from our
strategic reprioritization; disruptions to our business as a result of our
strategic reprioritization; 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 other
filings that we make from time to time with the SEC. In addition, any
forward-looking statements contained in this Current Report on Form 8-K 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 Current Report on Form 8-K or to
reflect new information or the occurrence of unanticipated events, including
future developments related to geo-political conflicts, the COVID-19 pandemic,
and macroeconomic conditions, except as required by law.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
10.1 Transition Agreement, by and between Snap Inc. and Jeremi Gorman,
dated August 30, 2022.
99.1 Letter to Snap Inc. team members from Evan Spiegel, dated August 31,
2022.
99.2 Investor Update, dated August 31, 2022.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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