Snap (SNAP) risk factors, 2025 10-K

Risks Related to Our Business and Industry

1. 01We generate substantially all of our revenue from advertising. The failure to attract new advertisers, the loss of advertisers, or a reduction in how much they spend could seriously harm our business
2. 02Snapchat depends on effectively operating with mobile operating systems, hardware, networks, regulations, and standards that we do not control. Changes in our products or to those mobile operating systems, hardware, networks, regulations, or standards may seriously harm our user retention, growth, and engagement
3. 03We rely on Google Cloud and Amazon Web Services, or AWS, for the vast majority of our computing, storage, bandwidth, and other services. Any disruption of or interference with our use of either platform would negatively affect our operations and seriously harm our business
4. 04If we are unable to protect our intellectual property, the value of our brand and other intangible assets may be diminished, and our business may be seriously harmed. If we need to license or acquire new intellectual property, we may incur substantial costs
5. 05Our two co-founders have control over all stockholder decisions because they control a substantial majority of our voting stock
6. 06Macroeconomic uncertainties, including labor shortages and disruptions, supply chain disruptions, banking instability, inflation, and recession risks, have in the past and may continue to adversely impact our business
7. 07advertising revenue. Any decline in advertising revenue or the collectability of our receivables could seriously harm our business
8. 08Exposure to geo-political conflicts and events could put our employees and partners at substantial risk, interrupt our operations, increase costs, create additional regulatory burdens, and have significant negative macroeconomic effects, any of which could seriously harm our business
9. 09If we do not develop successful new products or improve existing ones, our business will suffer. We may also invest in new lines of business that could fail to attract or retain users or generate revenue
10. 10We have incurred operating losses in the past, and may not be able to attain and sustain profitability
11. 11The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could seriously harm our business
12. 12We have a continually evolving business model, which makes it difficult to evaluate our prospects and future financial results and increases the risk that we will not be successful
13. 13Our user metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may seriously harm and negatively affect our reputation and our business
14. 14Improper or illegal use of Snapchat could seriously harm our business and reputation
15. 15We use AI, including generative AI, in consumer-facing features of our products and services, such as My AI, and in the operation of our business. The development, deployment, training, use, safety, and personal data processing of AI presents various AI, privacy, and security risks that impact our business
16. 16Our financial condition and results of operations will fluctuate from quarter to quarter, which makes them difficult to predict
17. 17If we are unable to continue to maintain or successfully grow our user base and further monetize our products, our business will suffer
18. 18We cannot assure you that we will effectively manage our growth or changes to our business
19. 19Our costs may increase faster than our revenue, which could seriously harm our business or increase our losses
20. 20Our business depends on our ability to maintain and scale our technology infrastructure. Any significant disruption to our service could damage our reputation, result in a potential loss of users and decrease in user engagement, and seriously harm our business
21. 21Some of our software and systems contain open source software, which may pose particular risks to our proprietary applications
22. 22If our users do not continue to contribute content or their contributions are not perceived as valuable to other users, we may experience a decline in user growth, retention, and engagement on Snapchat, which could result in the loss of advertisers and revenue
23. 23Differing government initiatives and restrictions in regions in which our products and services are offered could seriously harm our business
24. 24Our users may increasingly engage directly with our partners and advertisers instead of through Snapchat, which may negatively affect our revenue and seriously harm our business
25. 25If events occur that damage our brand or reputation, our business may be seriously harmed
26. 26Our products are highly technical and may contain undetected software vulnerabilities, bugs, hardware errors, or defects, which could manifest in ways that could seriously harm our reputation and our business
27. 27We have been, are currently, and may in the future be subject to regulatory inquiries, investigations, and proceedings which could cause us to incur substantial costs or require us to change our business practices in a way that could seriously harm our business
28. 28We are currently, and expect to be in the future, party to patent lawsuits and other intellectual property claims that are expensive and time-consuming. If resolved adversely, these lawsuits and claims could seriously harm our business
29. 29From time to time, we are involved in class-action lawsuits and other litigation matters that are expensive and time-consuming and could seriously harm our business
30. 30We plan to continue expanding our international operations, including in markets where we have limited operating experience and may be subject to increased business and economic risks that could seriously harm our business
31. 31We plan to continue to make acquisitions and strategic investments in other companies, which could require significant management attention, disrupt our business, dilute our stockholders, and seriously harm our business
32. 32If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings, which could seriously harm our business
33. 33Our use of equity awards to compensate and motivate our employees causes dilution to existing stockholders. Efforts to manage this dilution are likely to reduce the amount of cash we have available for other purposes
34. 34There are numerous risks associated with our internal and contract manufacturing of our physical products and components. If we encounter problems with either our internal or contract manufacturing, we may not deliver our products within specifications or on time, which may seriously harm our business
35. 35Some of our products are in regulated industries. Clearances to market regulated products can be costly and time-consuming, and we may not be able to obtain these clearances or approvals on a timely basis, or at all, for future products
36. 36We have faced inventory risk with respect to our physical products

Risks Related to Credit and Financing

1. 37We have offered and may continue to offer credit to our partners to stay competitive, and as a result we may be exposed to credit risk of some of our partners, which may seriously harm our business
2. 38Operating our business requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay the Convertible Notes, and any other debt when due, which may seriously harm our business
3. 39If we default on our credit obligations, our operations may be interrupted and our business could be seriously harmed
4. 40We cannot be certain that additional financing will be available on reasonable terms when needed, or at all, which could seriously harm our business

Risks Related to Taxes

1. 41Existing, new, and proposed tax laws and regulations that would affect the U.S. or foreign taxation of business activities, including the imposition of, or increase in, tax based on gross revenue, could seriously harm our business, the financial markets, and the market price of our Class A common stock
2. 42We may have exposure to greater-than-anticipated tax liabilities, which could seriously harm our business
3. 43Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited, each of which could seriously harm our business
4. 44Our operating results may be negatively affected if we are required to pay additional sales and use tax, value added tax, digital services tax, or other transaction taxes, and we could be subject to liability with respect to all or a portion of past or future sales

Risks Related to Ownership of Our Class A Common Stock

1. 45Holders of Class A common stock have no voting rights. As a result, holders of Class A common stock will not have any ability to influence stockholder decisions
2. 46Our capital structure may adversely impact our stock price
3. 47The trading price of our Class A common stock has been and will likely continue to be volatile
4. 48We may not realize the anticipated long-term stockholder value of any stock repurchase program undertaken by us and any failure to repurchase our Class A common stock after we have announced our intention to do so may negatively impact our stock price
5. 49Conversions or exchanges of the Convertible Notes may dilute the ownership interest of our stockholders or may otherwise affect the market price of our Class A common stock
6. 50We may still incur substantially more debt or take other actions that would diminish our ability to make payments on the Convertible Notes when due. Our ability to repay our debt depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control
7. 51The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results
8. 52We entered into certain hedging positions that may affect the value of the Convertible Notes and the volatility and value of our Class A common stock
9. 53Delaware law and provisions in our certificate of incorporation and bylaws, as well as our Indentures, could make a merger, tender offer, or proxy contest difficult or more expensive, thereby depressing the trading price of our Class A common stock
10. 54Future sales of shares by existing stockholders could cause our stock price to decline
11. 55If securities or industry analysts either do not publish research about us, or publish inaccurate or unfavorable research about us, our business, or our market, or if they change their recommendations regarding our common stock adversely, the trading price or trading volume of our Class A common stock could decline
12. 56We do not intend to pay cash dividends for the foreseeable future
13. 57If we are unable to maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our Class A common stock may be seriously harmed
14. 58The requirements of being a public company have and may continue to strain our resources, result in more litigation, and divert management’s attention