Snap (SNAP) 24 Oct 232023 Q3 Earnings call transcript

Good afternoon, everyone. And welcome to Snap Inc.'s Third Quarter 2023 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to David Ometer, Head of Investor Relations.

Thank you, and good afternoon, everyone. Quarter Conference Third Snap's to XXXX Call. Earnings Welcome Spiegel, Officer Financial and us today and Executive Evan are Chief With Co-Founder; Chief Derek Officer. Andersen,

to slides, to website presentation. refer Investor find investor.snap.com today's Please press letter investor our release, and investor at Relations

forward-looking these call are which we to no forward-looking of statements, includes assumptions materially from update based may obligation Actual and results This differ our our those as statements, conference on today. expressed disclosures. in make

results today about to statements, in information For as XX-Q, factors the titled Form these the cause actual particularly risks recent materially that forward-looking section differ more Risk please press may from release as described to refer Factors. most in we our issued well

as filings taxes, Reconciliations release. be compensation in our SEC stock-based between the Today's of and note our include to Please expense exclude calculate call. call discuss discussed will we X today's well figures, found measures. both and all the nonrecurring payroll press refer when non-GAAP any metrics depreciation GAAP on related we that will with understand of and how they can today's Please amortization as to the charges. and

turn over the like Evan. to I'd that, With to call

you joining all everyone, Hi, thank and us. for

our growth model. Our EBITDA, through in to demonstrated year-over-year as structure revenue positive our returned X% business positive increasing in leverage the adjusted to QX, and flowing reprioritized cost

on investment and go-to-market advertising focused are our efforts platform partners serve on to We for better success. drive our improving return our and higher evolved to we drive partners, customer have our advertising

more XXX% in million Snapchat+ reaching toward year-over-year. more We in with X than revenue growing resulting quarter, progress Snapchat+ also made revenue the subscribers diversifying our than

across a that communication platform. to and our family enabled strategic services retentive and focus on us between products friends and Our advantage visual build engaging has is

improve models and to investing to creator rewarding active our on our deepen ML of key content and community services, working service. areas: relationships start X ranking our Our XXX supporting in of are and and our personalization by creators, content content further build users engagement growing million to diversity to and daily QX, across by and we community in content using focusing grew all across content conversations

AI our to our and launching XXX available technology today. million products of every we day believe features AI AI, on leverage have XXX than million messages, on one AI used experiences deliver Snapchatters to platform more the continue My community. engaged XX which than to new people with Since sent My average. more makes We most billion than More chatbots AR

X, vibrant businesses our have Fest. On AR boundaries, be what's will are streaming collaborating bring November we live sixth Snap way. together to build reality augmented along with possible to opportunity and to and developers the the creators redefine that of Lens We're with us community annual push the thrilled

on balance Given structure platform, positioned have we leadership of team top we strength have continue the our built, the cost progress our and progress believe we strategic have made we to work our to the reprioritize with done sheet, well our making are the we ad priorities.

for the grateful for Jerry has remain his response service at be and direct the to and Operating of notified more and resilient contributions cultivating spend, team in to heavily has return new on our business to want Officer, move responsibilities his to build growth we years has retire business. I Jerry advertising he growth, measurable sources am Jerry community Chief future serve transitioning build focused us meaningful XXXX, the ad foundation for platform, I our His our a month. forward top to by many community X of over a Hunter, into and of our the made sustain intent at of in to investing we to improve deeply years diversify thank our will revenue line to end Snap. growth. QX to strong platform our his investing As deliver lay Snap. our work on helped

Thank that, session. Q&A we our with begin you. And will

Doug Instructions] [Operator first with Anmuth Our JPMorgan. question comes from

XQ weighted, think the versus October color the that's much comps Your could XQ, think particular, just that we East comps. is coming and war implies know in especially the I and revenue get on the Middle easier provide guide mostly brand given the and some easier you I was XQ in I back-end on quarter. deceleration hoping through performance,

embedded Just hoping talk about there. what's you could

for that you. one Doug, it's I'll speaking. Derek take

First pretty we the that. progress top that quarter into lot in ad line. went We that to had we on made direct on of response had number including and progress a a you're in we're QX drivers platform. a outcome, foremost, the that made our we've right, pleased with There's

signals to for in year-over-year saw significant precise in letter, has also bright really core broader make spot a models. of X-X to we in that optimization, advertisers. more the pixel of been driving the funnel. terms ad in to larger a ROI as leading behavior into experimentation, and faster lower and investments particular, improved much driving our And platform in we predictions, conversion quarter-over-quarter ad of purchase quarter And the pace continue the the much all noted We and growth range ranking much creating a we've in that's instituted and in of

note brand good First part Story we was uptake also around total of strength launched products, including advertising, that takeover QX saw in period. I the in really where that our the on And

there. pleased really that we So with the saw momentum

platform. we into QX, the color, we think but right high-level little in some DR I share talked the believe about we're path of on And the look I to letter, a bit think you as

with with So the driving and making more performance. platform, our our for with we're higher there, working them their pleased we're the progress performance continuous integrations on making privacy safe partners quality and

in growth DR business that and terms out aggregate. on businesses quarter-over-quarter we're small- also year-over-year pleased We're in XX% with what the to seeing drove what of for scaled And of QX returning solutions medium-sized our growth. and in

So new pleased seeing against there and we're we're with into executing what quarter. really fundamentally we're what the

in progress brand QX particular, off products coming with saw that the side, I think new really those brand the of seeing we in uptake. good on

You're right.

well. move share is bit being back-end As QX seen a the different to little revenue business quarters coming more than And a of as -- other larger we've a into brand bit bit in Historically, little QX, then weighted the historically as quarter. QX we QX. a little from products

share So little headwind. QX both rate in sort shift of of impacting mix business the at brand and a grown of of slower a visibility sort and being having things those of in larger a bit brings a QX,

had the we a I the specifically, of onset number incremental seen brand-oriented small reduced the we that in have is in last, a of more very raised say war that in is, of result our also campaigns then the Middle spending recently. what run point seen And you East war pause rate And triple campaigns have those we've significantly in primarily will resume has spending. campaign of amount East. onset seen we early to there have the which very Middle of of that. But period positives the the since a as lot daily the impact after a the

quarter-to-date number to we've QX what here the one, of we've when transparent seen that about things forward-looking on about information thinking we're do be giving tried that one side. so is, And for

when and for business back experienced we operating to the the I Ukraine the environment. had war -- look then And historically, folks' what think impact that, example, onset at and that all of we in the on

formal war guide is of realized be very we've as result, fundamentally that environment. that think in a kind would it I provide unpredictable. to an a And imprudent

However, do of we've at of we the today forecast the community top assumes for internal an acceleration to to about of pauses those revenue. range the as incorporate the attempted that end. the what And everything our into know that of of forecast. investment we sake transparency, But the impact did fullness for internal share

you flow-through. that. well a the EBITDA obviously that then, we range of that adjusted high course, can because right rate So as to see very And have through flows of

path pleased progress that pleased the with in those making brand QX And the stepping saw products well. So as -- we're on we're think right uptake the fundamentally, we're pleased, think also from I business. DR with the new with just we back, that And on we we're platform. we're

think of that I aware people good. is gives headwind there one you progress of we the just that. So We seen begin are framed sure that want the bit a to color make hopefully, we've to that on how little And quarter.

from is Sandler question Ross Our Barclays. with next

rest seems recently changed the that's And sales. with in Evan, not up caught which that is like of the you performing leadership ad the business, North well. America yet So area the quite team

Snap larger growth America to of change? that accounts going the to help business? you and in do If how when confident there. guess, we budget you more I rate do feel that with step XXXX? to can commit that international converge expect us North you are with And How about are kind So up

much fastest-growing where be. but from the to progress long we'd region so quarter-over-quarter, a thanks Yes, America, it question. for are Ross, North we making in the way some obviously, like

complex In simply work large just with. of general, North are more America has to customers number that a

with a of work smaller customer more X-X our the lot and details of a some It's more optimization and we've while made advertisers. just focus larger with drive for So integrations, taken the progress simpler success whatnot advertisers. in of to

making. We're to every should pleased cases, fixing their I'm closer the advertisers which their KPIs, So into we're day above stuff or, hitting progress that getting KPIs improved in spend. many with and translate

there, He's excited wealth to a customers, team. progress but of of bring. making got Patrick's definitely we're and complex leadership So the more about experience

is Greenfield Our next from LightShed. question with Rich

leaked you revenue is your of advertising question DAU? users content thinking be stated XXXX? then and growth great. would terms a -- to to to active really employee it how be content, embedded. driver pretty you and many on the and of it how that don't seem weeks changes what housekeeping. today So give your that for in goal touch I that Is about idea are any DAUs ads can would of trying where the content any us are with XX% overall get In a where And couple be a a driving would on color of potential, goal handle engagement are of ago, XX% ambitious a have a goal you of of interacting critical today. One where daily memo

on year? -- revenue that a that what's is your two, XXXX. memo, getting you growth And to XX% Like, do? for hard growth next Evan, really on then goal also in mentioned XX% goal just the confidence

just that's to driven be to the by motivate and around what's Rich. memo internal it team Yes, When countries really content emerging an possible. designed going the that's inspire Thanks, really comes to penetration, where are products ramping is cases, really with there in yet -- its our the have cycle, -- and communications up folks to to our transition content-focused some in growth products. earlier so and

of of do to So when high and really a aggregate, talk accomplish in countries of -- the then drive content engagement emerging rate in breadth about we we in where some of developed is DAUs trying DAU, of countries already. depth engagement sorry, depth content the engaging really of XX% more very we're what have with

-- So that strategy we're about strategy. that's how thinking how really the content

about more really with of that's lower customer in revenue, making the XX% success, especially funnel. terms progress The

We that we're are excited the progress about seeing.

progress we just can there. down heads more and making we're hoping keep keep So our

Our next Shmulik Mark with Bernstein. question from is

that really like to is color be love And on And you there? they usage. fantastic. sub asking Are color companion? any What bit on like I little could intent that using is this Any daily? seeing a like My around then would there AI their how a follow-up. Evan, commercial share partnership of folks going kind AI, would Microsoft are more hear there real just you're

seeing about We're Yes. a I it's with the think yet. progress use daily case AI. don't excited we're really My

case -- I things. sorts it are real-time for a that really of we there because information hope some access yet doesn't it's and those have gaps, use to weekly think now

focus right So quality. just is our now primary improving response

hard unpredictable. because As responses can to measure the be imagine, you little it's can a

seeing -- are with think a pretty built the improve people lead and if we're are the responses higher some doing those of we're satisfactory to we product of getting way the work overall. So to good understanding responses we've retention

product, can we quality, this retention. plenty more majority But to And I of early the keep on think there's long-term our we're focus vast would it's say response going commercial with just very, engagement drive intent. which very and certainly of and

our are models integrate We see steps to into taking and more content example, folks advertising. for that, help to relevant

making progress as So there some well.

next Our of from is Post Bank question America. Justin with

on time Yes. spent. Maybe data to -- of and I'll ask Lots third-party out us here engagement

DAUs then the and I modest as as you from in seeing on here. of the engagement world North guidance, characterize America gave you you'd rest And What a DAU think far platform that's QX? how drivers wondering Just in and slowdown. are some

speak monthly to like daily an healthy messages friends users. There do are who Derek overall, monthly maybe active where more a see with usage to in But North who certainly question. active stories more Let unread population opportunity of America, we not percentage trends, very the available. large are engagement from guidance we reach the drive developed of regions are that active, plenty have daily but folks or smartphone

And with regions like do monthly more so opportunity North drive see frequency an use we America. active in to users of

more plenty region world the in course, headroom incremental users. in of Of new of rest terms

what we're also are the side. about on We excited seeing content

with U.S. time spent globally time and year-over-year trends the some growing well, U.S. spent in positive growth we quarter-over-quarter. as content So in saw acceleration

overall growing of we engagement, pleased terms in to say I'd it. opportunity we're continue see So

pick that we million. DAU on for which the to just XXX to of part forecast QX, million And the second shared is up that, XXX

growth for to DAU is XX context, XX year-over-year. just First, million year-over-year about there right million

So still significant growth. seeing really year-over-year

as America you've example, think include, -- reaching markets. bit other XX- in and by really would our this some percentages North look in North Western in XX-year-olds more particular, got European and an course, countries. many XX of We're I high to over market. mature countries, market to of a little In that America, of at

shared North So And XXX million. high number penetration XXX at over we're a for on very DAU. now think already example, the very, latest was there. we I million America,

really deep. really, So there is reach the

the rest much focus the the of of the growth been growth. Our been DAU biggest total, has coming of recently world in number region. from That's in and driver

comp We good there. a had in quarter a prior very as the year

DAU again, bit that year-over-year seeing XX see little year-over-year in rate range, you're impacted to million substantial million implying internal basis. But the forecast that to a XX so on growth additional And year-over-year otherwise, there. a continuing

So hopefully, that color. a provides little

with Stanley. next Morgan The question is Brian from Nowak

X. have I

what you can The contribution quarter a the your the little bit in one, then little subscription housekeeping. of of you on first assuming are -- revenue the midpoint revenue areas. in out at sort of of Derek, one guide help subscription And us fourth amount XQ?

you've on sounds you're and really the Can for the made like to examples you strategy. a most improve Then us it categories advertisers. the the where next second of more one, performance verticals progress performance few progress think you how starting tangible sort make some of to give the or about categories

I'll part Sure. the there. take that of first

first, In there. old that doing more seeing how terms in of excited reached the We we're the we're breakdown very on is we million than really we're it. what a period. subscribers product on Snapchat+, launched I not That's think about X since

there. really had momentum So we've nice

trending grow number subscription where on close shared the a -- we're recent progress XX% Day in I we run of Investor of year, to think seen if give sort you've you annualized of then we some of running go at ballpark the the about most you were we product. back beginning quarter the I that think so then to that XXX then, about rate million were to to the

becoming contributor meaningful letter that most more certainly at the quarter. in than XXX% recent it we grew shared much rate So a a and more in the of

between business different have would So to -- subscription what the of seeing line and really perspective. momentum just -- break types as down QX, from to into both forward terms we on going to We the the look would our for a as don't with QX some on continue well. expect we're business advertising and in but revenue, what margin we pleased that's uptake of business, top contributing there we're obviously,

gives that you an of hopefully, bit little a idea. So

focusing from aligned. really we're in bit our with very everyone here. to little then the where And if success about we're strength and go-to-market we're what I'll more on ad what Really, talk well about, chime go detail seeing of seeing on been to seeing where platform we've is, getting in progress advertisers. with expect some -- wants we a heavily efforts the where

help led talked both categories seeing lower their that quarter-over-quarter. for sectors. But optimizations and grow that business with and and And have restaurants the the of growth variety products -- them sure to that which revenue see pixel so for on I about ones is we've X-X with e-com large and with That's selling is, we're the also what purchase through an the year-over-year align about we're share traveler going we've can recently earlier, well talked good platform CPG, that some business. seen and of advertisers the success doing our are that's and that been pretty you well. to to I that's work traction doing making to well us on combinations funnel going meant good optimizations progress of really is And the what

that little we of traction products helpful those a those in takeover also the QX. seen revenue new then that the And sequential was there. with we've bit success in got improvement brand to That and with the

little bit advertisers. on So different of the hopefully, both with you subscription that traction of verticals we're a and a sense seeing gives what side of the

I with just features. being We're been have able side to run lot the ML things. can headway tech progress that more making of models on bigger briefly speak to we've platform, the our a of making

feel progress So about that there, obviously, to good think -- I do. I our more

atomic the our That's optimization. a unit for business right now well of of advertisers. is lot kind think I working purchase of performance X-X

solve needs. so top more then build been do what advertiser to of on we've that slightly is And really, sophisticated trying to

or optimizations advertisers, advertisers. are those something beta game. event like optimization -- sorts that install, optimizing around like certain important we've And for of performance an optimizing a for really around that rather completing in level just So business, example, with app than app our testing so something a been

X-X on to fundamental iterating then that's working of now. of sort really block with is that taking advertiser needs top right think building and more meet I So that important

advertiser there's up advertisers. I long and the too much long to tail can It to of conversions smaller ramped more advertisers these for also we takes start think in and terms of too get a for a bit quickly. spend little maybe do cold maybe find

So we've progress and also making there. been iterating a there lot

of deep that But overall, the that we've And more now. together. good way are just is customers of using lot platform about we tech right pieces these a where as been bigger various our things go become one these pieces the I it's they're with learning feel about the different

signal sure advertisers engineering, deep goals So for product of are going the of they're these success to quality, as against I momentum debug to a PMM, to course, all measuring measurement, lot for. And bidding yielded what that example, across has just make really, teams customer lens right complex from of well. our for positive auditing, more taking think setups

next UBS. Your from Walmsley Lloyd with is question

of to couple A [indiscernible] here. parts

all, do the while something the the guys more what think integration? Pinterest, On in about the how guess, powered those to those think search, ads advertisers? talk for how own enhance targeting Microsoft the within broadly, we've platform My have integrated is signal you broadly, you about the doing just are beyond like Are or performing Bing Bing across at you platform? And turning some to of them AI seen Just to And for partners you in we're all about by across Bing topic, on your I monetization general, that can that others? or ads? similar you

partnership. It's still early the with

the very the click-through are ads healthy I rates think relevant. are when

relevance, on relevance been continuing to really drive has AI. improving for focus My links big in sponsor the So

interest in to integration, inform So terms categories. it using we're signal of right now, far

do initial taken there again of learn and perspective. test more there's that think can but a lot sort the I of step sort with we've we

immediate meaningful a on about longer-term that So doing especially is investment, really as think because we're the results. we yielding this work platform more

the important the So focusing and product right with think, terms experience we'll priorities, of but platform I more on in there the partnership, ad course, keep experimenting now. are of

from Our comes with question Evercore. Mahaney last Mark

on into or a question a and want ARPU bolts nuts issue I And on Okay. just ARPU. get to

indicator, trends You like that is a know -- lot. a of just an you but is, and growth. output maybe could why XX% had jumped European kind here. And just interesting explain ARPU kind that this of X year-over-year I

American It's kind we've then while. And a seen sequentially, North a lot. the ARPU jumped in sequential growth of biggest

would color behind just output And any metrics, understand color any metrics. X those that So their be appreciated. but I again,

Mark, to there the it's I is in what ad ad Look, products we're fundamental the our part Derek. platform making improvements seeing go-to-market. and question. Thanks think for that the of the you're

region, for when there So we've year-over-year at seeing the is you're ad that the made that European example, looking what to platform. growth DR we're the the improvements fundamental in

some we've broader lower we've pace made faster precise earlier that on advertisers. I terms those can about you optimization, in quarter-over-quarter. then predictions. ad features improved incorporate ROI see the conversion much and the and more the in becoming infrastructure platform, earlier, in improvement much things funnel out those The models for of of of that, all larger. that experimentation in to and signals DR a So work seeing big to we're talked that's done the drive of models investments themselves of And the ranking driving and into as ad year-over-year I driving that's mentioned And range

what in QX including of nice -- is ad regions First I to products. one the traction year, improvements Story thing to our for region that APAC platform in making particular a the the new those products. changes be in And they to came think prior very in this region course, to and got to extent, to been I us certain total the launching we've and Europe in significant prior then, these an is go-to-market is and precedence on the other takeover then making. brand also QX, launched And and And these new mentioned earlier that earlier, thing which the products

And a the market, applicable, and most small the the go scalable be improvements solutions some -- for European the for medium-sized those businesses. just the unique really are to globally we're good improvements and making to to of ad fundamental they're the including to product, so region platform -- part, not those going ad

see that's and can well little sequentially of XX% the impacting to a But America, America bear exercise North the as those that market, And there. region improvements is combination at North some fastest improved why a of on later. coming for example, that's fundamental the America was quarter-over-quarter go-to-market as North you in growth,

So to output the up in progress platform, which show I the think all news the the starting is in business you're and what making fundamental and seeing the up great we're work ARPU, showing is with for ad that's around.

for thanks So question. the

as Third you This you. well question-and-answer concludes attending XXXX Thank for Quarter our as Snap session Inc.'s today's Earnings Thank Conference Call. session.

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