SNAP - Earnings call transcript Q2 2018

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Operator

Good afternoon, everyone. And welcome to Snap Inc.'s Second Quarter 2018 Earnings Call. At this time, participants are in a listen-only mode. After the prepared remarks, there will be a question-and-answer session [Operator Instructions]. This call will be recorded. much. very you Thank Mr. Relations, begin. Investor you Panjwani, may Arman

Arman Panjwani

Imran Thank will Inc.'s be the have time overview Call. Second will QX, good and afternoon, Kristin call Co a With Stone, new slightly a Officer; to Relations. Snap everyone. Welcome Please Founder; Evan and hosted Quarter CEO for the open To this the provide of we before today Southey, for different XXXX Evan you, update Chief of calls and CFO format strategic Q&A. are more previously. allow Strategy Tim question, will for and us and Spiegel, Khan, provide brief than we VP line XXXX financial Investor Tim our outlook business Earnings Conference that brief note

have additional We of financial we that can for Web found user of and reference Earlier business be XXXX, a our our information site. provides slide Relations metrics our financial today, second press on quarter presentation for available the release. overview made included in Investor which supplemental an metrics also and

including events, in assumptions update market and in regarding Now, second future is expressed to disclosures. or of make statements that statements, conditions, forward-looking projections from characterizations results information Actual Today's projections, obligation I quarter expectations, today. the guidance call on conference we financial may statement forward-looking to quickly you a financial with other XXXX forward-looking will based future differ our or these Harbor. provide no outlook. those is materially our statements. Any cover Safe addition performance This includes to our call refers to

with as statements, the cause about the XXXX, from risks in in factors described to quarterly refer our well This issued SEC, report that Form filings press XX-Q be our information titled found can to more please XX, results available. the the today, March materially actual Factors. ended section as we information other for in particularly For on may year differ release Risk forward-looking when

SEC or update depreciation compensation to offer Evan. as times on With they nature, may detail to I'd into business response and remarks Please to payroll refer the also we these will measures information measures believe today or our an we metrics. prepared in our can These Investors use as a filings our use the and our results in the We Reconciliations results GAAP may will our charges. Web metrics isolation related additional trends. exclude not expense one-time to commentary non-GAAP considered may metrics. financial and in and in operating our for additional call our Please for be taxes, over be non-GAAP to that, stock-based understand we prepared of and press for, be ongoing an of tool reported figures, in not should provide our include on well This in may measures. between amortization investor.snap.com. provides substitute accordance financial financial be release future can found and discuss evaluating from, additional with At in in with annual a provide turn the all results. today, Our or that non-GAAP and site GAAP. questions, to to or non-recurring as how issued of calculate at we insight quarterly that greater when our which like found note copy metrics these

Evan Spiegel

to ahead about in and team, we invest earnings Hi, Snap, as to our culture everyone. And innovation. welcome continue improve at I'm excited optimistic the been about really call. the we've reinforce making QX our progress opportunities our and

and culture this a past our our our of leadership that rapidly business. lot to focused effort and time on need have we We team, year scale developing

team Our performance and the redesigned the to within of being learn progress human creative. kind, express our incorporate to world empowering about smart people to management about processes values mission themselves we’ve contribute together. moment, our And by our to and is passionate have fun

work Company. us, hard For not company, we make to the to it’s of And that innovate exciting this team building rise it. watch value. we drive that so a while is public sure way continuing it’s reflected been and attitude that do the we’ve just across about the do long-term worked our to about to positive challenge our It’s

stronger is it much team before. Our today than been has ever

decline been show slightly we have to to lower hard we X% community. user feedback and redesign have broadly to iterate in grow based has we our feel It use frequency this six We our heard redesign. more our to that primarily rolled quarter, opportunity users. active more on working approximately we driven we’ve people. the continue frustrations the disruption base addressed active been was now are to among months the of caused of the due While content application the now right right Snapchat since of daily we and biggest the from our saw progress This our by users monthly on and a eager have make improve by the out tremendous to our

we more people the to store year. grown from learnings by that our Android number iOS than For on this to excited stories watch show of publisher every iOS day bring and application. And are our XX% has the iterations example, the

July from more our shows in publisher any history. other and Snaps Additionally, in reviewed month stories than

close brings infinite an friend the updated with Snapchat personalized to to redesign, combine day every of content. With been that scroll of able we've people strength the network our

expand this our Despite making of and improving are our we will long-tail progress to drive results future of product believe and growth We’re steady we engagement. content on our personalization. quarter, the is working evolution offering important hard this an DAU help that that

new in are and see starting Our basis, improvements users continue over on spend user XX like to of retention. we to already an meaningful Snapchat a indicators growth average on daily minutes leading

people well no everyone, retention user has been XX end the accessible X% matter for Snapchat Snapchat make on or redesign. the on more new of older more device we for we've than since to the than carriers lower launched for and devices everywhere, focused increased to network. improving quality everyone. partnering example, And We want with For application work

New user Snapchat to by of it application improve users of increase to easier are and existing though predominantly using a rewrite to application. innovate a in has Android year us XX% we've completely on presents will Even efforts application Android, we rewriting and and working helped the Android a over has opportunity new retention structure believe for future. our our that iterative for latest the make Android since nearly the advantage capabilities QX that takes XXXX, big been modularized

opportunity our Explorer long-term started ingenuity us, thousands lab to Explorer version by device celebrates we in to the camera. like time users improvements Lens increases select massive test out performance Our and Studio. it show limited internal to users using and substantial in the power browse important that we takes to the Augmented open recently are test of Snap, of metrics a our the rolling the communities application creative with of Lens and create Lens allows a for beginning built our be Snapchat Snapchat and countries. and continues beta reality community lenses

to be with and self-expression, We the together. fun reduce share friends. frictions are Snappables also and ton help release Snappables, that experiences of new a can use augmented reality

mix, Snappables million to of For used was example, selfie XXX one create snaps. our first over

and are and insights we to We’re version It we really are the while efforts world. our augmented as two much Spectacles build combined almost impression, excited install XX% team reiterate Spectacles, based to programmatic on reality, about bidding, advertisers, towards per been targeting, we quarter in where has exciting new and and on is progress released cost resulted our lower a represent computing our All and advertising more. we with feedback. this per per for customer goal-based as with continue lot sunglasses transition an growing year-over-year. the slide learning simultaneously overlaid this measurement, Spectacles moved years cost usually cost in near the with has making since we so out real-time Snap. We revenue a began advanced When advertising future build our has analytics the to opportunity quickly

share now new to about friction going of Tim him the on making advertising is some Even at thing the sustainable it in business, free Tim and our our was the flow. measure. forward call the take have about our with we that many expense advertisers cash and progress more business. business business easy the and we easy, to do of of belief This experience and a grateful long-term. to He’s opportunity to play feel though progress perspective the move our a proud These a has Stone. reached I’m revenue and because force. our are that to conviction inspire this the and I'm effective, like brought we're it advertising good from even are types requires long-term, short-term are to strength, of to our more team. strong to team wealth our growth. removed to position scale we building buy the right the our over generating and as than also operational really I'd to have cash opportunities towards wasn’t over to introduce our We this we making. scale and Our to for could turn cost us easy business sales transition direct allowed

Tim Stone

Evan. Thanks

million, operating of XXXX in to million is $XX quarter on EBITDA, and operating an in focus flow of QX capital. changes operational changes cash from in XXXX second EBITDA, improvement offset XXXX. million and cash driven financial down operating QX efficiencies. from million our adjusted timing capital. again results by QX with change $XX change growth $XX %XX improvement up $XXX of improvement by offset was Our flow an the compared by the XXXX. cash XXXX million $XX driven year-over-year timing million QX adjusted by The were compared working flow in XXXX in reflect of $XX QX negative QX million, in the is improvement in in working sequential expenditures million Similarly, capital $XX and

expect Santa facilities. cash majority XXXX. As year moderate we this QX to free with improvement associated The related a office compared next leased additional XXXX, are our with over facilities of QX XXXX an reminder, with $XXX expenditures $X capital of expenditures the a the our build-out several million, compared $XX was negative of the substantial which decline capital are million and office Monica to million of QX flow quarters.

from and of DAU XX% $XX the free XX% and $XX capital QX $XX in stock-based million, million, QX underlying $XXX shares over million sequentially, million $XXX were compared XX% awards conversion on in June a revenue, result XXXX to America represented an XXXX. quarter from As our million expenditures, of was strong million, years total and and was year-over-year. $XXX see outstanding XX time. International increase XXXX QX months QX XX% outstanding in from ago. to up relatively up QX we adjusted down $X.X plus million, QX XXXX. shares $XXX DAUs should XXXX. up of were X% from down XX, total from flow cash million billion our low X% EBITDA and XX% up $XXX Common countries Total in trailing billion $X.X for XXXX QX XX% North revenue in year-over-year revenue in XXXX XXXX roughly

and exclude Approximately transition XX%. million revenues XX% more the times and XXX% in compared from to interesting our North back revenue advertising of XX% XX% portions XX% year-over-year look XX% and business, XX% Programmatic America. impressions $XXX international were shift guarantees. and is partners down pricing growth traction SMBs to countries. sequentially, minimum XXXX. the It’s XX% global year-over-year improvement sequentially. sequentially, two a and online of X.X XX% all countries revenue QX of As before pricing in increase which also define while year-over-year ARPU programmatic sequentially. $XX by strength Geofilter driven sequentially. sales year-over-year Programmatic for our our XXXX, than results of sequentially. Advertising product increased and in and XX% our Pricing revenue XXX% down global countries. transacted and XXX% grew quarter programmatically formats XX% year-over-year up advertising an ad down down X% marketplace, XX% a international of Advertising by years outside of online sales million, to and this was our was to and international quarter programmatic. over was business and includes increased on-demand sequentially, in Impressions strong sales X% as up revenues an year-over-year reminder, year-over-year to QX in $X.XX, These traction we driven were in and

We Tools X% XX% an platform throughout costs XX% Creative will and continue increase of year-over-year of was were sequentially. programmatic and X% revenue million, of of the $XXX million, decrease decrease to XXXX. business a $XXX transition our to a of an sequentially. Cost year-over-year Infrastructure increase

driving economics environment focused and it We’re on improving as efficiencies unit operational time. for over multi-cloud a the scale

benefits improvements millions in cost of our efficiencies on million, in infrastructure cost we opposed X% included investments through free in to and These which $XXX efficiencies technology, and in in conversion cloud amount infrastructure partners’ cash remain and down in our in along should efficiency. and of continuous over and leverage the dollars economics several overtime. an from focused cloud long-term. of typically have and seen customer to dollars flow customers as Additionally, EBITDA will operating unit This tens higher operating million which X% QX Operating over results unit in expenditures, up cost were capital sequentially. result our The are engineering year, expenses EBITDA structure cost innovation model reductions time. passed XXXX, year-over-year

We focus productivity driving cost operating across business. on continue to our

taxes. which are expenses sequentially, XX% leverage about primarily expenses, grew growth excluding XX% related stock-based which were sequentially. down and and and to labor Our XX% We X% operating operating and driven of X% payroll compared costs, by costs, compensation year-over-year people cost fixed revenue year-over-year saw represent of

revenue XXXX sequentially. was margin EBITDA negative $XXX XXXX. and an of XX% expenses, XX% and QX year-over-year QX decrease was QX in improved XXX% XX% an sequentially. for XXXX customer structure, X% compared with Adjusted operating million, XX% XX% million, of which negative of negative includes cost increase in XXXX Our EBITDA to a adjusted year-over-year and improvement negative and $XXX QX

and long-term optimistic in on value focused the our and potential scale are leverage creating shareholder business. long-term are We about for

the for initiatives which we innovation will and drive drive we believe At well many in time, generation are free flow as enhance we over operating same and efficiency as time. operating as investing We’re experience user our toward on cost growth. users, cash profitability engagement, executing initiatives revenue

financial inform reflect statements For as helpful following are guidance the our and time, first we quarterly X, expectations. sharing near-term subject EBITDA. uncertainty. The to will be on to August are for substantial thoughts and investors outputs revenue that believe providing our of and external We expectations adjusted forward-looking XXXX, financial our

and mentioned As factors. our at the materially may of many the call, be start by results are inherently unpredictable affected

share QX will and be to $XXX between is in QX negative I $XXX Now, grow compared million XXXX $XXX Adjusted XX% outlook. Revenue million, negative EBITDA XX% expected and or negative between year-over-year. million, $XXX million to between expected to is XXXX. to be our $XXX and million

things, While acquisitions, achievement reminder, our time. over ever. One learning investments, thought among restructurings, global down, and finally, other how reach leadership Snap drive settlements, to enthusiasm mention to was have DAU we me excellence quarter. the or fit Kristin a million example, assumes, Snap. who with Southey am us opportunity than with joined that no Users, that that happy I’d going are QX. DAU continued XXX are our than trended Relations. opportunities This long-term. the In on legal that the guidance, for growth operational rates is the initiatives is audience, a as for of recently Snap for I not Investor Active company for are I and higher years VP of introduce less am that great in focused give both also as and It’s sequentially compared historically, And year-over-year long-term to U.S. glad which Canada, we noteworthy a grow to so guidance team I old. joining enhanced There a QX joined be have to my growth Monthly I seven and for business is many since concluded over a partnering

also last from the may for finance technology you thank prior roles. for Investor know Relations year. of Arman already leading her like I Some her to would

Kristin Southey

to let’s for everyone. and Tim. the Thanks great working up questions. open forward It’s call I to with that, With look be here

Operator

for Merrill we our That the earnings Post Please [Operator and today’s go ahead. session concludes question Justin will Instructions]. And first the Lynch. prepared comes from now call, question-and-answer remarks begin with

Justin Post

really I you audience? the reach. guess, see mentioned Tim what’s the been financials. that there? there? first, like think bottom since on of a there, positive you’ve there’s one when audience. what the then you help is and is years. there monetizing the you’ve taken Since is growth of secondly Looks just you. revenue over Do Snap that for two over think pretty a you Thank improving down large room big you monetization questions you reaccelerate pricing And the get significantly your Do is last on you’re enthusiasm for as could And

Tim Stone

monetization, see for driving opportunities now, it experience relates it to user in As opportunity focused of that engagement. more us users over the a we’re modernization over result time well. And institutes as time Right our monetize. to innovation for on will and will enhance lot to we

just apps well at aspects discover. as camera, we’re As well, about -- communication, the modernization, not think all it’d you whether of as looking the be the monetizing as

in global audience lot So of over opportunity. of that a opportunity us it the reinforces reach said represents the size time. and further for as And call, I our

Evan Spiegel

take relates revenue question. do and it pricing growth to Imran, the pricing, want to As you

Imran Khan

better about the show the better because who advertisers. for ROI ad is relevant for a it Yes, business consumer, our showing you audience as users, I most to experience drives think we as ad, the when way think like well our our would

it. continuously continue on to bring in lot and more focused improve that. we are are do pricing maniacally of you across when delivering and advertisers audience. on you And experience takes advertisers, for both care So But we our focused that

Operator

And with Stephen our Suisse. next comes from Credit go ahead. Ju question Please

Stephen Ju

you the app up suboptimal. I about be Tim XX% your sequentially. in talk you and views your when terms And revenue because of or rebuilt of have any experience was may Android will how ROW globally. users guess And can subsequently for signed Evan, Android globally many at the this was think Imran, timeline deployed point churn, up

drive which wondering you up under growth product So Thanks. to there? went country the

Evan Spiegel

that to Android the testing the a we’re about reengage them know been to Right community lot and how lot thinking changes now, internally. making the We’re we’ve let a Android about application.

to it to matter in going in markets experience what we’re beta continue We roll beginning select and for on. no they’re handset that want people, and learn out as sure out roll We’re we really to it great it’s a test. to that make

Imran Khan

to regards very international With rate. market, in pleased growth XX% that growth are the with we

I think we to countries. one roll to of that the is experience were through able buying key to programmatic advertising achieve subservice many out things advertising

like countries In addition a to in strong we Australia. have audience

So with rate. we very are pleased growth our

Operator

our And go with comes next Barclays. ahead. question Sandler Ross Please from

Ross Sandler

can. Two comments, quick questions the on guidance if I

for So first should decelerate. the year-over-year that you on DAUs, growth Q-over-Q and both rates the say

the from posted comments us as that in Is on implies the that just decel revenue, the about low high right something we that the And on the XX% So XXX off QX. quarter-over-quarter slight give it? second you XXXs. in would the a key to Q-over-Q at end way then think

us the out have be is deceleration seeing you in you at that out given to growth anything And will some rates the given point. comp? would why lift So would in wouldn’t you momentum you’re flush that there just great. higher that that programmatic, cause on XQ can Maybe call Olympics a

Evan Spiegel

say point DAU giving we’re so not can I add guidance, than the On historically, out, any I I not did there. in we’ve did comments more there’s the be guidance, for gave to much for in in of revenue the going rate financial sequentially decline the MAU and expectations our for and both we growth. matter see, EBITDA. that DAU But our outlook and incorporate and year-over-year guidance DAU

Pricing, something’s gave and year-over-year growth growth area. range appropriate pricing, guidance for in overall decline great the relates guidance providing in to quarter As it XX% advertisers ROI, second growth, guidance. as guidance we value think lot in X% or and experience over is XX% strong the quarter of XX% you’re revenue again, we reflect saw relates it think decline -- range strong a is to quarter and we revenue, is of that year-over-year the revenue the your particularly our growth. we appropriate But revenue mindful and in the the and pricing investing and

Operator

Terry And question Heath our ahead. next Goldman with from Sachs. comes go Please

Heath Terry

as revenue what cloud Tim, in serving roughly in I through and the and And think about you’ve settled on guess prior base then, giving at I the side given the the Any you’re or you halfway about color DAUs, how Evan Company's through Snap, the what costs of quarter, almost not might how talked Curious Imran, experience, you've cost your costs that quarter. the particularly gotten to realized July structure, of give can thinking but the on you’re existing user relative you're optimal? halfway be early you the to guidance us seeing extent we’re things. August?

Tim Stone

second the question as well. take I’ll

further commentary reflected in any DAU expectations it’s We’re for third guidance. the the quarter, not providing on

it cost I driving optimistic growth. as the on the opportunities for to As relates cost structure -- am as the well on front, structure,

in operating the as improvements, I improvement to in costs and we’re not engineering going that’s the there driving, forward. DAU keep can as the persistently we’re only call, some reflecting, If second why And that's on you efficiencies infrastructure quarter, as at in going unit as you per imagine, look mentioned our economic second well seeing. infrastructure but the costs was costs quarter

operating our infrastructure not of drive great we again this the saw I operating of innovation well. growth head the year, But think XXX In the other QX, in XXXX QX back as as of year. efficiency. us, expenses to operating well as relatively so to to there’s headcount we from certainly opportunities with reflects expect reduction And that to and reality areas, going to about initiative reduction in and cost headcount these leverage invest growth deal invest drive also expenses, down the in in as opportunities. quarter the but only end this side far a augmented and ahead we saw opportunity consistent this there, actually to we’re for we’re continue of

So about EBITDA, us loss leverage. and for year-over-year be first in improvement see to time to on happy history in our EBITDA talking

saw I'm EBITDA greater improving So than we about revenue. EBITDA be that with to at rates change in happy talking the XX% leverage in

So I am say opportunities guess overall I’d I the ahead. optimistic for

Operator

from And our comes next Mahaney question RBC Markets. go with Capital ahead. Mark Please

Mark Mahaney

me Let Android. you and somebody talked already Evan, try you this. about asked about

Is out about Android Let the me when of would little experience -- draw the When try to you like same in the contemporaneously terms Android Android terms at advertisers this. experience in Is is, a Is a or like two? you fixed bit experience match it drag to do that Is user the user you it year it too, advertisers. this of then the the iOS that And more quarters? testing. there on or beta the they is to do that, how and for something Thanks experience, user iOS months? think like time? for whatever be or a versus fixed Evan. needs

Evan Spiegel

in of in Android components. Snap and think with worldwide So accessibility there’s product, of I our three terms particular

have we’re be the been internally results more the think testing is really to and working itself, experience application one the it’s we’re and very exciting. on hard I early obviously first excited something that widely

in different another these piece really the the countries. is I of think network that also speed of the network that important and affordability

see all better this we’ll hopefully of tackle next android a end think year, we through year I and the three those as experience of So overall.

Imran Khan

side and we to help to continue improve to the have regards advertising improve With growth Android big client revenue we’re as that obviously forward. opportunity going ad work, going experience to the work on advertising, as well to

Operator

go is from question next Please ahead. with Stifel. Our Egbert John

John Egbert

early I outside few access developers. What benefits from out to a and these tools the your from leverage to How the audience? your you on? you questions see year developers some regarding some seeing you to you’re Snap to developers think love do approach innovative hope of Kit then differently the would peers? rolling And tools ways allowing tools these of had biggest are

Evan Spiegel

that’s excited about a empowering the think I applications. we’re across thing wide express to themselves way of most variety is people

songs example, Pandora think, Snaps to I people of and that drives is So out stickers the check for of on being really to share exciting music. able

and not things another the is makes protect that is expressive thing communicate, way Kit, to we’ve but to the excited form think just power in to the because and think, I linking stickers a Bitmoji, people in really Snapchat, their way I And of in and applications is we applications as other are think seen we services. we Snapchat in using being lastly, I are privacy, that community our respect the they which I approach as built more think, really one use we with trust Snap of that of terms about trust that information. people appreciated likely that want will to

that if information. that with good login worked do make you job your safeguarding other to services hard really that Snap to Kit will sure we’ve think and a I identity

Operator

And from go ahead. Please question our comes Eric Sheridan UBS. next with

Eric Sheridan

the I advertising if around can two Maybe business.

might be everyone. headwinds you on really ‘XX move is that up of going for that to creates ’XX? pricing much And Thanks business direct. programmatic, about evolves? this the cost follow get we programmatic one we what going With through structure versus the be to to go long-term the think then trying to is of frame to Creative some the the XX% of medium Tools impacts and how of programmatic of revenue And a as now you to we thinking should whether as as over -- there might is mix

Imran Khan

percentage With of regards programmatic. to

to platform regards who and going platform, ad So consulted platform. to And impact for way can organization how advertising enjoy I our self market what’s product. need world advertising advertising so And are it, platform think you that does understand the even long-term, through the on cost, our the With programmatic sales that with to is and have experience. best vision the is we’re people practices. to buying our this on our advertising everybody to who should educate subservice service be buy product most platform, frictionless buying continue our to to -- that able innovate

programmatic. despite our also With will smaller we ad delivery very revenue process buying to self been Snap how opposed automate thoughtful business Tools invest the to process. Tools as our So our Tools we the transition, revenue. we organization to an transitioning percentage are Creative Creative regards Creative are continue ad to have ad we in And and of

You saw rate into that’s well. and quarter some impact already growth baked guidance of negatively impacted the this Tim’s it’s that as

Operator

Please the from Lloyd comes question next Bank. Walmsley go with Deutsche Our ahead.

Lloyd Walmsley

just large from do One app. for user Evan, even growth at guys to need you fixing user to give to do for build ad tech lot you talked a guess between I think aside a then the side. advertisers and revenue Evan, big And for level and high Imran. the can You you What you a do a And strong sense on reignite of advertisers? ad and DR maybe of Imran, brand us growth? the business? mix Android need about one profitable ad improvements

sales, the that for it So more wondering some are Thanks. what DR drive the more are you key features, doing shift? challenges and scaling side. Is what of to

Evan Spiegel

Canada. users as young XX us. today for little And about. scale bit on user represents I obviously I significant we’re the in a think opportunity, engagement one also So excited Canada, very think that’s significant think and/or the we’re ours, million seeing we and as minutes a side about business over In for so as opportunity which what really over I XXX growth U.S. is for monthly active we talked look

content. over product is forward, as past to I user we’re we primarily explore months, focused a DAU on more obviously the the lot go year focused experience So core something by XX allowing on obviously, we’ve improving or the think people very

So a the of these of redesigned saw opportunity product, communications understand the work to of we through And a issues, that there's Discover think Snap. we side as there we people upside with some platform. the think of we with help of lot value especially there's lot the

So the time, given I widespread pretty of we’re progress really the shorter made amount appeal the think in Snap. opportunity of and about we excited a really

Imran Khan

Evan’s and question. your answer bit And to little then maybe second

penetration purchasing where our the very, media. difficult the I and millennial is I they in reach is traditional have is -- also think large in advertisers, audience advertising power our big audience to that the appreciate millennial which market when to market audience, big. we talk among very And developed really

that and very, doing more it. business response So in of couldn’t progress regards we with incredibly we the are when that I Primarily business, you DR AD a I our appreciative. are last mean making direct to well, be a so we of think very perspective happy is very Manager seeing, with it. launched our pleased improvements. things is lot With I'm year, put we June

objectives example, product objective help few different nine our new So transition buying. we our have and where now from based to make solve optimizing we progress based to buying -- updates want several are Web buying objective business including from, new to are for We choose in and objectives continuing based conversion. driving

So let me this give Shop. company Your e-commerce named example. There’s you an

of great Your were They success. they Shop, wanted and ad digital drove to channels. return they installs higher XX% Snapchat, unique from on other found a Your what to at total XX% Shop’s investment from getting our then they millennial audience leverage appeal

pleased help and grow we our be more all business. to them these small platform succeed So their businesses couldn’t on to help

Operator

go with from Citi. Please Our is next Mark May question ahead.

Mark May

and And through? through separately, maybe time, and ads, and can do trends maybe by of including headroom you click couple think forward, Thanks. increase And rates? about with an ad if business spent from please, perspective? engagement on load growth, growth should you user ad driven more still impressions sell ad view recently. you A are and with the impression being talk significant the time in going you talk load we trends then just more of about have Could or where with user

Imran Khan

that relevant -- good that I if are drives on users, user that annoying relative really is user I you focus experience. even ad the we five showing to most better Mark, that think we if engaging your experience. one ad the really reduce ad shown show great with them you I you And most because completely that

work think bringing So doing on load you the the the lot think advertisers I platform. right on ad best are doing you right side, the the is, the work ranking to more a way about are by

lift initial ad were because better and have right campaign, one with a the to I’ll successful we're trying the right ran three think the people. ROI. us and an you partner of deliver lift purchase has example. you and lead delivering the So of most that great to I time, us, studies Snap relevant conversion we’re they and good the that's, with and they give working all And subsequent ad partners. they we progress higher to-date, been archiving studies recently making that's in ad on each test can we’re you the enabled show Dominos

engagement, point, on really it's is terms a to again doing and problem of really to ranking working improving back we’re on a the job that. that, good going team ad and hard the In right

Operator

comes question Jason Please ahead. from Helfstein with next Oppenheimer. go Our

Jason Helfstein

the agencies? I But with the one in for us platform feel focused bring gotten on headlines around less color of crossed what from how to just can quarter point them some we’ve was whole agencies that with the getting numbers table came this it's do out can and opinion, the obviously, things And speaks some over frustrated on last there? the you're the think the had ROI you the at platform, and that give of themselves. about ad we more more you product and working like, really Thanks. questions you're now, discussion and your you

Imran Khan

engaged gives trends platform. compared the to attractive our yes, that some incredible with not density an increased we us. win the option they other low for in very for seen on advertisers were us, were who pricing, opportunity been have platforms. looking the it It with have with one necessarily But things, of think very, with who engaged their had the and success and good And and budget advertisers gives headline come I QX. our some to of flashy they and stayed with advertisers

meeting, increasing customer excited then budget good with their significantly, in CPG in So customer, we’re one monetization that. success my seeing about really seeing CPG about we’re fact the talking And how we’re ROI. staff really are because they

advertisers ROI driving couldn't for more it, them. with with on I engaging and So value and be happy focusing

Operator

go Our next JPMorgan. Doug comes Anmuth from ahead. with question Please

Doug Anmuth

you challenges? a side, -- some of Thanks. also the XQ, and Just one and dollars we’ve comments about little made targeting you’re measurement the where you have on bit of ad could talk or Cup things improvements during Tim, DAUs then, you in then any any think quarter? still more quantification if And the Can just you doing linearity on advertising. the on World ad during the well,

Evan Spiegel

to do question want second you the take think I first? Yes,

Tim Stone

the to during of DAU DAUs X% ever. be the we’re going to up not behavior commenting on intra-quarter comments the relates to monthly it rate quarter, highest As DAUs front active made up beyond on and we year-over-year

Imran Khan

custom on And different with capabilities reach continued regards and interests. purchase make segments One offering from actual progress over Nielsen, leverage can based targeting, targeting partnership to -- on extended is Advertisers now to we based more audience example coming. recent thousands with building to with targeting pretty significant ability to there. currently audiences for advertisers we to users’ our thousand

who Snapchat advertisers are really, store. we people campaign So their really a retail is target purchased example at good to can One excited. lipstick

can level we So to get of granularity. that

think, we as challenges look opportunity With Pixel. excited very that about is, the little the about very, regards to -- one bit is I we're So talked an it. of

and Pixel recently progress. we continue enroll to the continue We to make good

XX% For spending number example, are accounts the in getting their Pixel, over good traction. growth advertisers saw quarter-over-quarter actively ad they of using we and

allowed at grooming to leveraged grow wanted months. higher which company in acquired lifestyle user XX of drive to example, see to its high very cost acquisitions average points company acquisition below their by customer addition with allowed were -- in an to Snapchat them of value order real the provided direct-to-consumer our which we’ve And one percentage and the Pixel, two ads customers on good XX% also model result, per immense they time is revenue performance And got to easily conversion that provide this Snapchat result, scale just Manscaped, driving grooming the target. to for most the media at or other value they mix So and than called platforms.

our to at drive they can platform to creating a win an So on ROI, excited. we’re value so that drive our very attractive goal is very win-win advertisers and Again, situation. the price

Tim Stone

evolved of that be scale current a to versus we Cup, programmatic, as And mindful then World scale well. major for fact we’ll following on the an on communication more your have example. we less well major event-based, But the also on at of people far much And last as always content events the be modest a as it’s the impact, would less as expectations over primarily but related up quarter a and on concerned, be drivers is only time reflected provide revenue front, as and historically. QX. as Olympics are not response events Cup, that’s watching for World direct World Snap, engagement for XX a impact currently the like again, for us, But the results quarter second to Cup, on revenue guidance in that the more in World million Cup also impactful our question our

Operator

with Nowak Morgan Brian from Please comes question next Our Stanley. go ahead.

Unidentified Analyst

taking Hi, [Alex for it’s question. actually the for thanks Brian, on Long]

think revenue, seeing on we’re and of touched can some international. prepared if But parse incremental anything investment Company to Australians on and you wondering the ad XXXX? international then And out second, think incremental SMBs SMBs, versus margin you And front? as balancing of for including trends we as efficiencies. on drivers focus and I in international. remarks, Thanks. as self-serve growth operational the trends into How about think in highlighted I you head the continues do you the helping

Imran Khan

strong and team. lot growing on more we’re and super excited regards known seeing at also the So a solution on-boarding doing on very the we're of so They’re group with the has pace. one world trend healthy that our the excited leadership and our SMB the business platform, advertisers SMB, and across well business really been with we’re global to really, about that online business that’s as

we’re I at super point. this think and say So excited to beyond nothing

Tim Stone

in we about second the to your operating operating as potential As whether think and business. of efficiencies I second infrastructure, we’ve structure. as either it the scale and relates optimistic driving that’s long we’re well. think And or, the talked operating efficiencies as and about not about, quarter the question, well over term just an it’s for When it’s cost growth not now example, long-term but

we saw in addition, year-over-year revenue. In XX% growth

cash is but operating the generation the flow and focus as just us, improvements profitability and over long-term. both you free operational towards the time. for today not So on over drive -- efficiency that's this growth And focus

Operator

Our Anthony next Please ahead. with go Evercore. from question comes DiClemente

Anthony DiClemente

remarks perhaps think your per Can that per guess in commitments filings your the cost. To talked in the that what are disclosed there filings, I Snap way at to you Tim, related also on to QX, quarter. minimum day the Snap that were hosting disclosed hosting next your you the give the cost about to is And snaps years. disclosed comment that you Thank day I then please. levels you normally that in or ultimately chance there filings, over minimum the first wouldn’t wanted in was those us, very spend several go in give much. snaps a minimum efficiencies. cost I the are out ask that operating suggests

Tim Stone

the So part first. I’ll of take cloud the comment

current we’re partners driving over economic with unit with improvements. We’re constantly we’re the not time. in And operating and partners cost the But as and in said dialog as comfortable cloud I improvements, cloud as with engineering strategy. current efficiency on only optimizing cloud services comfortable our well utilization with agreements our call, and our

Evan Spiegel

per And per day, day in over X the snaps of in snaps billion quarter. saw we terms

Operator

Greenfield question go comes ahead. from with BTIG. next Please Our Rich

Rich Greenfield

to then some you as the across think color usage look you us on What friend touch look? that much those story, or of a curios, anything publisher I And of upper was story, be percentage that a creation actually many which does fact that daily How follow-up. prepared a use Evan, happening percentage XX% a of people How side, daily think just the does I basis? year-over-year? shows intellectually, year-over-year. is and a at is In your it’d stories, platform. and of What both down I story, the if up right case. daily that give you whether about consumption, track look what's you was show. whole stories wanted DAUs. DAUs, how the the those remarks, could or things actually basically people using friend global one are talked of about on wondering actually viewership Thanks. that bigger products Is I publisher friends with on

Evan Spiegel

the I’m numbers. disclosed exact we not sure

that comfortable You’re right And lot that expression. Tools, the that’s focused seen so to we’ve point expressing so we’re why themselves. of importance stories, Creative that our which empower with people really and out really feel on keeping close friend friend success network of a

out we’re Discover So of content, friend very I focused on sorts the we’ve is seen stories friend of with with in stories. separating all things find. rather them other one And think easier than great to make mixing them

of so Discover is And the business. at having long-term them page of top the we for the really think the thing a important

Rich Greenfield

SunTrust. Youssef question Please next Squali from with Our go ahead. comes

Youssef Squali

two thanks are all, questions you. for And very of guidance that's maybe for these Evan, Tim then, First helpful. the

spoke engagement You about users’ platform. the on

retention you. new older a think maybe it trend last the Thank of guys seeing you I XX, terms necessarily guys and important very your numbers daily basis. you day just minutes to on for how metric? that about over what there? that talked are I years to hitting lastly user is hopefully XX plus couple has How seeing people younger grow than without growth for audiences, fast think in and metric per in And about continue keep X%. you What

Evan Spiegel

over time XX So in disclosing think we’ve terms per pretty spend, been consistently of day. minutes I

about sure people lot the when things think right really the trying can make at in that to particular, content. a that Discover, we look find is we of One

the is of I so content surfacing that think as possible. most as the right important we’re quickly And people right things the to about one redesign the

that to content. may that go So dive one can right they over page, in

to? Tim, So then that’s spent how there. about want And thinking we’re time do you

Tim Stone

it well. add. anything covered You I else to don’t have

Operator

Securities. Fargo go ahead. next from question our And Stabler Wells Peter comes with Please

Peter Stabler

And reaccelerate? if would ARPU America? Thanks. was so the on couple faster investors expect first for most than to we see assume it Is in of lapping and that's in fast start right the that that I started programmatic, me. adoption be could to the programmatic ARPU, internationally? I aggressive North it that U.S. And related of we transition as if And to guess A could.

Imran Khan

I I of business think think the regards directly. the with we ARPU, to many market international programmatic started

advertising for With I this domestic one our order had the don’t that in I our is U.S. things of ARPU excited in-session process. buying we business business. U.S., based is the give about ARPU, mature and we’re to think we regards But more the think guidance. potential key

which opportunities market audience lot U.S. lot one than lot a We have large advertisers, goes lot of XXX ad the is there's in on advertisers. Canada, largest of in world, very base, million deep more into and and the monthly of there’s more that of a with opportunities a users

and business business. And that, guidance. really cannot North so really, American I'm give you But I excited beyond business specific I ARPU the our think a domestic our U.S. about

Operator

Instructions] Our question ahead. go [Operator with next Please Jefferies. from comes Brian Fitzgerald

Brian Fitzgerald

point? Maybe dynamics? to as auction Are respect the Can the follow-up Eric's at pricing a about question, platform. lap with seeing you the there? talk majority the And does Thanks. you're what as like look of competitive what bit of this you rollout a these to self-serve auctions

Imran Khan

auctions platform. And more think competitive. and I more bringing are advertisers think we’re lot the on I more becoming

really relevant on focused not but that business. showing advertisers long important term ROI that, in think most the takes at I we’re if do delivering this beyond to to what’s the pricing. that I ad as we the that point, consumers the the care our down think it’s we're breaking of So the and we to doing Again, think really

Operator

comes ahead. Please question from Pivotal go Research. next Wieser with Brian Your

Brian Wieser

about could perspective -- impact you. you if Thank talk contributing. wondered did from the just your And the the if or you GDPR see might market whether be I with any way just other? or also export one not China

Imran Khan

regards with international of with growth we’re very a the very happier. couldn't and international our be think, revenue more healthy happy to business. It growth -- GDPR, I cliff, at grew

that seen in of impact impact, in GDPR this fact, call terms I material In any we can during not have discuss QX.

be There's China, of very and with attractive traffic, companies that early a is who week. help advertisers market. closely. very I a situation However, a developed it’s lot With we very, are still those interesting a very global valuable was China and think market audience could businesses grow. for meeting looking Snap are China regards and in And to to last in very the monitoring offers I recently

the what’s down breaking at from not revenue we’re However, market that this point. contribution

Operator

our from go And question Securities. ahead. Lee James comes Please next with Mizuho

James Lee

ARPU, help sustainable? the us is than so A is you’re when rest realized your wondering I And that it actually monetize say ARPU on in able APAC ARPU, on was I of world Facebook’s to rest well? Thanks. why follow I only look And it’s up of high question Europe. that XX% just Europe. world and at

Imran Khan

again things think not to in couple keep I ARPU going of but give guidance, to mind. we’re

advertisers. lot like also you from of the very, or at millennial very rest look that’s amortizable our East. think that world audience, our of coming audience is also If is audience Australia attractive a a to I more Middle in more market And is which the

rather really guidance, of think I ARPU. excited very terms ARPU But trends. we I in have. focused provide. that cannot see overall But as And think any about than markets revenue grows very, are various audience so we we growth And driving specific audience are the how on demographic region’s the on from we we’ll

Operator

And you call. this XXXX you concludes today's your Snap now may as session Thank quarter and session disconnect our second lines. earnings question-and-answer as Inc.’s for well attending conference

Snap (SNAP) 7 Aug 182018 Q2 Earnings call transcript