SNAP - Earnings call transcript Q4 2018

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Operator

Good afternoon, everyone and welcome to Snap Inc.'s Fourth Quarter and Full-Year 2018 Earnings Conference Call. At this time, all participants will be in a listen-only mode. After the prepared remarks, there will be a question-and-answer session. [Operator Instructions] This call will be recorded. Thank you very much. Mr. Relations, begin Investor presentation, of Ometer you your may sir. David

David Ometer

are Welcome and conference fourth today Officer; Executive and good can Financial Chief our you Interim Jeremi to and call. Spiegel, Co‐Founder; Officer Officer. Earlier of afternoon us slide quarter Lara earnings Thank Business XXXX user Relations everyone. Snap’s Gorman, financial Chief full-year and quarter With Chief a full-year Sweet, our at Evan the and that investor.snap.com. fourth on available today presentation we be XXXX, site Web which metrics Investor made overview and provides found for an

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

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

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

Evan Spiegel

close with our for above daily user average advance QX thanks sustainable overall XXXX, that building Android broad offer have improvements, year‐over‐year, to In of made of feel towards human team to the our because to their now decline time we our engagement the daily long-term X.X% achieve users over rollout higher we with Snap our in leadership XX our joining we’re contributing themselves long-term and stabilizing express everyone, progress to offerings we quality our Hello able We innovation, product people minutes foundation per to by users a our will family. business. day. as our we progress and Despite for friends focused product empowering flat on scale These in of the well continue sorts investments scaling expand hiring us business platform, ended content significant call. help of driving and future spent will simultaneously and quarter‐over‐quarter grow a goals. year serve while the active active mission and with a advertising experience,

We of compared when last are closer representing to achieving our loss of million XX% QX EBITDA substantially QX year. improvement profitability, adjusted with to $XX a

full‐year year‐over‐year, year relatively QX revenue cost XXX% of XX% totaled more a of just ago structure our of to compared our flat when with our This quarters, through revenue maintained limited the growing our flowing to to have XX% five across past losses bottom QX We XX% revenue, QX revenue. than line. while incremental one of our just losses

We we’ve our as made enter growing are progress XXXX the focused proud we driving towards and business profitability. of on

need Officer, Strategy created Business We We building worked and talented in both past leaders our were and business is many incoming have for exception. opportunities experienced several in against but of our order the team made including company’s and we growth, platform develop no next Julie the our us, ahead our the we execute Grusd, our have Officer. and The Officer, welcomed transitions Communications the in hard to and our recently Chief and last year team to Henderson, was of on leadership focused culture Jeremi change always Jared of stage Chief this Chief difficult XXXX. opportunity, our Gorman, we long‐term year and necessary Snapchat

one in content forward. Publishers with at benefit by XXXX. and leadership tech our from boldest offering addition their We of while us new offerings application, which our our redesign of friends. for scale the We to content expands close the some we significantly our success continuing opportunity, platform our media excited and new the expanded content that are increase providing reinforce experience with of vastly Discover and a communication to our with of accomplished long‐term of premium laid layout The business hundreds allowing companies as Shows the for leading foundation world’s XXXX of of wealth to goals our moving

also We engagement. generate a on that Discover of have new greater introduced features helped depth

Stories, in Detective comes watch reached Agency, next of starring In week. people to with prior new first produced ESPN your new by our of per XX% be more episode Snapchatters favorite example, The audience entire episode of and completed XX% the more For easily went and QX, season. a NBCUniversal, Snap their than the Original the meantime. December. when over million viewers in cartoon joint now notified Show over on venture tuned XX Bitmoji friends, can a the show that Dead out, episodes SportsCenter’s launched We you or in times choose and the watch three to Girls

announced that listen more thirds improvements, more our for other News able publisher XX these million recently represented now that to watching NBC unique any on day to day last and more every are of product net Snapchatters one to This XX% they Following and compared reach new watch, two each to them, people platform. average. the on watching people also every is now audience, were shows audience XX that NBC million our Tuned consuming meaning did of redesign or stories and reach our means read, News can otherwise a stories Stay not of year, partners and

core depth along to relationships experience high‐quality, friends, when more the from our our their new the shows which conversation the friends double we creators self‐expression reinforcing By with fast between Commercials, over Snapchat’s to breadth with is increase and with content compared fulfilling expansion way engagement professional helped the which separating non‐skippable following content were complement a believe Discover advertising and we of friends achieve advertising and We extremely last to in format. for visually of premium people value a valuable of revenue more from providing premium than year. this the makes while in video product in narrative the Snapchat family. content communicate redesign, turn for We community, also with able launched that with products, long-term. also These that us generated QX

this a has behavior, of Snapchat cameras world. of most‐used become As one in the result the

platform a every on new when million computers. times and last of have with of of We makes views lens to reality profiles our video with launch which look with over saved our average, empowers to invest or recent memories Eve, close day year. or release compared been with to played to devices continued value easy in back We or shared the over recently favorite our lenses which the that camera relationships plays lenses use friends. with and in to than up friendship vast these Year’s XX% XX% community laptop on augmented majority the high‐frequency desktop on of audience engaging their streaming our conversations More augmented XXX day. usage daily our platform, every with community augmented reality with our of drives the your people Snap reality creating viewed it also your expanded New This Camera,

the continue we broadening future. experiences excited We’re the augmented community our to in provide reality to

We quarter‐over‐quarter on both than year. and grew our following we on improving QX our and to Snapchat last time year‐over‐year, forward experience is our users This increased beginning look platform. progress In grow to our redesign, iOS during great investments engagement fruit are iOS. bear the and daily seeing iOS in it continuing active average spent QX, to faster on did

average devices, promising team less including application tests results XX% on quality. to show in remains Android to the engineering focused performance Snapchat. time it on open takes and our improve rebuilding Our Early reduction a performant especially

devices results, Given to to our improved more we have these started small to we Android look percentage a of community, providing new over an out and the version time. forward experience regions and rolling

transition platform has mobile brand marketers. with performance XX a for building able reach our scalability business to significantly products to we monthly we and of improve total to our progressed the and advertising Our population to on year‐old focused premium ad U.S. core XX% self‐serve year, performance basis. XXXX XX and following Furthermore, on ads video both last now and are in

an we current and advertising important it our some built for digital us, we’ve & platform, self‐serve critical direct‐to‐consumer including the that brands with businesses, to continue best‐in‐class have set Native, told become and strategy. part products Our to newest us in fundamental have Snapchat leads unique audience who Stimmel, connect against infrastructure growth new up the been our indispensable big Gamble, Millennials; of performance to for business strong has partner buyers.” engagement both to brands is driving XXXX. foundation Gain Crest for continue we Craig our Z see to recently that Now Gen advertising partnerships our brand Procter “To and scale marketers. advertising across and in Across and like an

was over business built experienced the and our changes and we infrastructure advertising long‐term. made strengthen business. to this community, improved our of full‐year grow brought Although leadership growing in while proud for reach. within our a company scalable core challenging have to XX% are team, many We all the product more we profitability significant ways, XXXX of year‐over‐year better serve revenue together We did our bringing and our

We a stronger business, positioned for team. year excited new are and are as product, year that stronger with a the well we a the we enter are ahead confident we and stronger

Now our excited business and November Jeremi Jeremi Chief I’d Officer. like at introduce role, joined customer her who oversees revenue we’re us this really as have in across Gorman In to and Snap. to Business operations

Jeremi Gorman

our Thanks, join Snap beyond. Chief opportunities I November and for Evan. in I as see XXXX business thrilled to was Business in significant Officer.

highly‐engaged large, other channels. can audience be we’ve Z Gen reach difficult on a First, to who Millennial and

watch communicate leaned Our and in and with they community Snapchat to fun close content. friends is because use made‐for‐mobile having

a Second, strategies key tooling, XXXX can around purchases, capabilities, performance fruition. and such as our and advertising an installs. as came advertisers year sign‐ups, now into business, indicators, was maturation to and self‐service scalable range long‐standing We our model auction‐based, optimization, pricing against a a pivotal app of bid improved in

deliver incredibly competitive performant resulting continue campaigns. highly low and per cost We to in outcomes, CPMs

for our paying models prices even to performance showing advertisers off. In events, lower‐funnel bidding as installs advertisers and will app we means improvements significant see our is efficiency increase, which addition, made that machine to learning commitment

was advertiser to out in the most theme Snapchat feel. all paired reach media brand‐oriented and sea reserved of innovative innovative engaging break creative in built Finally, throughout and of One of advertisers many for desire XXXX ever position look Snapchat mobile. leverage social as new seek such converged to to their we to content heard content, in home needs the formats sameness, conversations our models as many repeatedly ad similar led stand and is we are out. XXXX. the frequency, to a to has fulfill ways Thanks best to with & and upon buy This campaigns these

in conversations starts partners. this Snap: the for advertisers. are engaging video. These our advertisers with ad organically can formats For represents in a significant reality, delivered opportunity at friends Snapchat instance, our we strengths Conversation or strong between that augmented an believe with in a that first way have reality a groundbreaking augmented creativity, results a picture empowers participate time Monetizing brand for scale.

example, a highly try U.S environment. among sponsored age awareness For brand an augmented in Lens to authentic created over which new on ran creative the increase stadium of experience XX. to balance uniforms They fans soccer AR campaign an allowed enthusiasts reality

As Millward drove measured over brand lift by campaign the favorability. point a Brown, XX.X in

to New Balance utilized supports X.Xx company ad channels. paid Snap Pura improve Ads, Vida, and rapidly with a of formats same those artisans In and Snap driving worldwide, then lower to deepen that in campaign response our our partners, we a other hundreds XX% XXXX to advertiser tooling, jewelry return onboard ones. Pixel Costa with continue beyond, competing than Snapchat tools and and that direct drove Rica reported spend. both new re‐engage relationships founded optimization, existing will on users a Direct‐response cost‐per‐acquisition

have no more since in our engagement Adding per our we show advertiser strong, engaging of advertisers recognize as their continue performance to that to and per We ad on that advertisers. impression and advertising results subsequently which launched of prove and prices relevant number ad experienced ads quarter quantitative a indicators. blur, every tool a performance brand lines QX We the between our key but quarterly users, allows active in cost XXXX. self‐service to ad raising matter growth platform accounts to decreasing the outcome marketplace every overall, rates simultaneously helps and increases needs whole, the basis, for

adopting partners with a knowledge consultative model, Snap We so have vertical reshaped advertising their combination platform businesses successful with the members become and partners’ coupled deep our more by organization, support This enhance relationships in that expertise, our Snap’s audience vertical business teams industries. and their for to better experts and a partners. Snapchat will will sales and of of make our team

a you. I the to way now strategic forward. privacy‐safe are We us XXXX continue success excited users look be to here and a I more We going as for plans in for sustainable believe engagement‐driven, to business be like turn will to the mobile‐first, this and business platform ad real of a drives advantage drive I’d forward our we our building beyond. Snap, more outcomes. for advertising that be sharing at Thank couldn’t about over Lara. And to call our

Lara Sweet

Thanks, Jeremi.

on Our and fourth quarter XXXX financial results reflect growth our driving focus operational efficiencies.

performance and compared we the line. on generated quarter financial quarter. year record results and prior This top strong growth to the the delivered We prior significant

and We in also adjusted had free adjusted cash margin, improvements EBITDA margin EBITDA, gross strong flow.

by flow in and $XX million Our compared compared million, XXXX, QX driven cash change in QX sequential capital. improved to the $XXX XXXX. XXXX capital. by negative in offset with operating is by the year‐over‐year $X million improved change cash flow QX $XX million Similarly, is improvement an million, a operating improvement by adjusted timing The with $XXX changes in changes offset EBITDA, the working in adjusted in timing flow of working driven of EBITDA, cash operating

expenditures, which and mainly lower are office Our of nominal, prior build with capital facilities. up than the QX XXXX $X million, from capital million XXXX are quarter. out expenditures million associated the were $X QX $XX our

XX, to billion compared XXXX. compared million million marketable QX million December with shares quarter with shares cash year-ago. QX and a totaled of million flow and with Common improved underlying cash ended compared $XX securities. XXXX, outstanding free X,XXX awards $XX negative $X.X QX X,XXX XXXX, plus improved Our XXXX the $XXX stock‐based outstanding million We on with

business. negative towards cash than scale $XXX the as The quarter as million good cash the and was forward about was quarter progress and $XXX better our flow. feel free prior in million million. for cash we to change continue Our change move the improved in position $XX year cash versus generating We we our prior make

We growth. have a number of of revenue drivers

from generated full-year XXXX. active and $X.X users Daily increase XXX XXX million, to XXXX. XX% in was up year‐over‐year the million QX in in QX sequentially, $XXX an million QX XXXX our of million For of XXXX, compared and XX% quarter, XXXX we revenue billion, XX% were revenue and record XXX

QX reminder, December. XX% $X.XX, revenue in experience generally improvement user with a of XX% QX seeing engagement increased per As we XX% seasonality XXXX. an sequentially. in North and in higher engagement, in total our XX% user and XX% of to Average outside year‐over‐year compared America represented Countries revenue, XXXX of

monetization, up up was XX% of impressions pricing terms In total sequentially. XXX% while XX% down and and X% were year‐over‐year year‐over‐year was sequentially,

year‐over‐year $XXX X%,. at $XXX an decrease increase XX% of cost quarter, .Infrastructure X% increased much revenue XX% and of than revenue an X% was of sequentially increase a XX% an and revenue year‐over‐year million, the costs million, slower sequentially. growth For rate increase a were of year‐over‐year, and Cost of of of

Importantly, declined cost a business XX% scale year‐over‐ continues margin X,XXX were Gross can points demonstrate over to sequentially revenue profitably. expanded year our of which record and XX%. X,XXX percentage model Gross to over of revenue as that and meaningfully points from improving basis substantially, a year‐over‐year basis sequentially. XX%, margins

We we multi‐cloud unit efficiencies are improving over focused economics driving our on the environment and time. as scale operational of

our tens dollars as EBITDA. to infrastructure free our In of from result flow engineering programs. are reductions in we cloud excluded EBITDA time. XXXX, benefits expenditures, efficiency cost model as to are infrastructure opposed which investments innovation typically cost included time. passed our to model are partners’ technology and customers our adjusted along from The efficiencies, This over continuous Adjusted result of in over which capital of achieved in in cloud costs a Additionally, should cash adjusted conversion higher EBITDA of millions

improvements usage and of initiative our Snapchat, by also but infrastructure not initiatives savings efficiencies Operating optimizing data For $XXX QX users cloud daily for infrastructure can X% sequentially strong which our in usage and XXXX improved performance These revenue result and should reduced focused client overall economics cost the year‐over‐year, server were to costs remain optimizations the on and operating and only savings or a our in example, costs on down in we XX% that X% as million, quarter achieved application. on cost executing Infrastructure launched Snapchat year‐over‐year bandwidth in structure in our activity are compared and infrastructure in costs. be leverage continuous, focused an reduce expenses the over sequentially. long‐term. of our resulted growth we unit‐cost XX% down

to and are uncertainty. year‐over‐year, represent financial productivity compared we quarter negative expect our are operating‐cost to respect business. with adjusted driving continue. leverage XX% the improvement negative QX in sequentially. expectations We year‐over‐year. the and focus XX% Operating With to costs, operating with adjusted on EBITDA as and had percentage XXXX our quarter XXXX, QX in by prior the saw over improved which improved million million revenue These a QX X, to prior driven year Operating XX% XX% across in of was continue million XXXX the improvement two related Adjusted XX% compared QX XXXX. forward‐looking versus We of prior million, QX $XXX of EBITDA XXX% and million quarter. decreased was This X% Operating as over XXXX, momentum negative and EBITDA up reflect expenses QX costs, our of declined subject million third February which in the expenses. Adjusted meaningfully expenses an employee‐related the XXXX. primarily that in negative thirds $XXX employee leverage fixed‐cost improvement improved XXX about QX significantly XX% EBITDA prior prior improved a an was XX%, we of quarter. quarter. the to in the XX%, over to year to $XX an in quarter, $XXX loss in margin substantial statements and for over of XXXX XXXX our first consecutive

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

and Revenue Now grow or share and million XXXX between XX% XX% year‐over‐year. I $XXX expected be is $XXX outlook. to QX will to between our million,

by This and a or that less reminder, no the be was modest million There between growth rate XXXX to quarter. our among boost negative are to settlements a in EBITDA XX% legal guidance Winter expected from assumes, XXXX is impacted the year‐over‐year million QX $XXX Adjusted negative event. QX business will of million, As that QX of Olympics. than XXXX. things, in revenue negative be restructurings, $XXX concluded other acquisitions, $XXX compared investments, revenue

on While are daily we the that, active we QX XXXX. daily are we not With a open in for sequential cautiously active optimistic users not going let’s in to questions. do give and foresee guidance line users, decline up specific

Operator

Justin we your that with go today’s Thank questioner And [Operator will for Post call. ahead earnings you. remarks today begin And Merrill the question-and-answer the now with session. And will concludes prepared question. the Instructions] Lynch. first Please be

Benjamin Garneau

the Hi, where And the guys. Thanks the best Thanks. for update Garneau had for Justin. my on for I see updated if you on sites improved also for application? just any wondering was taking an wondering call. timeline Benjamin just android the on monetization. opportunities you

Evan Spiegel

Hey, Justin. focused the as we are on is engagement as monetization of Discover most improving there. depth and concerned far Yes,

We are seeing excited we [indiscernible] improvements about personalization. around the really are

a effectively. is and lot merchandising there around content think more to do also more there I

created our and generated content more by see shows a of a for for content I and premium demand also user today content. community, lot think we demand huge

working easy so that both surface a through we and content helping for of way those to really types are find. And resonates in it's of is users

on we reality. lot I see working then, around we augmented that. And So a huge to are continue opportunity think

we have are immersive the advertising and really in doing things world there. our incredible think I camera most in the advertisers some experiences of

experiences on important way to I new brands So helping the will looking wholly out the in years, to us. over just its very to the think X towards experience camera and people, X next focus future be

Operator

questioner ahead. the go with Jason Oppenheimer. will today Helfstein Please next And be

Jason Helfstein

Thanks.

the So clarify just on comment let into me to first on sneak the guidance.

the it was, broadly you’re if took that at think growth you quarter, that the us with but in it be out the will which not what acceleration. growth fourth the will should I use be obviously X%, are about line midpoint revenue high-end headwind, XX% about Olympic if or you because thinking impact it telling that that would So an we that be exactly

So about about so quarter, that call talk just XX% then, And flat you. daily while still there. were in helpful. would If plus within quarter-to-quarter. within some is more you think it demos, is Any secondly you we the XX% color demos, color user declining. can XX% as to Thank there be growing,

Evan Spiegel

you give guidance can't and don’t we breakout on the more like DAU We color that.

Although I would say we are very excited about the android opportunity.

we lot most shared our that, to seeing last drag roll think coming are we is we We’ve I quarter android. DAU a and out rebuilded on of resources the waiting were really the to for from that broadly. of android, shifted so internally

we to android improve continue experience. So

I us, terms way broadly billion more and or X Snapchat. so don’t there's speaking, think it, android billion opportunity, of about roughly or android think have for may who in be are the to X on people

share few there story make So a we real different a [indiscernible]. market percent to take can

Operator

Barclays. questioner the And with Please ahead. Ross go next today be Sandler will

Ross Sandler

second that And in showing side, now we as android good the iOS. seeing got the Hey, questions. is, terms the barring is the platform stories. once in when on on the What then structural as rolled Two guys. any out. that’s [indiscernible] be data in test Any and android reason why guess going of to update shown advertisers million the you I timing early good place Facebook results X be can't in as or question [ph] are

ad on curve industry seeing So of conversations have with up is Jeremi, getting the it's we how your the in be XXXX. that standardization going Do this the you see Thanks. are think, you that those unit, in advertisers standardized. an conversations now ramping Do adoption think advertiser do impact will you the easier? to

Evan Spiegel

to pertains it in terms especially really as android, we are about accessibility. seeing, we’re what think I excited of

low-end So app more making in the devices, usable particular. on

I incremental today the use to able use there on customers end phones, it in they are can't our just who future. lower will be think some So product

be definitely restructuring android even that think excited certainly see and the investment we about what that the for are our comparable can do on devices, think way I that service or I works. equal huge to given in the iOS experience We surpass and

Jeremi Gorman

second the Ross. question, for thanks And

We about excited vertical believe our are more well tailwind this We do when format. industry, a seamlessly rise for our continue and can that believe now to to boat more this that the adopted that really to throughout the were XXXX, years we buy and advertisers every ad criticized this. ago comes have since of for to the will it's us on it of really we widely the And format and really rising format, add we more business business becoming format will be quarter it adoption tides, help We advertisers wide several the that expect they QX platform. do our of even the incredibly that.

Ross Sandler

question. And today with our next your with questioner will be Mahaney Mark RBC. Please ahead go

Mark Mahaney

now continuing could And you new come of Any one quantify you current are What grown spend that its question, to particular verticals by to seeing are strong? questions, where new you really are revenue -- small, from ad from? revenue color that about some content? relatively the Thank percentage advertisers, advertisers your but if you comes think more appreciate ad you. please. assume coming terms could We it. Two are talking just of advertisers were on starting there then, the quantify grow. is on just premium I Okay. it, advertisers in by or the And

Jeremi Gorman

year your Thanks advertisers question. again to answer for the a comes last from as shifted of of self-service. I part will premium to deliberate that asking. we question. for but quantify don’t pivot first revenue direct you the content, the made our Thank response We percentage We work with

against up advertisers allowed bid to We ads are seeing are highly performant and KPIs. their

or So of just sales app downloads direct-to-consumer or install businesses.

a success in of we response lot seeing So direct business. that are

globe. premium brand have broad well is to lot focus advertisers as do a sales is a with deep video so can brand have content. in there We un-skippable that as second where the which brand. format of We know accordingly, that six our opportunity opportunity our team our with within augmented the we advertisers format, reality go commercial still we and We across with more reorganize success

Operator

next Heath will our ahead. Goldman Sachs. questioner with Please be And Terry go today

Heath Terry

of Evan, public. share us qualitative since Curious has whether how of changes? consistent it's that Thanks. sort you you're how of engagement cohorts, in people if user that extent depth Great. seeing the you product with is or those share stat been certain over demographics sort XX split interested within sort just to can its just time if you minutes products, always even and guys within of incredibly evolving, where using in are can of spent certain a with terms how went is little more the us sort

Evan Spiegel

for Hi, I the question. on think broken thanks Heath. we’ve out not I spent we’ve service. -- our sure ever I’m actually time mean, Yes,

little business. talked we with the think we’re on content are what bit in about side we seeing of the excited the script I how a

is our can friends, from to I in So content from what our do publishers things I from think going see off. exciting terms big last bet and be we year to forward. of paying that really content, shows personalization like separating and it's going And think

that’s we about So are excited right in terms of really time spent, now.

Operator

be with today ahead. And will Stifel. the Please Egbert next John go questioner

John Egbert

question. the taking for Thanks

still impression growing how alongside is Obviously, aggregate noted quarter-for-quarter. per yield but so for pricing Jeremi, lead in decreasing outcome rising advertiser to year-over-year, impression per advertisers. think, cost per account I can down less

been formats, So I'm stabilization of wondering that some pricing maybe the any specific ad growth ones if or across [indiscernible]. you're seeing like-for-like ad have

Jeremi Gorman

for question. thank the While we -- don't

we break our the models don't pricing formats. out While ad different across different

engagement us our and there increase we that community the of deepen we think XXXX, pricing, as look in think opportunities. really into formats. I in that sequential our as shown is our a X% were of strength And and overall with monetization variety adoption forward as excited gets I

Operator

today with Bank. go Please ahead. The be Deutsche next will Lloyd questioner Walmsley

Lloyd Walmsley

of at the effort drive the MAU in it's I over or you Thanks. MAU improving the more look you driving and for you converting on of user app, on do Wondering growth. the kind -- beyond Do function you can growing growth kind new longer share of geographies? a the do sources see are of when over go-to-market into how DAU android return of to where guess, that? what the you what awareness that to near-term think and biggest or user term, demographics the

Evan Spiegel

mean, priority I Yes, areas. in so this terms think about key of sort three I of

foremost, U.S for and in strong XX% market the a First which Europe, is XX% us. and core to really

a about engagement to content lot and deepening lot we do thinking have some a of are stuff talked the with We that about today.

I think focus is XX%, primarily will international, which on to massive and opportunity XX% of XX%, area the android. XX% second be even to a

of everywhere. make too working hard the we’re product in customers folks that marketing that really been core a we’ve and sure value world. past part delight of And learning offerings to year company become So our how terms over product global the really to around more as that to our explaining our on

time. younger are that on doing content users adding or on that’s we’re of then so we're area lot they to I XX% personalize experience making our a that I of how as broaden people we the are in lot now to perhaps, folks naturally reality in with work content that's and offering gotten plus thinking age-appropriate side appeal So a the hope over them ages. And we all bit where last about historically incremental older, the us the to experiences for augmented is can who little of customize think and grow a in we folks doing lot the But also older focused of and on will continue more terms think that whether happened our core and old sort expand our have markets. to

making So three those of areas progress where and sort are all three. the on we investing are we're

Operator

questioner Citi. Please Mark with be ahead. May will go next today Our

Mark May

you. Thank

for by versus on you’re In in terms more potential DAU what is QX, in a you lot save just breakeven outlook expense plan? growth And better and done last should is going that or targets QX expenses, revenue company there, DAU to to forward year expense slightly for base. opposed that reporting driven seasonality or by much profitability has as else. hiring the more do to the of more modest think more then something right being you much about QX, hitting the size the the would over we or driven you How think or attribute Thanks. rationalization have

Jeremi Gorman

the question. Thanks for

optimistic give in we on daily going and a our we not XXXX. cautiously are guidance sequential don't to users, are except We active that our specific QX in DAUs foresee decline

from we’ve of profitability, free And the reminder a our -- profitability quarter. help our we internal and breakeven, achieve improving while engagement, it's the to think on achieving date. a that is full-year a what eye had also growth, guidance. free our goal revenue achieved flow forward not really look that the we've cash we increasing to comes which keeping which it and it efficiencies and future, this the not it's come will flow operating growth As accelerating seen stretch to strong and expanding to us on as cash a it forecast community, results monetization, But revenue I in close is focuses

Operator

John ahead. go Our Blackledge today next with will Cowen. questioner be Please

John Blackledge

about commercials, Great. one Evan, new most we mentioned of there like rest most was Any helpful. Thank or could than be you. be among you’re advertisers there impactful for expected. collection several and others, scalable and two is color revenue, world you ads And excited that Snap? on products would stronger then, for out maybe just it

Evan Spiegel

I’m really excited about commercials.

taking investing one really that’s people is that of quality are lot and things to a exciting the really format the me of commercials the in seriously. Just

see creativity it's think to for future. I great So of just excellence level narrative and that on video mobile, around the

narrative already video a shows several the In narrative as or of over think advanced over effectively I continues in stages works are format the watching for of develop, narrative [ph] -- have customers, that sort experience lean back because years XX they’re seeing really development. mobile early already minutes. it really arc have more next X to a we a that So

So I is really for exciting. that think us

there also which I as think platform. creativity people whole avenue their have opened augmented on our testing think in really been terms has augmented reality new of side beautiful on Lens are capabilities a the of lately for studio I up some just reality executions

Operator

go today be next the will And Please questioner ahead. Doug Anmuth with J.P. Morgan.

Doug Anmuth

is taking about daily add you. mean, think into the you've for do are functionality the things past And in adding But then, are engagement. terms just broadly, others XX secondly, to I perhaps you about of other ask plus gaming there that kind there given any management questions. of how just the things and very think obviously, retention departures potentially functionality And key the like Thanks can I more platform, you strong year curious if the recruiting wanted minutes how plus? that the into you you platform. seen to spots about and then, over mean, -- just fill the Thank team? more across think

Evan Spiegel

Yes, huge are build continue on there opportunities the to functionality. to across for us platform

innovating is continue certainly interesting, time Lara and us we’ve critical some think gaming I Interim looking that long-time. think us, something to now. for roles, company out has will we think to the as really So I role And platform. the been been for CFO the a for right we I investing well, quite knows She role are we fortunate it's have really in a look in forward with

personally massive I up over a do love freed and flexibility also we leadership to us right. made team, I'm to take development it's that really the side. get the So the year if really the on with difference do And the think at it in things really business and me last for product look this, the to over gives now I because search time the our the

really next growth. teams for evolved of and the think ready I stage the I So think

the So see and really exciting It's come together really really to excited for to me. just see teamwork. everyone

Operator

questioner be go Rich BTIG. The with will next Greenfield today ahead. Please

Rich Greenfield

-- Hi. quick I housekeeping. got Thanks question. a One, couple. for taking a you've just historically maybe the

terms Snaps got where of out update was of reality hours was all positivity. put to know communicate, friends then, you fastest in usage. content? last you’re that we kind And spread stand the day, year versus you of leaked [ph] Evan, Has it 'XX? this us your intended for and Wondering think how updating about goals Is it it. highlight profitability, XXXX And if per wondering but you you Snapchat laid best and make on You do few on you I okay late of you the to rethinking talked you kind for professional in out were I that you’re letter to the way I give more more positioned. way how it call wasn’t the full that about of of augmented Thanks. shifted terms -- talked working lead kind could Snapchatters, thinking make any find achieve since and is content leak, on wrote you’ve I user it content. the to would of a the Discover that kind kind it? about call year thinking on about Discover still know it generated mentioned just last times that publisher Where or focus then and in on

Evan Spiegel

so Thanks, we the a day. billion are on Snaps, Rich. Yes, above X

are leaked on the goals think against So team I I the them. and still there I is think the latest well update really that, memo. the executing guess, Those

I sort thinking there that our And progress year. there. as is and when the progress to is to So as think throughout see happy I'm concerned, to of are far it three about it the we things going see to continue Discover comes

quarter. I like refine really progress been made last The most we to in we’re in there algorithms seeing We’ve first the that. our time is personalization and improvements were things the think spent working and

keep It's to iterating there going time, take are that. on going momentum personalization to definitely the on seeing We front. but

about we’re interested thinking and The is really find second thing a help to things merchandising content that in. trying people the the lot they're

something into it's that. like today supermarket the think [indiscernible] or a like I almost walking without

are will then organize piece there's more is Discover. the We more to think do us innovate So around there. I playback the think effectively our a thinking to third about and beneficial on that really be And really playback we things really playback. to experience lot I community for with full-screen,

we're comes things three prioritizing the to of sort it Discover. are those when So

Operator

next Please go questioner ahead. Anthony The today with Diclemente Evercore. will be

Anthony Diclemente

Actually two guys. I Lara. Thanks, for Great. have

and that rest of that can in quarter anything there world that is or year, sustainability call much I’m wondering continue those had other rest cloud were or and the last Thanks. in region. new year-over-year contracts and follow-up so to partner that world of gross of since of or think the anything AWS? cloud sequentially. go payments, addition, whether And sum the Was a here the in discuss you in know revenue AWS [ph] ARPU the Where improved additional contracts from quarter that lot or there -- efficiencies expansion. was then terms from margin potentially that about secondly, a question up entered new to I countries out restructurings partners I lump any in there further can you in and

Lara Sweet

Thank you for the question.

platform the new as international, excited self-serve internationally our about through look markets our has we to that at really scale we and additionally self-serve us platform, enter more how think enables to are I ability how So quickly.

think we’ve So of that there lot a excited we opportunity we're about.

model, typically focus on does which expect benefit growth cost gross to with we our the excuse from -- margin, we’ve look see how we think efficiencies continuous we think along me, it's customers at of as than that of revenue partners really our revenue cost continuous I model cloud And efficiencies at part look benefit increased the When our model time. on our overall our focus innovation we investments multi sustainability has continue and over of revenue interesting at that I about to and at technology looking to is our pass where our trend. our see you As exciting in rate cloud too, infrastructure we a and a partners, think and growth. slower our when

we So that. with pleased are

Operator

Thill next question. Brent The be go will ahead questioner your today Jefferies. with Please with

Brent Thill

team? think consider? the senior changes. -- of want we comment opening of have change lot the Thanks. you there could have the curious Good a there and any in just open that through been on percent you CFO to afternoon. to developing role to the you’re Evan, I be what if go Are back team just I'm on to culture,

Evan Spiegel

role are team, role. senior marketing focused we really the on the the on also On CFO and

the are teams they’re for year made towards the way I’m happy the me. priorities together. sort of those So together changes scaling, the half look as business come the year, we way and working past really of the over we two forward Most the with and

are those related us. So focus areas to for

Operator

Ron JMP from go the with question And be Please ahead. next Securities. Josey will

Ron Josey

join to the taking understanding you talk that to and question. about took bit for that XX that's just then, talked see businesses reaching there's you did force when second the to shift place? when that way year-old just are sort do, that XX% vertical suggested a XX more I to of also Evan, you the sales ads. Thanks thing what about a wanted Jeremi, Great. the little model. lot right of Jeremi, that built reach, And with follow-up that on premium of video a

you. that how time? wondering trended Thank over Just

Jeremi Gorman

question, Ron. Thanks for the

There right. aligned a You’re are vertically. lot are teams sales that of

a -- I particular deep up get and been a for and go as which after the I’ve a as can during with over as for is oftentimes think goal -- up thing as possible, model. to set is we’re us to ensure a that But is really big do the in in everybody be to revenue, But that when brands. they our really it important sellers it's structure billion here I really so the big not go came to business. the three that are set operate, durable allows means we call industries do consultative the future, customers to now I months is and understand quickly can and noticed we that there those and right account $X that I in in vertical team and possible. that make every as in when as came growing And every

reorganized we deep be week the able side two accounts. thing change this that there be on was months, is continue team the do. to so that over DR rolling grow really focused will that that a and of that addition, sales to business me the the we are last that right it next In on will go they to they're specific made can emerging expertise forward. that Those as means so six is And We indicators that the and well. of move that have people that have set optimization what to

answer question and see us that to so That with from important that gives XX-year-old we has environment. that of content second on ad can taking grow that they and our our the to in again our is really question, watching we're your are they’re engagement. way can Thanks very premium working lean over XX% we efficiently as for back That people more you grow that XX the addition how shows in shows for important growing, had And ad tended completing In question. reach that that our that’s to to premium environment, to reach inventory time, started. they’re base. continue -- always

Operator

next questioner be Please Youssef with ahead. today will And SunTrust. the Squali go

Sagar Vachhani

Youssef. allow reports to How for thinking of You the allowing or content Snap distribution publishers on devices? the other platforms Snap are created Hi. the This is potentially their to on you consumption broader for Sagar or expansion creation of and Camera last use on about year longer-lasting properties. public stories better

to of has sense how thinking your there? been a Just better get hoping evolving

Evan Spiegel

opportunities extended in desktop now think We to extend extend cameras going the I particular that more as are platform, that mentioned is you to be augmented constantly looking platform at to our on different to on reality and platform there future. opportunities to are in our

to again in offer. content great then we’ve I and of And there experimenting lot us. a for always unique exciting very of that’s terms So consumption, think

Operator

Wells today Please questioner next go with Fargo Gilbert Securities. The will Robert be ahead.

Robert Gilbert

to you trend could ask around my in Good Wondering first quarter. the please. revenue on [indiscernible] questions. the thanks and share talk Are if it afternoon looks I fourth us like It for if shows. continuing particularly reaccelerated to ask Two investments amortizing expense. shows, taking through wanted deals. sales to and us Then also rapidly just fixed the fixers, how tell wanted you’re there. commercials, about deals and on variable more maybe are channel more those drive governed by assuming could you you

mentioned the the in release also press the you deck premium content and think tool. in I targeting

product? limiting on might the ask you. be Thank pent-up to are you if wanted of talk that access you product sort there could Just today for and about that demand

Jeremi Gorman

engagement invest side. content will for And are the going our -- about really there. excited about content to continue we're the in and to talk platform I you question. we Thank

engagement I think when we the our talk we that only priority content for of the care shows is depth making people think by us. we partners XX% And partners watching every the for our breadth redesign that partners, sure taking work about enables our but are that not of with. healthy and publisher day. that our demonstrated stories And the more fact that’s us, are and

actually that’s to comes deals, not structure those we into are something at how going it As time. go that we this to

Lara Sweet

targeting And to and tool This tool and we pent-up a are is regarding demand. a access of answer premium not the agencies. limiting question big commercials second whether part for content or for brands being your

want good that within them, excited platform a time One that’s really commercials the down and and bring effort. commerce with invest to video, -- And a we had advertisers coming of for that confident that and nickel would that had premium premium as very format in if that say I lot content have about of premium double things most heard is have video And that second to six Snap the vertical to content. to every to me continue format into a that premium I build unskippable environment. we continuing nickels. that it, in will that the unskippable advertisers I’m within I

Operator

securities. Lee next the questioner Please ahead. go will And today Mr. Instructions] James be with [Operator from

James Lee

you regarding percentage down, lot help maybe to a break I you’re guys progress verticals DR you so my maybe specifically. a that not top about specific about, Obviously, And And of allow advertising a scale question, what couple revenue understand you e-commerce. as and Thanks. questions. curious to progress in can last for you working some drives DR talk particularly of got DR kind conversions? maybe about And of of past. taking that Jeremi Thanks us also can in your questions far? the better only the of I’m gain talk improvement and maybe

Jeremi Gorman

and e-commerce Thank by in-app out a direct-to-consumer install are and the we for but gaming that well. vertical, Sure. as question. of break in seeing specifically lot you success don’t We

of and them such can as where in have our products We innovations buy a the to directly the collection four lot ads you from e-commerce within environment. made ads feature up that ads,

optimize brands, of But So their we continuing lot there, a build we particularly We that success. we can and are a with are want getting help bid insurgent those KPI to -- them. more on sell If innovate installed, started when And bid that’s we that they DR seeing want e-commerce. are out reach they just more to break challenger if had that there they can the lot products them way. way, of audiences, are we success on don’t for can can of to on lot out they a app know to to relevant brands with and on that. a we’ve optimize specifics advertisers, bid that although they

Operator

be Mark our with And questioner Kelley ahead. Nomura. last go today will Please

Mark Kelley

much. very Thanks Great.

XXXX the in year? quarters, through we I of that that we to kind What And demos cost Just flat then, the original kind of talk several be the for your know curious target can there any expect not prioritize? the two you given you about expect quick given ones. structure pipeline guidance like been show like full-year, we Snap pretty saw but you’re content Can improvements Thanks. looks and EBITDA same can what are that has for XXXX? this

Evan Spiegel

will coming which a think surprise shows want the say have partners I will of summit that seeing don’t ruin we partner on a their to our on the the -- are Los creativity opportunity on but be lot celebrate X, I to coming I great up, we up Angeles, [ph] platform. April the a Yes, shows and in

day be for fun a Snap. X will April So

Lara Sweet

we that on guidance the efficiencies, we said, to I continuing to on. if and focus think going provide maintain structure, how operating fact are grow the as on something a while But it's we revenue flat critical full-year not to about our are think maintain focus cost are And able standpoint, to that’s roughly you demonstrating guidance. we that and we continued results are you

Operator

your you Inc.'s you well this fourth-quarter full-year as as call. conference attending Thank and And question-and-answer our lines. today's for and conclude disconnect may now will Snap session all XXXX earnings presentation,

Snap (SNAP) 5 Feb 192018 Q4 Earnings call transcript