SNAP - Earnings call transcript Q4 2019

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Operator

Good afternoon, everyone, and welcome to Snap Inc.'s Fourth Quarter and Full-Year 2019 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 period. [Operator Instructions] This call will be recorded.

Thank you very much. Mr. Relations, begin Investor presentation. of Ometer you your may David

David Ometer

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

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

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considered financial site. issued GAAP investors provides today, use isolation in Reconciliations measures, in as from, metrics and with and release for, of ongoing to of operating These not which can be an our and non-GAAP a results on additional commentary Our these can believe we financial found be for should prepared our substitute include that between measures also financial in use trends. results reported or GAAP. Relations in press be evaluating a tool today the found our measures non-GAAP Web non-GAAP information accordance copy will for Investor

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

Evan Spiegel

for thank and We free momentum and call. grew our the board growth, was progress across and year revenue joining our everyone, a saw cash we accelerated Hello our XXXX transformative community, profitability flow. you for towards made Snap. as

excited are developed we momentum XXXX fourth beyond. growing business and the about early in through year quarter, we the continued the We our and into

active we million of QX in application. $XX product users, in community QX, of generated revenue investments the by in XXXX, and XXXX, our compared we daily Our driven XX to our XXX growth added to EBITDA. million to grew core largely accelerated active million to XX% XX% we of course Throughout improvements and year-over-year Android users adjusted daily

EBITDA towards year-over-year, XXXX. full-year full-year adjusted we profitability adjusted and EBITDA working improved Our are by in XX%

the service we The future. our process, strategic in and our strength to revenue planning our global and business business gives investments while completed growth order our goals fundamentals underlying our of recently as aligned self-fund the our AR growing have community, content around and in invest in our investing for resources teams in and and a us real We've to our XXXX profitability and momentum in future. scaling long-term Snapchat, broader expanding confidence achieving in supporting our on platforms, friendships profitability

tool always creating and products to are their long-term, in and given supporting and a richness camera long-term to distinct gives any the maintaining well into creating is have a our share storytelling, through communicate and business. important future. self-expression, will allows a to day, that communication, relationships people the while core us that real opportunity Snapchat Supporting them expressive. communication become broad close daily has that serve This and believed advantage friendships way our of visual efficient together community company. most for something We visual have means On serve unique sustainable that harnessing competitive a an our for and to family building us friends, with using

technology growth our ways close and new role to of people's desire community empowering Snapchat of we communicating plays of is want Beyond one before ways for friendships, another the vital nurture humans smartphone. to community the that similar communicate of The interacted and in technology supportive the health Snapchat to visually, that our have with through face-to-face We natural for allows creation build friendships. a feels long underscores happiness. to which centuries,

the demonstrates friendship of Our fourth and quarter engagement power self-expression.

than on Eve of XXX nearly average on Christmas, the came together we snaps holidays Snapchatters and saw Christmas to million an sending creating Snaps As community more XX our Snapchat, celebrate each.

our to Snap is growth, to excited meaning camera that of frequently growing number themselves. a than people particularly existing to overall DAU with that our note every community and members creating are We continue day our use the camera express year-over-year new faster our of

we the excited express encouraged more to and communication, by are have empower Snapchat. adopted even on creativity easier and worldwide it making visual faster Snapchatters We to yourself by way are

best barriers in business burdensome to Snapchat. limited that partnerships Internet. to the we invest a way the reducing grow markets to As in Visual and can we are the and communication work high-bandwidth be and to with cellular our relevant a around local build reflect culture, using activity world, while global locally expensive believe is products that that community is

costs, have service now to the cellular We our with manage Snapchat's the in months. helped investments half international usage cut community our past and these ongoing our XX of in partnered data six median over carriers efficiency in help

We experiences working offer are locally of and which launched the tailored the AR our that also are hundreds now in content partners international diverse channels, provide Discover to were and XXXX. to local with majority of cultures of community, relevant

Going and forward, we our to the vast invest for fully in will technology, world. growth our to team, opportunities partnerships realize around continue

to and platform, from content as time Our and reality year-over-year both to value provide our and partners. Discover, reach and especially grown augmented viewership continued linear television continues to in curated to grow content content spent, community have has platforms our mobile. transition

our partnerships, through We our product have dramatically Snap content Shows. and Original expanded offerings including

population. While the fourth than Shows, new have been Z recently-launched audience. titles from up the U.S. like like the this now Gen some "Vs World" early the measured, half investments our hits being ranging of largest docuseries, Dead season, makes to Agency, selective our this these by for its to ad-supported Girls and franchises more are Original Detective of in our Original point Shows watched This already premium

we our content more every than XX% are in that premium nearly top content content with mobile number investments minutes growing Originals Discover premium As the consumption, year-over-year. we and increase XX of destination a continue watch offerings, day into Discover excited for evolve of by to to see other people

beyond our We our Lens are augmented have our and self-expression. to reality. variety through available expanding also is community camera the This community provide and experiences we hard efforts our that worked of reality value on to to entertainment year, augmented deliver value with to the focusing able both

For engagement XX% New available dramatically up billion than Eve our engaged on year. augmented our Snapchat. reality is On times, prior increasing Studio Year's over growing alone, AR community, of more more example, to in million XX number the which platform driving turn Lens from XXX over is Snapchatters the with experiences

on contributed this X% experiment meaningfully We've sent with compared just year increase, by more QX more our when every QX to Explorer than Lens the Lens many five on on Lens Studio it times search community, with different Eve with Explorer and to Lenses made went easier the experiences XX% our Year's day and to to also XXXX, than find using to using of XX% of submitted Snapchat day every as and to experiences average. AR AR community Explorer. compared XXXX, built In New before. people Lens browse

camera, also and new to to identify we are help We partners our a adding of expand billion helped people has using without the value excited be how to Shazam are working Photomath our math using learn songs solve problems calculator. over to like partners one with Snapchatters camera.

Games. and progress against to scale are our also we Snap content continue long-term and Kit, we AR opportunities, other Maps, including many significant As platforms, making

at content by newer are AR we excited these engagement the stage and While platforms, than earlier offerings much from seeing are our we are our community. a

Bitmoji. to a of hang watch and in games, their and to of announcing April. wait Partner enable share new across the these can't platforms on will while up our community, playing they routine personalize which chat Today, group friends our world, experiences these at and song be workout friends Spotify, their their we around face with see We offerings expanding a what out a to some of are with people Summit variety continue for wider discovered Fitbit Snap

even ROI investments so a our on large the are scale reach of are have service, we products longer-term that our engagement like ahead, differentiated high-quality our revenue time, to This to able investments gaming, measurable among advance per massive our growing means volume and over drive high community, We our revenue is opportunities of long-term in maps. the and in given the substantial extremely to under-monetized future. of partners. the still proven Given and we inventory working that advertising increase believe hard and average meaningfully user for platform levels our our our self-fund we our potential advertising that monetizing that a

go-to-market In our for budgets. strategy XXXX, will performance to continue evolve brand-oriented advertising and both and products we

this are scale increase advertisers. and ranking ad have and performance started heavily the able deliver we to in spend We return on investing to year to optimization efforts our that

frees that early bear improving platform, impressions up their it campaigns for to reducing ad these are are investments starting investment can at of the particular relevant in from This inventory each particular user additional we receive impression. our return As increasing campaign. a only while fruit, show getting not and ads advertisers our number to value relevance individual. the better this experience shown but the of does the the of number simultaneously a increase by Not that reduce for we are

any incremental, build to talent in to upon with platform, but our we technology made improvements new and increase gains and to the this be steady significantly we have engineering product plan investment area. expect As ongoing in we

have we or our find believe Given our online young also audience on massive audience strong scale, access for at among reach value to that want efficiently other proposition difficult platforms. television brands increasingly linear reach a to we people, household our but it

increasingly advertising developing our opportunity. Building are specific success with to advertisers our their unable demographic We but time, three represent relationships have takes television significant those many trusted, unique spend brands, times platforms. and massive on seen strategy further this in success especially U.S., total ad we there a and scale budgets verticals early advertisers, reach across solutions in are more the long-term multi-year investing for to and mobile the to is believe desktop as opportunity address a and

investments to accelerate our and for able focused profitability as we long-term our both camera. our products the vision in growing achieving and realization as revenue are of on so We near-term business the are our well that

brought see an difficult potential. because camera and to untapped company the created people of another world to and use around terms camera Historically a creativity, save camera means to context never a reality, inspire be has decade used utility, people yet the real infinite trillion infrequently was opportunity with them over cameras photograph, with and in to document past before Snapchat in everyone's memories. revolution to Internet-connected begin that in through empowering daily decade to on with have The it what as continue provide Lenses usage communication, tremendous people expensive camera cameras in X.X promises bring for pocket, create to experience We ways been possible. modern augmented treasured it defining that seemingly understand and in This Snaps XXXX. smartphones

Jeremi discuss I'll to made our we now over to have business. the turn growing the in call advertising progress

Jeremi Gorman

Thanks, Evan.

we business made see progress our We are moving so with excited the XXXX. XXXX significant and in into for opportunities

content. experiences, Our augmented teams for reality community enabling on are business and alongside revenue grow world-class iOS, performance aligned, well our Android and to made our engaging mobile improvements through

generated In we revenue revenue the QX of across our increase to XXXX, our of hard we the year-over-year, we increase an XXXX, compared $XXX teams year-over-year, made being built of XX% $X.X have compared full-year XX% and QX an XXXX. results Snap, These we've of byproduct Over products are advertisers decisions million, at done generated XX% to in billion work in XXXX. XX% validate of a for sales all structure and and around teams of community. the our dollars,

have result, to growing that a we significantly the faster peers. revenue at we believe than opportunity As annual a our continue pace

are fully making short be which to opportunity, will We term largely our progress the by driven focused against advertiser believe on ARPU medium in we demand.

impressions levels and globally. headroom given our significant of of available in our business high supply have We engagement ample

self-serve our result, focused to As demand we in CPMs advertisers are driving on a from auction. improve

our we a our peers. gap and ad current to close own our to to at position applying the meaningfully inventory, CPMs ARPU comparative in industry are relative Looking products

for not addition, the key it increase goals, ARPU our available First, our choose of to and remain our contestation up measurement, ads ultimately CPMs, impression for we even and on relevance growth demand and increases in our priorities: from relevance impression, three prices. optimization to advertising only yielding also improving improving per auction, ranking, driving ROI In our at drive higher ROI. does number but To each deliver achieve increased partners, focused

our the our and out building functions Second, partners needs sales to globally. marketing support of advertising

ad value. augmented and creating innovative deliver real experiences Third, video reality business that around

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U.S., XX to than in more more we example, year-olds XX of XX the XX% reach For XX than of and XX% year-olds. to

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the over reach and minutes demographic makes community Our Millennials have that per advertisers service valuable for our average, our engages XX the up on with old of day and Z. Gen year with unparalleled XX-XX majority

relevance is Our priority ranking, and deliver first and investing to measurement, drive to our improve heavily ROI. optimization

our on investments XXXX, In enabled advertisers scale platform. to our performance

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lower-funnel together who Our advanced ads—work self-serve as tools, optimization and dynamic at goals, solutions—such and platform product reward advertisers invest our video ad ROI scale. to formats, in catalogs with

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we our out teams operations As ad verticals improve years. generally geographies, global in to advertising organization business we more includes business. scale Global advertisers largest and building work across our sales the the scale operational all rigor sales in mature sales as our seamless our we rapidly teams to planning, create experts and planning, our build a continue over to growing different global continue hiring Partners operates pipeline coming ways expect to with to team support to to This

and our Restaurants, We're success notably the Entertainment, of early encouraged CPG. by Tech, most many verticals, with

products favorability for to VooDEW Dew Snapchat in VooDEW significant Snap Mountain Dew penetration. buyers, Mountain sales household returns Mountain DEWnited DEWnited and and the For above a lines. limited-time the drive target The highlight PepsiCo's product logo, resulted VooDEW a fans ad for lift candy leverage campaign our with to lift campaigns Mountain in Mountain PepsiCo worked Snapchat two Ads in Filters leveraged drive helped to Halloween classic innovative brand. Dew and Snap for which run Dew awareness and incremental looked and Ads and Dew's ad product. leveraged to Lenses example, through and brand The norms campaign their primarily to sales

Our advertising with the lead to third priority and way innovative to services. is continue products

rather focus these advertising our on brands, clicks that the depth built products engaging brands engagement, on just consumer impressions, customer are As successful. for and is makes more are of products advertisers our more formats place Snap innovative the than incremental ideal reach and drive foundation that real same because employing interactions.

order for and in reality community. heavily invest solutions Snapchat in to delight content that augmented leverage outcomes our and innovative drive to continue platforms We better advertisers our

is top Video a priority.

For video premium placements format—and has content inventory. Snap Combining scale enables out to Commercials—our started of our seen engage CPM for engaging capability premium stories. prepackaged, ad Select, easy-to-buy we more six-second, this with format within to and example, with already buying success quality in Commercials Snapchatters and which non-skippable, product, fixed Commercials full-screen we have brands. high seen early the success deeply rolled model Recently,

not to app continue GOAT User Amanda install in engaged raffle. broaden a only well from annually said, Commercials other highly Black as raffle, but just XXXX, Black cost and accounted Senior Commercials our with users for Friday page Sun, style, that $XX,XXX prizes, to which GOAT credit. the "We'll to XX,XXX ran that global Friday saw week-long participate for Black leverage over the all They as in reach X,XXX of Friday page, a campaign platform promotion swiped to per to XX% that Black featured similar cents XX downloading lead their a Friday audience." landing sneakers the download Snapchatters the landing Manager, GOAT, to traffic campaigns up of awareness included For a Acquisition raffle Snap to app. and with

Long-term challenge than and remains brand deliver marketers to building no on better one Snap. mobile for is a solutions positioned

We our Lens functionality formats. have with a AR Sponsored camera-first huge our opportunity and

the out are brands and providing of additional beyond value building ecosystem beginning at for paid We media. our AR

this Coca-Cola Scan utilize our that first camera are For to we and McDonald's example, technology. the announced brand partners quarter search

Our by content initiatives camera campaigns link camera to well-known images These Coca-Cola. digital Snap this logos related Scan the what the on—in of case, the physical and search feature recognizing providing focused through reality lenses marketing visual existing combines and AR our and to is McDonald's complement augmented and the world.

brand Any tool, our technology it and the creation via for AR our utilize community. submit can to now free Studio, public Lens Scan Snapchat

Turning into part lives adopted an Snapchatters' AR physical products of adoption more formats becomes technology. growing to way reality poised that augmented We connect a widely continue everyday are immersive ad a of is this milestone important starters conversation through businesses. audience with are AR our believe we marketing unique by as for advertiser to and

with We Snap are of stronger combining result brands also Ads, portfolio Snap is time. over seeing that brands their with deepening a approach Sponsored they lower Augmented Lenses costs per outcome. when to Reality in ROI and This investment utilize leading

MGM new brand-focused their partnership Awareness International Xpt in Intent. a For MGM Park including lift to with XXpt launch Consideration example, QX XXXX in lift Las with Ad our in Lens campaigns, Resorts drove Vegas. This a started hotel in a and

response and bookings expanded platform to QX with This proving and units. effective saw, with an in-line reality and direct Snapchat's ROAS is AR XXx efforts These direct augmented to Story full the funnel the full-featured Given Snap their Most they achieving Ads portfolio opportunity they a properties room Story drive our direct support drive of response-focused by units, and response circle Ads direct came all applying by ROAS We Snap XXXX using Ads, ad generated the XXXX. team Collection tactic an sales entire drove with Ads, learnings reality Pixel and they response of Ads. across blended a upper augmented business. in recently best portfolio for enter MGM success their Snap into bookings. cost-efficient to room bookings combining activation Park for across expanded running structured implemented ad

marketplace with strategy to digital engagement growth to peers. content, a many of overall brands their response in and is the help on and of relative our and advertisers the agencies products to advertising our performance-centric build in improve improvements X direct new audience, to are scale, gap and Looking Based verticals, focused camera, across our in relationships forward, products close businesses. ARPU our position to for invest for of communication, opportunity growing the levels our across and market, to our size we continue meaningfully

the what to and Our the future over Snap forward deep we partners team is relationships longer incredibly excited and term. for with look growing our about building holds

to call I'll Derek. that, over the With turn

Derek Andersen

Jeremi. Thanks,

and Our focused our results scaling making reflect priorities order towards QX operations cash and financial flow. in in our investments future drive profitability to of of our the efficiently free business, positive

earlier, daily to users represents active of As million XX% an year-over-year. or our XX XXXX, QX mentioned in million Evan which community increase grew XXX

community XX% pleased DAU are QX in in from the in We year-over-year the rate accelerated that growth the QX that sequential our growth exceeded see to our of quarter. entering and XXXX, expectations to XX% XXXX

based, impact of benefit Europe, our each as and to of Rest of and on in which community sequential to application, with made the new higher across growth year-over-year North continue cumulative growth are levels and continues and iOS the engagement sustained The Android broad be platforms, We Snapchatters. America, of of well retention our from year-over-year improvements we and contributing to have as both sequential to World. growth

to X% million of In million X by the up X XX prior in or by or in grew Rest year-over-year, year-over-year year-over-year, we now XX% In underlying XX% in the DAU growth X% end stabilized or from the As grew DAU million to quarter. to million patterns often up DAU sequential the in community the when focusing lapping year-over-year, better the we XX X skewed that rates illustrate million quarter. trends or near Europe, the America, again quarter. prior are are period DAU compared grew within or the prior X% or the tend World, DAU, million In once XX% compared regions. by of seasonality on by X are growth from North which XXXX, within

pattern for guidance across accelerated and mobile, of the that generated rates the see to solid demonstrates growth QX accelerating our community, We in our regions, our year-over-year pleased an end in regions the are has of believe total We market a growth the all quarter. revenue all million, and that across of year-over-year. on of developed current top year-over-year of range in of attention clearly of an increasingly platform. exceeded differentiated XX% competitive We value $XXX increase the growth

of expected, period the current As rate prior QX period and revenue decelerated in quarters, X a growth peak versus the impact our the quarter in relative of reflecting comparison shorter a tougher prior recent holiday year. to

demand Recent growth ecosystem. the prior our auction products, within always advertising have to our self-serve based valleys fill impact goal by quarter growing rates in helped for which of of been elevated has on demand

We of launch capabilities to which quarters. comparison relative resulted now the the goal period advertising prior are lapping in prior based year, in our recent quarter this tougher a

time approximately driven holiday this in ad Black throughout the we revenue week to growth current quarter. and Christmas, to window contributed year and the shorter was elevated current factor also between period compared rates the in year-over-year the of year, prior Friday In experienced one spending this while addition, the deceleration in

period XX% of ARPU revenue being in the Europe, concentrated prior to XX% In rate XX% to QX, This QX, compared the grew tougher region revenue in in World, compared North XX% team grew QX, in in grew XX% In well XX% We XX% X% XX% in compared see to QX. In QX. XX% comparison QX. XX% compared re-organization shorter following quarter. this holiday year-over-year as America growth while the year-over-year of to QX, our the in year-over-year sales period. to of in lower in relatively grew North reflects compared QX while America, as compared QX, grew to in year-over-year XX% Rest accelerate in in ARPU pleased European to revenue grew were year-over-year, the QX, of while growth completion impact in ARPU year-over-year,

of ramp goal-based-bidding the World the when of the World in XX% year Rest in capabilities. deceleration reflects growth of prior sophisticated sequentially steep launch revenue The following Rest grew revenue more

advertising the goal ago XXXX. gained in growth drive of a based region always-on of the World Our our throughout traction of the helped year quickly products worldwide advertising to business course Rest and

tripled of to advertiser than Ads and Commercials strong in see improvement demand revenue doubled that continue year-over-year that in year-over-year adoption ad revenue in QX. our ad including We and broad-based Story products QX, more

XX% at grow continue a percentage observed in long-term optimizations Camera allowed monetization view in our in our self-serve continued XX growth focus supply, Gross quarter. Reach were The significant engagement, QX, same to Filters revenue which are percentage combined the by revenue see our Lenses efficiently, percentage X% and the opportunity to decline adoption were growth accelerate on and utilize our year-over-year XXXX, to inventory a Frequency with the points in and from Total we as decline of available XX% eight to strong platform products driving demand in XX% sequentially and build the with pleased XX over operations in AR ongoing by to XX% while prior advertisers QX our seeking self-serve QX efficiently. their to sequentially, to expansion from the of improvement five more continue year-over-year doubled strong per yields up just in points points of rise impression over margins a scaling period. AR as We us presence to and cost moments. continued carousel key with impressions QX, eCPM in in year-over-year year-over-year stabilize an driven

year QX, seasonal $X.XX versus two were flat reflecting cents sequentially prior up DAU per trends the costs Infrastructure in activity. but in user

deliver Snap, activity, in user our of underlying a fully progress in the DAU the cost unit continue costs drivers driving QX, against In the efficiency down to cost other our deliver costs. key time, per We over and goal increase infrastructure impression, make flat an improvements of to our year-over-year. significant cost year-over-year including offset to resulting

noted in continuing the the earlier. expand side, than infrastructure of our and overall our at grow been operations investments efficiently or Ads audiences XX content, more we on rates future our while premium we our and with to the The XX to have revenue making Ads contributes has ability content allowed to which greater revenue scaling Shows on On which to in content, in focus our monthly our margins, Story QX, to reflects these these pleased are of us approach investments doubling our investments see while Commercial yield make premium down business. rapid of investments in scaling efficiently costs gross million

flat in sequentially. XXXX, Operating QX up to headcount expenses base in time We on to this business year-over-year with we million primary in talent so. and the QX, our intended the invest do growth. were begun XX% we the future year-over-year headcount and our growing of engineering, operating shared by monetization and that quarter our and focused $XXX expense growth in year-over-year grew of driver have XX% Full was last

between are we a invest investments metrics, growth we the output typically is the there While the lag year going pleased momentum with of improved in in continue have investing from seeing forward. to our to the over expect productively business and we talent are and past made

$XXX invest down the the in we progress from Consistent as quarter. prior a prior $XX guidance, reported EBITDA. million year, the and an QX, delivered we and adjusted EBITDA in the positive this future million and income QX prior we prior of adjusted flow. improvement the over while improvement million profitability million of the making over towards quarter cash free $XX over our million for which $XX profitability business, seventh prior quarter continue marked $XX quarter. was $XX negative of prior our adjusted was Net expected year-over-year decline that consecutive XX% EBITDA QX, first at quarter over million was to in with of our leverage the in as In the a XX%, year, quarter, of

in net the million reflects settlement, of offset in was improvement decline quarter-over-quarter, the and The QX adjusted one-time offset cash $X.X from $XX in quarter, a partially working income capital period. the billion driven EBITDA largely investments for QX year-over-year, XX million, M&A capital prior ended related legal $XX which cash negative the QX. were by well in million primarily activity in which EBITDA in $X Free improvements by Cash $X.X in adjusted Flow working that securities, an and quarter. marketable the during between seasonal as as net down with the and in changes investments quarter to billion largely reflects improvement We

of the expect that to QX, XX%. operations XXX progress To begin, our we to QX assumes towards future XXX guidance business, and with efficiently, cash profitability you growth DAU of invest to implying million forward flow. for to look will our share scale to financial we our in continue million, of As positive to make year-over-year additional free I and full-year

which are range. higher range to For revenue, QX $XXX and growth the guiding at the potential a in $XXX end modest million for of the includes of revenue to relative between QX, acceleration year-over-year million we for

adjusted continuing million million our For between of adjusted invest EBITDA a range to in QX negative with are to in EBITDA and QX, while sequential positive and the $XX we higher to plans achieve negative business the of decline reflecting guiding $XX leverage. future our the seasonally in revenue

today, and we you our call questions. Thank your take will for now joining

Operator

Thank first prepared Please our instructions] for question-and-answer now call, of concludes [Operator Sandler comes remarks That begin session. question we you. And today's will the Barclays. ahead. from the and go earnings Ross

Ross Sandler

guys. Hey,

a the day, impressions here. flagged trajectory Jeremi, given question you and there's pretty engagement load any on QX and so, in is Just low, plenty that of how QX, on ad the revenue available given

of the there's at And revenue high-end, mentioned, see to acceleration that. QX all platform? what's at range, XX%, to the on the guess is versus new the much then, side, on existing demand that question you more the the we new the can the of doing pace how from So, looking in onboarding is Derek, I advertisers, team seeing increase fourth quarter, you're growth the the and advertisers

what's is the guess growth the you to confidence giving up in I Thank that So going revenue pick you. QX?

Jeremi Gorman

for increased as advertiser for it AR. Thanks don't our perspective, funnel demand and question, premium break as continuing different such advertisers are things, strong the for then we from ad the from and commercials out to A we see so like Ross. demand app couple account units optimizations, brand bid install, down specifically,

growth. generally retaining of we that and ever, spend their to XXXX, there. there's terms well of let and as advertiser room know critical is did continue ROI, demonstrate to advertisers in this have are Our we active QX of highest really grow increasing a you I'm still of which advertisers in pleased our meaningful number to lot

planning the our and still like to but get that's to through with of marketing opportunity BXB to partners teams, approach early we advertisers, deliberate QX, of through as media days, primarily new what lot a agency sales seeing. have we're and in addition, work our We market, community, education reach in buying really our well, started and the we a

to we in, continue to continue all ROI. So, deliver

to best focused base. bring the really them continue to market really, products solutions right are the the have exact on to that and ensuring We the we grow advertiser

Derek Andersen

and I'll half for QX respect question, the with it's to Derek Ross. take guide. Hey, second of the the it speaking, Thanks

think that I holiday revenue of out in growth the one, things, whatnot. and are when obviously, look impacting I timing QX, the some factors we around couple rate there at a season pointed the the one-time

about of the want think And revenue when the so, we the the that the not really but terms environment guiding, materialize about we only our mentioned, for to one seeing into around on. just make the things of fundamentally of as we're of potential that sure in that but the Jeremi range, the materializing confident business that in optimistic factoring business, think we're so I we're risk for the also in our we're and trajectory some to personality things, in reasons all forward, going

sense tries and our guide our see the trajectory, -- about number. end the long-term to confidence of So, the materialize bit you we for potential bit of QX to throughout quarter, both business reflect a higher risk in but bounce the that the our a why the that have to range course little of also little we our and momentum hopefully, the a potential we for off of optimistically and the gives us point to

Operator

ahead. next Michael Research from Pivotal Please of is Our go Group. Levin question

Michael Levin

I has of native advertising lot QX you a and direct-to-consumer XXXX question. conceivably to from in we a inbound a wanted It's how definitely of for for understand driver big Thank question the been investors. for get business? the

Jeremi Gorman

the I business. and [ph] very a [DRO-based] for we're business both say very, fortunate have question, strong Thanks strong that would brand-based a Michael. to

So, that CBG, We broad-based serve to a fact that is diversification, we the the more. and love verticalization of what we're and in types. seeing have not relative meant that entertainment, suite all of like and concerned to swath tech, advertisers verticals we're efforts products of success across

So, to reliant as we diversified as services as on heavily and are because that products [DXC] [ph] not possible. be we have group,

Operator

ahead. Terry from Please Heath Sachs. comes Goldman of question next go Our

Heath Terry

as at you you. and benchmark? of detail how you're gap what the in the quarter, level ARPU out whether about gap you look seeing thank that you'd sort of are you quantify you using? necessarily specific that the Great, specific that and that in disaggregate see mentioned was advertising, as improvements quantify and can you're can who, contributing, in the but ad When investments between and who you're tools seeing the from in call formats would advertisers monetization? just prepared usage There you then remarks, the between a great and you're you're monetization you transcript, targeting, that is of [ad [ph] specific tech] where it's technology, or using that the are in that components contribution but measurement, you right that making use, lot that better when measurement the the there ARPU in Not

Derek Andersen

them sort Hey, it's Derek I'll there, speaking. Thanks for order. components in the question. two take of reverse There're

gap, one just to trying what close. are is gap and first we The the about ARPU

opportunity longer our the I and have, looking have, audience we see we the that ARPU we're the engagement we today, think have really about products in when drive eCPMs at what our think the the audience inventory that opportunity get for the yields and into near-term ecosystem we the and ad excited term, inventory we in we we market-based and that the marketplace about for have. to to the demand is have, yields and that really we're just continue

our got we're about look We excited DAUs that that, pointed where ecosystem, obviously, that's the all to of and of accelerating and remarks our the seeing the improving a when the year-over-year get towards we we're there are drive prepared the the versus growing Shows, up we to and beyond at go peers like So, with a some opportunity. drive spent how in that Premium health we that, benchmark side. of course, in of trying we the marketplace general prior highlights on is and think and which on into for to Twitter, we the growth and to and towards, course, we engagement some time quarter, want see adds discussion engagement being we've of in Discover, the engagement user in opportunity the with of growth just about in near-term

how not driven say, about looking then we trying closing And when the that's point, absolute think at ARPU we're build at because kind optimization, we're just the much is growth this to of of predominantly demand so, and the supply-constrained, which your we're stuff think gap, looking versus, ecosystem. at, to into being other and by the usage, question, is I

we're more ecosystem, can into user able right and right just to the ad bring when what at our you so, see the we diversity And the of that improve right serve advertisers to pressure yields, and allows optimization and efficiently takes the use who great us to which in would is customers not advertising we're some our our today, of inventory from it ecosystem low yields off because really benefit more supply-constrained. for the moment,

yielding how hopefully we see question more and gives color So, the your little to that bit marketplace that's there. out, a

Operator

ahead. comes of question next Please go Our Mahaney from Mark RBC.

Mark Mahaney

end. wasn't but didn't nice Okay. not mention in you Evan, just material on and if you talk on growth, the was in DAU the last that? filters need or some the the quarter, innovation EBITDA you of Two gender a then the talked impact terms had it full-year it Derek, about out, Cameo, questions, profitability, features of And please. at about call of to two One, this so quarter the there particularly isn't that you you called ago, this out new will

Thank you. like just that? where -- a but you have is full-year is adjust not to the you're run is nice thinking, business to So, that two, or that that one just a to actually generate goal, if will profitability, goal, wishful trying or is that

Evan Spiegel

so but lot think of really and discover included, early that's excited of our growth Mark. potential business one our time, a interesting chat we I I business content community service, the platforms, for or Cameo of Hey, that of lot them, that's the that of of our future, more whether about they'll augmented durable very opportunity innovation really happening think our in us, as reality, it's exciting products Yes, into more start drive thing is for we has turning get for and in I lot see example, are a as to for that part Cameos, innovation. and is our Cameo over members think

side driving growth a community So, we seeing the lot here sharing popularity, this, and engagement is really with with one the our every community are the and growing come ideas reality them about lenses is on they're we're have don't and things actually and up is great that that us. to augmented what's of engagement created Snap, the then of all day, and at up in and coming with building that's ideas everyone, them for recurring great

future. that excited the we're about into so, going And

Derek Andersen

order on Evan profitability as and look, the obviously in thanks aligned. returns is on, objective as and growth, those This faster, don't you guide full-year like we'd that the side then, for seeing. ARPU I the And company, quarter, to the beyond try can these our investments company an for the current see, obviously question, we've to XXXX% we're in we gaps investing been close the we pour accelerate revenue are Mark, and but

driving the make to in we're so, possible. on And order the business scale that

see entire to current it there. it's the And beyond talking why guide pushing that's you an leadership don't obviously in an me my We that section is objective and towards. just don't team quarter, so,

Operator

go from comes Rich ahead. question Please Greenfield next LightShed Partners. Our of

Rich Greenfield

the taking start for philosophical. maybe thanks the just questions. of guess kind I kind Evan of from Hi, with

of some of the in the content every look that what most the And thinking to spent on just clicks terms number from Facebook in it revenue of improvement takes in lot disclosed, growth a the kind from a we quality, wondering algorithm just the to is asked that of now? benefit the bringing that's ago, I battle think I'm you quality of improving something but or of quality up ARPU about is thousands earlier XX-XX And you're between in I time you've like like percent back does constraint over driver GAAP a think gets it all where X say competition improving year think, is, the still how to the more advertisers versus the it, of the think wants year single made the tension of of about buildup the guess to improving take there, that harping you're advertisers question advertisers? to biggest you million I of progress million. quality, place and type growth was are question fair quality on. then, discovery growth, now Jeremi, and that to to advertisers. onboard a that just of about you a you is single to advertisers time as of if in you if what revenue the everyone follow-up Snap look greatest lot seeing Thanks. relative auction, is day. part the in of we're And what the was I drive of suggest is is is experience, the closing X that hundreds forward,

Evan Spiegel

to improve questions, content announcements around be discovery still tension neat the about but always to service, a is the be new that we're room side there's some momentum making lot and we're to I the and later all I really content excited effect, curated. We're on this about that going seeing the one Rich. of business. Thanks the of think of the year for there, think things that going innovations is Snap to of is And really there's

right served quality. balance we're try the how the but and content so, content that's that also of that's really we between, content pool that's high to really get defining community, relevant, to our And

merchandising more page sort now, things swipe if doing over, make effectively, for doing off Discover, a that's some you think experimentation lot we're you of that to like see around a we're I so, And shows there, over of we're to but lot. one from learning the our experimentation trade and right

of as go community hope to we learnings we those bring forward. broadly to some our more So

Jeremi Gorman

then, part to And advertisers advertiser Rich. new account take best Yes, types. Definitively of all second including I'll absolutely. of your grow the single demand question onboarding the way is

comfortable we a ahead. those, than all with fewer headroom very but how are opportunity but million lot onboarding for to tons have have do of grow. of X advertisers, products tons of We we're and them. We And

We all products bring on to do it supplies and do the the advertisers it and to have types. of

close is where the side. focused breath are to So the ARPU a yes, have ensure peer that our team gap relative myopically of sales on to to that advertisers we we

Operator

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

Doug Anmuth

that Snap can toward here what shift and taking I usage age in just time the in the XX over plus, XX% the up for want talk more closing Discover you ARPU Thanks. more question. about can that more and talked to just on time Thanks follow-up increase about gap. users help Discover. Discover Evan, spend. for monetization And then you than among means

Evan Spiegel

in, to consumption. invest board consumption from we're mobile it's community And that's Well, creating content increasingly happening people, well. shift up the content excited I the behavioral as creating and level, we're so are really because behavior overall, young think offerings really happened the content so viewing behavior across know, you not the there. in why and growth folks with I about new we new linear And caught a interesting that that much happening from here opportunity as so see content why much at continuing this shifts seeing our to shift. moves older think shows, high have demand see there television to we types, with first we're And

broad is important that's of closing frankly, but ARPU advertiser Snap, the plays do the think I and So the role it of so in level at gap, current inventory given demand an ARPU opportunity available. amount the

just to a for something full-year close Twitter grow of I think, we'd to level to revenue years ARPU. XX%, of to get several have north

revenue So possible. we on think we're is growth, very which accelerating focused

Operator

from comes Justin ahead. of of Lynch. Merrill America Our next question Post Please Bank go

Justin Post

Great. the feel year the get How do initiatives A first, you couple the the I your with year-over-year, revenue tougher for revenue you this and of interesting just about to questions, progresses. QX. in both kind of that XX% you're year setup acceleration know it comps but commercials And revenue possible I thought on DAUs guiding and all? up three help and year, your was growth are secondly, then can your at costs that were guess x. share if I up

So, us the of the Thank just the if attractive maybe bit margins you. a Discover there? you business, and margins to are operating you about gross little those help could really

Derek Andersen

Hey, Justin, question. the it's Derek speaking. Thanks for

of it, on terms think to store heading year focused long-term for I into setup the really opportunity. In we've our the revenue on momentum, been

lot a of around the different of in optimization, You our those And teams we've ARPU the monetization know, today of both in on sales that the Evan ways been product. longer and time here in opportunity. then the on support investing I've in engineers touched it term, business the around terms and course, teams,

to into And the we been business set like so, the feel up. putting inputs ourselves in we've order

the really we are pleased so, revenue, And there. seeing growth think the with opportunity the we're and in I momentum business absolute

business we're see going going make to close it keep the order to in to in continue to invest possible gap that faster. you're so, And to -- us

see the components of big the cost own And, they our the of or of that and bit course, terms investing so side, of of it obviously then the and also costs but scaling gives on when content. are a three on of do there's little biggest then, so certain really sense content structure In lot ads. there, in the you shows which a within infrastructure, separately. I cost about cost, the own think of And of can scaling probably of on that revenue, and/or structure revenue on share, the we you report course, in a we're

for different and quite bit a us. Some well of is scales frankly that structure little

the monetization grows, contributes we can seeing really scale business good continue to Having on really more expand our margins, up healthy, and efficiently. the that expands us those for we over engagement business, efficient, so expect The also that as to of cost and our time that, is so basis a flow expansion ability the the there. still infrastructure our to really get in As cost grows, our content audience invest and scale a and it you're point as X-percentage on we opportunity through the future opens while which number margins. unit side, growing to

working been And nicely for going focused on so, can has make we're being stay we that operationally those us, cost efficient, to structure so investments.

Operator

next Please Suisse. question Stephen go Ju of comes ahead. Our Credit from

Stephen Ju

Hey.

So, thank you.

So, regions Evan, GDP per have some capita. of the ROW lower

to every be different. given So quarter to well, be prior and the relative much constraints be would might your down are but the ARPU for may called And ultimately regions you year, cost lower, you app that the those serve in year. that Derek, may the lower the use DSOs as case out, your this cost data say

shift? is go that base to about the that and between So can self-service continues where agency more can revenue DSO Thanks. the driven, ultimately as advertiser you mix talk shifting ultimately versus

Evan Spiegel

Hi, questions. of and much lot as obviously, region DAU a our terms first we've able about, for ARPU ARPU, the got been grow by cost than and to ARPU, grow To around the DAU. of in infrastructure talking cost to we've the we've been faster our long-term opportunity by managing, any relative one, to per Stephen. costs Thanks DAU per of the U.S.

course, margin. The as on of it's and per engagement You to infrastructure, to component going ARPU based and that. It's and so our in deliver thinking expand to can the because of -- obviously to user across factor us little a a efficiency for that's through DAU impressions our being you're going of the also see driver. impressions based user vary Typically, a there, on the and growth bit vary allowing are with and flat engagement. of you costs a that, quarter this revenue cost is overall

there alignment DAU and ARPU there's speaking, between generally different you so, your And when per some at regions. your look cost

bit by varying And And importantly, getting at so, as those ARPU and and little costs better getting got that country. scaled helps you a them better we're your appropriately. managing you've

can coming think has can see well of margins, a faster see and expanding, that's the in through little that think so, world still our been been any that for working through than been you growing And even coming you our mature DAU as I so, pretty And markets. I The outputs. have the us. rest margins more

we've you DSO, attention business efficiently it of of QX terms working sure scales and lot got working Obviously efficiently making capital pretty managing yes, and capital revenues you seasonably drain speaking, to but collect on In structure DSO a a the to that sure quarter-over-quarter capital put working efficiently the was and to that any generally come outputs. starting making expand course higher over the of can see know year, those through we've able we've just our our scaling been and in, that we're well. last

Operator

Please of UBS. ahead. go from Eric question next comes Our Sheridan

Eric Sheridan

I Thanks. Maybe if can. two topics

so quantify And on wonder filled] to [values [ph] and that's was the how the be that out whether next the headwind calling forward? versus you'll we just communicating looked or expectations holiday the way now QX then have going demand, back less are aware impacted quarters any comps forward, either on underperformed couple as we much. QX period, over knew of of if outperformed be 'XX that be at Thanks that on aware versus into the we and as of shorter should we calendar the the look looking tougher a as there QX that auction just be you the forward your -- thinking could of always there going should easier going about days? On I self-serve comparisons that in create you're to QX, comparisons over year-on-year business might we comps that or

Evan Spiegel

similar trade we're in you're supply-constrained, Black the thanks expectations of seen I revenue to businesses, that and I just Yes, going quarter, a yield mean, us, of I the and questions. to little what to not it's spending bit in against kind in prior to is Christmas. understand That period we dense, we at way pretty that the more, the lined a to demand for important you as saw the you for fluctuations off the platforms and impact have demand, and things up little more we're shorter Eric, holiday the that's shorter between if sensitive other QX Hi, our and so, about think about really we that because years, holiday we've more what that, with one fluctuating, had period, know, whereas for look saw. much elevated when period Friday

is to So, it real guide. which close us was why expected, coming as our you saw

so as that the you were the our as and organizations throughout the on that. our that of teams and early going of saw you'll doubling that's we're put between those effect be the course you the forward, investing higher, from from results because then as those of so, Typically, course, that down we always a We're good. pleased optimistic the into business, engineering been where and but we the that lag overall, business. makes working, appear and terms our to of the and our investments investing see And and the we over for monetization that what's see move what's businesses the we're content, our and investments, that looking investing all XXXX, just seeing business XXXX, we've about seeing results investments sales in in the making accelerate impact product we and sure, were the can with forward, ability improved, us course business on improve and business and opportunities in expectations we business to support were ARPU of the on, realize our of in so,

question. that the I to helped Thanks for hope illustrate.

Operator

of Brian come Our ahead. Morgan from go last question Please Stanley. Nowak will

Brian Nowak

seat was of appreciate advertiser do questions. guess, are of improve first you sort I direct area over friction taking pace two I your think in have need improve the maybe biggest as Great. potential important Thanks. just some most better the or we're the then two, they are hear for one, thinking downside, flow go strategic my guess which response to interesting of DR adoption, dollars I I what to incorporated the into about detail the the us perhaps one XXXX? sort And one, second some priorities, really of to that worse? of quarter risks and Thanks assuming your risks service so to in the the philosophy Jeremi, sort though it could improve your talk your you to platform? guide, aspects to key now, or What's can or Derek, upside guide of the on the the first of of -- and sitting guidance the for downside, through the

Jeremi Gorman

Brian. the question, for Thanks

lot is I I They huge are So, business, focused on one absolutely the improvements is we of advertisers us for There and think that our of not optimization ranking sophisticated the remaining things alongside products think hurdles think things. want to their want of sound, and brand they're they for lifelong for where really performance messages. and Z They looking for millennials, and a win. tools more advertising and want to structurally advertisers. just in They They we're all habits. importantly, really canvases, media. They us They safe want we forming want those reach and environments want have Gen video, are want to they options. creative succeed.

to in think need fundamentals, reaccelerate ability and everything I optimistic do in So, we're extremely we we revenue, about that. to terms of our the have building

XXXX. So, we're great forward to looking a

Derek Andersen

to thinking our react ROI quickly about talked And how the in opportunities, there's our that's use demand but we're execute possibly and you're are, opportunity to little when trying bit in execution the estimate on we come we into about the our we advertisers, bringing on Brian, we when allow things and the to and we're think around for to Hopefully the range for long-term new comes is, effectively ROI opportunity. and what growing and rates out, quickly advertisers what could the excited speaking. a eye momentum more question. to execution a obviously, business and inventory about and so deliver of and investing quickly that as Thanks really have think that seeing, can. where being the can really they're quickly Thanks QX optimizations, that that can also our the risks question. the guide to the I short-term, the keys that the the our customers to that we focus, and growth trying reflects focused to the our and QX to business, we're continuing more can you're and that on for diversifying and we and we our really for Yes, the range down that, it's think we a good keep us helped as opportunity how platform, and we're deliver at deliver explain. give capture longer lot the accelerating how you term and of Obviously, Derek guide, be. of our capitalize around really a

Operator

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

Snap (SNAP) 4 Feb 202019 Q4 Earnings call transcript