SNAP - Earnings call transcript Q1 2020

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Operator

Good afternoon, everyone, and welcome to Snap Inc.'s First Quarter 2020 Earnings Conference Call. At this time participants are in a listen-only mode. After the prepared remarks, there will be a question-and-answer session. [Operator Instructions] This call will be recorded.

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

David Ometer

Jeremi Thank first With quarter good Chief afternoon, Financial and us Derek Officer; to Snap's everyone. Welcome Co-Founder; Officer XXXX Executive are Officer. Spiegel, you, Chief Andersen, Evan Business and and today Chief Gorman, earnings conference call.

at provides Relations be metrics Earlier first of investor.snap.com. today, that quarter we Web found our of XXXX, slide a overview made can on the Investor our user site available which presentation an and financial

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Actual disclosures. differ make update statements, to forward-looking no obligation expressed and our those results in materially we may these from

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

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

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time effort each remotely. to dialed-in our we we this understanding member safe We team as the and call and staying healthy in keep Lastly, during hope call. your of appreciate is through work members the is everyone our safe

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

Evan Spiegel

thanks our very future. call. joining we a few remain and the but and everyone, months for Hi, for world, difficult the about hopeful optimistic It's been

unimaginable tragedy. As doing focused all help this to we on team, part a as been navigate have our we

save about care it that together supporting working and added deeply are to see this gives inspired We staying a find we we one future. positive forward all people humanity home in crisis during are we've that The another and demonstrated be all towards faith us confidence how another to all us path time. safe, will the shared compassion and right healthy one during to this gives towards able lives

offices community, safety around and January priority globe. of and as continued At team. and closed Snap, health is spread our the our the We our in partners close our first our first office COVID-XX to

opportunities. continue critical continuity awe adapted how our this of quickly business maintaining circumstances time around and ongoing rallied has our to and team execute in team during Our this I'm against to

the are also and case case preparing situation working a for scenario recovery, rapid We worst daily while scenario. a are for towards monitoring a best current

despite because together separated for while inspired has and circumstances remains close more physically. team family motivated Our our helping the are and emotionally, important challenging friends they people's in stay product never lives especially been

We on are that peaks seeing holidays. during volumes our sustained see service communication eclipse the major we

with in people maintain over communication Snapchat critical in as the their friendships example, homes. XX% the people friends larger which XX% their markets. of on shelter is and week For physical with last of of increase has to been increased last focused March some build by week in and our compared helping than especially practice distancing January always more

community and mental our safety the provide as reached which featuring early millions the for multiple to In days the information well up-to-date hard people launched around crisis, as tips working immediately resources are lenses we practices health. quickly best world. with factual and filters and of of safety hundreds We and their of

mental called For more feature support be new curious a a in You that to be these health can and Here may who crisis, emotional their to how added or may help We or experiencing provides issues Snapchatters who learn friends. about proactive app they

watching over from our information up teams news and in-house important have and content coverage population of to our agencies times. audience particularly like trustworthy our critical half these than States XXX Discover WHO, it us minute editions more CDC during United content the educate feel partners, for Gen also on news featuring is we to published curated with the with Z the We on and COVID-XX Discover,

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and sharp We in month a games spend daily in in quarter games. activities five than increase new more this time of calling group double saw and related average chat, across launched games March. seen have the We

information and friends, XX sharing million doctors, includes In the in community in employees the that store now his Home, from its frontlines. first place Discover programming their includes along in From Smith episodes. our news three Will which who addition which and This Will with over to in shelter like own teachers, content others celebrates garnered are experiences uplifting viewers shares his experience,

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use. in suite lenses out turn to Snap downloads we've and people streaming which as together, Camera, daily whichever XXx Additionally, our to of they a video conferencing the work allows live desktop to of conferencing more to video and seen increase add than app hang people service

during our COVID-XX past has crisis top our remain on the health months in focused we we've While building priority the been momentum over the supporting partners the community. of our community growth established few and on

Our and grew average active daily to X% XX% by daily active community up an XXX of million QX, year-over-year. users users quarter-over-quarter XX million during

visually Snapchat themselves and communicate snaps over our to using day is billion community express with Our every creating camera average. X on

addition our of spending time to more In people and usage on camera, increased the Discover. more are

Our that and curated approach has us is selectivity our content and editorial helped topical. community timely mobile bring accurate, best-in-class to

new spent the geographies. to a on growing and and quarter. to including demographics around new in channels very engagement use targeted approach continuing amongst to Discover tastes and serve needs We're data world XX by to has take the this time This Discover channels adding drive to investments our allowed regularly various our of insights audience, us

content favorites, For example, our XXXX. content time XX Comedy Unfiltered, the doubled diversification spent offerings the daily Trevor over watching Central, new year-over-year like total Nikita content QX has of investment ongoing deepen our Daily a Discover by of with age in docuseries engagement platform. helped snapchatters on including like in Show original The Discover and and This Noah, expansion

built on acceleration by believe ground Snapchatters, growth. people restrictions users more by help to the learning each did now recent and playing lens longer water. that lives active the by daily immersive creators lava engagement using term lenses play lot augmented role the growing or our our We of these lens trends support average. every of with our We've community communication than powered last in technology of of this is year. reality during reaching day with lenses community XX% XX% with important Augmented travel is also studio continuing behavior machine created A the into they reality of to in and new adoption transform an our will day lenses driven

$XXX million of rate. growth representing revenue generated in a We XX% year-over-year QX,

growth revenue growth in optimization of long-term. to our While March. high of two many lower confidence products high advertising we over which the budgets declined ad audience, due growth to ability reflect revenue COVID-XX, first These rates the the in and our the in offset us quarter investments our and the beginning give in rates quarter, grow our experienced in months

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uniquely continue adopts jumpstart digitally quickly, which makes is help audience positioned to This the And we this recovery. generation to help our Snapchat drive recover. The transformation. will help part our native want to them new businesses and do to technologies

pandemic of complex and business, ROI, predict dynamics in our product our us long-term the difficult of is audience, indicators success. terms that it auction this and impact very advertiser of we our momentum on position innovation, believe While for we all engagement, to on the well see our near-term unprecedented their global

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to investments continue cash us safety partners. strong this prioritizing and health during time, and of simultaneously and the allows team make long-term our Our community, to position hire innovation while in

the tunnel curve team. flattening new the physical normal next to with of logistical and like, as cities health what chapter as end at the a beginning countries. to be mental the crisis, the in perspective, in see look in well of We're terms from The will the light figuring the being our many well both immediate will of out and regard

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service a have leadership, efficient creativity driven innovation, excellence partners that deeply the and value and operational growing of advertising of advertising strong for we the delivers our pace platform We that community provide resilient by an our a team. relentless values

share way inspired by our turn it the joining they business. while Thanks that I and will our safety team community with of and proud have over of first. the our risen more and challenge, to putting the to and for again call so health about to this Jeremi I'm

Jeremi Gorman

Thank you, Evan.

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about thinking global COVID-XX brands new outbreak The has shifted audiences. are of dramatically the ways reaching

to are and each self in friends and expression their separated Snapchatters families are storytelling. communication, maintain together their routines, physically through While friendships virtually from visual regular coming other

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home with time brands on at help generation services are We with and them best the more spend to how partnering new discover as they products and speak online. and Snapchat

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their worked viewed quickly XX more within the the filter hours, campaign home across XX Adidas team hashtag create million than help U.K. team and Germany. Our being to with times with

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we have partners. games demand. over through our also largest This better support of not past includes or are the global sales grow businesses. priority ecommerce structural is our advertising who with partners made oriented team have to improvements second service enabled advertisers our and Our their to but building year to to advertisers, work performance improve our us advertiser teams only scaling operations demand advertising sales and better The

May. this excited Snap We Naylor VP on will Americas the new our momentum early build of with all Peter as to in are join who

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

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

we cosmetics is growing said, resonating products e.l.f. CMO, [indiscernible], skincare to and Marchisotto for is core our customers. "Our optimize utilize and example, message and to lip, Gen Z Snap eye, help our Snaps ads and partnership our ads Kory agency new audience. our business efficiently shop an implemented with ads media clearly dynamic and face for consumers further with As personalize In millennial

of We Snap to continue marketing innovate ecosystem significant priority our to and optimize has which in performance drops one led objectives." CPAs, across

continued native opportunity. rise The on mobile presents premium especially mobile us of with formats content consumption, growing a

Our year, leading And insights as robust over well and what we on the data provides for video our solutions video advertising market position with last products mobile us rollout devices. a mobile have better buyers. platform video a down premium about on performs of on focused doubled

video allows shows into to our have reserve for to we and curated discover incremental Snap premium within increasingly potential video has our designed brands environment. example, brand TV and predictable Select commercial at buyers for product online our focused been social For It's a video offering the video video attract hand on budgets safe ads. Snap both and fixed price. Select select online

our reality that augmented the of potential tremendous for continued holds Evan As augmented immersive success reality with experiential, are advertising. we and future seeing believe is We computing platform. mentioned,

grow than we buying since less will years AR dominant their making studio new democratize products, market platform robust investments to which tools quickly that buy been and scaling serve our ago, service continue lens two the their education driving and believe supports AR launch and ad ad advertisers self we have in with we're improve is Our investment advertisers the our measurement. process. Self AR, the creation way as

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

lives to response in XX search We which the money Organization's experience technology solidarity for lenses funds. XX our World health to a to mask transformed AR into three important and Health immersive Snapchatters from raised dollar enable crisis, we such beakers is camera fund. a different the launched response first supplies, each that A as hospital development items our turning our global calls to lens this audience example, each For to visually the to with a donations COVID-XX everyday to are pillars notes to the represent fundraising into trigger medical research AR action countries is your an for technology. currency to skin camera the with bills uses and care, of to and ever represent represent representing currency, recognize how of unique part drive milestone way through connect and physical patient

We team full as a structured entered platform economy. a to business the community quickly support and partners featured our and our global disrupted support the and to sales pandemics we XXXX with COVID-XX pivoted ad

to will performance-centric improvements and products across verticals, brands long-term the scale, and marketplace help improving product continue invest focused relationships advertisers businesses. to response and agencies our making for and direct building We with for

engagement important our businesses are in overall to across role opportunity of across market, our world. size the the in recovery and Based advertising an play audience, levels we the the our on driving service of well their of positioned digital growing

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

Derek Anderson

Jeremi. Thanks,

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

from up our As quarter. community in to year-over-year mentioned earlier, with accelerating XXX QX, in to grew growth daily prior XX% the active million Evan XX% users

as daily and higher weeks in final many results, stay This impact to has from average. quarter, QX the on we our of our using in While a entertain as metric the sought engagement little home. observe connected calculate we community this

impact users the growth which community improvements sustained impact, the in the application, our our we on we in absent result, new a daily this active higher of and accelerating made As cumulative are to Snapchatters. to to of reflects pace of already levels contributing accelerate have growth engagement year-over-year were retention

in our year-over-year, to across of Europe each North in North with America, growth our grew both iOS on regions. as and be The In community rest growth platforms, of broad-based well rates Android DAU as continues and America, year-over-year accelerating world in prior quarter. compared by to XX% X% DAU in of the DAU quarter; grew the to XX% rest XX% Europe prior from year-over-year by by in XX% prior grew up quarter; in the compared XX% world, year-over-year,

We increasingly believe QX was our in and mobile the QX, range. our for of value consistent is above the of the attention differentiated midpoint accelerating guidance growth our community demonstrates of and year-over-year, an clearly XXX increase our on competitive with revenue growth an market rate just of XX% platform. which million,

many challenging our an has of had growth and impact environment in has economic become the partners of on for business. advertising rate The this our

in long-term. continue our of growth We to For to provide XX% evidence are the observed quarter of we of in normal grow over results and growth a March. XX%, ability our share total the indication QX believe was market the example, declining beginning additional ecosystem elevated year-over-year growth under that our the that approximately and advertising before February of in conditions, approximately our to ability the accelerate rates at to January strong

consistent see in quarter. XX% the in of XX% world impact prior rates revenue in the observed revenue accelerated year-over-year lower full revenue in following growth rest North And XX% QX as of the March. in that deceleration were grew just growth XX% reflects year-over-year In in Europe was international North QX was to team The this compared prior modest grew quarter. QX. QX, in in to XX% America growth reorganization. We in compared quarter second In Europe, to revenue we the revenue our the year-over-year pleased year-over-year which with sales America,

their All by the regions roughly magnitudes. growth in of month decline equivalent saw rates March

ad see demand advertisers. continue our response products, We are our driving which products, to including from of strong goal bidding based adoption direct increased

views to tracked self advertisers to to we've installs two our our use past add pixel. including their by years, serve campaigns, objectives continued purchases that video more platform the Over optimize app can and

to We significant optimization improvements and measurement capabilities have also models. made our

as nearly revenue of result share partners a advertising of two share of our are the over on to investment defend past ensures has response that half we a positioned represents more budgets and As doubled a of any macro these to and our direct our return well in our direct grow advertising total years, revenue environment. delivering than enhancements, advertising

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impression infrastructure XX% in costs of QX, in cost of and of over down to the other QX, DAU of goal driving the progress continue Gross up $X.XX time in our against points make down underlying prior were cost an costs. unit deliver percentage drivers deliver cost infrastructure were a key year, as Snap, margins $X.XX we including X our year-over-year, per the from

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these efficiently, reflects the gross of while our margin, scaling able been that continuing investments we operations pleased in while which expand in making to particularly investments of future are our overall We business. make content to approach have our our

reflects operating and in investment expenses Operating which has XX% our million year-over-year. increase in base, XXX been our talent expenses focused monetization on were continued up The teams. QX in engineering

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metrics, output far. a While there are between we're typically as investments improved we the is results and lag pleased seeing with these

over Adjusted leverage EBITDA range. year delivered in prior with adjusted in XX% prior million XX% improvement of negative the of positive, which XX qX, of the we XX in In EBITDA down an and from was QX, our quarter. guidance line million the is meaningfully but midpoint

and in continued have we established build crisis in revenue of impacts our business with the our partners, our have to growth rates. on of the long-term momentum despite on community order COVID-XX growth advertising to invest the near-term We the

leverage for in downward put pressure the term, right our is has this the the the cash decision adjusted long-term of EBITDA sheet improving and growth given strength on business, While balance flow. our it believe of near we

quarter quarter improvement quarter Free ended the first in driven We cash in X.X roughly quarter the EBITDA XX of by for negative a improvement seasonally was and of X QX million of securities, cash marketable operating the adjusted our which flow revenue. marked the million year-over-year. quarter. hired improvement flow advertising with billion the flat cash an year-over-year the was positive XX for collection and at QX X and of versus million million prior

in have our also to capital by additional than billion access more We X credit facility.

on we we in in QX for that April And where plan for not recent growth how estimated changing year-over-year intend guidance rate our be to our in into is economy we Today, beyond and today in is may we we far revenue the if XX%. this clear through XX. a growth Thus want because invest so rates how we begins growth factors prior XX% continues through evolve to recover. rapidly But recent Given sense and quarter. less at are or it how to the crisis do the COVID-XX results, our estimate QX we to have manage most business. the QX, to Therefore, move world share environment, to week principally, visibility point as control, do provide quarters. the we financial same much depends world's the have manner not in when the

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or EBITDA adjusted QX. revenue guidance will we this, for Given sharing be not

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of the we cost regardless Given outcome that our estimates, these cost structure the not do short-term, in currently of directly minority varies in with revenue substantial a small QX. revenue expect ultimate variants in

position our are there factors numerous well believe growth optimistic business. prospects uncertainty the near-term While because to our is long-term there current we revenue the we relatively about that remain in business that about environment. rates, for highly perform remain We optimistic

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

Operator

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

Ross Sandler

run happy April, on advertising. everybody's solid what's actually broadly in looks Question safe on digital the rate you light and to in revenue pretty of and Great. hear for flagged that Congrats it going sound. guys

talk mid-teens Thank what that your about confidence these when of rates rate? DR and you Do pipeline? think negative seeing you see this are sustain overall lot you. growth of can XQ worse can kind gives you peers types mix about mix, you far your can or the you category of So the a growth growth? And your

Derek Andersen

it then the Derek it's the first probably part speaking. to Ross, I'll take over second of for Hey, kick part. and that Jeremi

we've of important one here think a and got things rapidly that's that I challenging is environment. evolving the

depends manage world a the forward, macro our that. how and lot to on, situation going and governments reacts So, how this environment the

think really conditions. continued pleased to we're as that has out, under these you business pointed grow I the

positive big to business. that's think that business as I sense optimistic that cautiously for very the normalcy also see return could some We're we of the we recover. a

out, know. about And we there's don't that. a also I cautiously want so lot we're point optimistic But to

gave But how insight were what much as situation, transparent forward. of and because sure really exactly great to that, this as in possible. things so wanted like trends with difficult folks it's that to And predict, think look to are today I confidence going going we we make

to to handle mix I'll And it some issues. Jeremi of these over turn

Jeremi Gorman

for are where economy platform question, Thanks as and and are at while move well And buying people core friends that's important positioned, And the something stay its it digital extremely Ross. is physical the to brands. connect does for communication closest visually to Snap family, distancing a accelerate a our the it's challenging world home, critically why their at with to remains. new community we and for discovering that

focus continue given effective partner. ways them categories have take to CPG with to wallet, market advertise experienced pivoted opportunity best recovery that product current such roadmap to advantage and share to that our to the build for And on impacts environment, To as positioned overall and entertainment, have teams this those we've we as a help share, teams ecommerce to in look unique environment. share our cost are sales our long-term as of in of outsized market and gaming, do that increase home Snaps digital advertisers industries and

Operator

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

Rich Greenfield

that algorithm more showing. you guess down. dollars that's mean, you from Discover, we you're out question sort to Naylor, plan that? big and that running meaningful for the of for think pretty TV ad standpoint ad a content them But the the But Or there's Discover Thanks Curious, increase Naylor? opportunity of and for may shut to what's on are the I no what over with taking spend. lot advertising is terms bring content the Pete ad just put we productions of to current pandemic during Like, maybe his as content, using difficult a TV like, the I there's of to partly attached you an the actually in Pete doubt do? what's Jeremi. Hulu. head be into brought clearly Seems lot take in you've it, more like and stealing you obviously expect happening or you guess should taking amount XXXX? TV kind with to expertise with a better getting users I content, question. quality got When about is of a dollars curious, of on trying And

from that I mean, content you Good standpoint, shot look create was the America actually kind to struggling for house. I'm of Discover Can a Thanks. are content robust you creation content have pandemic? day like? the the other a Discover? saw do What curious the But keep Peter's pipeline from also I partners Luck is during

Jeremi Gorman

TV. digital, Yes. Rich. as a traditional linear And to been priority Thanks that carry typically us as for they years. budgets things to number for absolutely of advantages migrate is of in move investing question a top Video for TV some those we've same the the places

first to we our introduced that in are as have We more for are of you originals, commercials, Discover point content, also the six know importantly, non-skippable curated your introduced new lineup the Snap such seconds. format. investing And which as mirror we products television premium then

of allow including longer complement to seconds, standard six is now ads, a video had years. and for which number we instance, for our a we've XX that XX for the So

Select, content and the predictable prices, which allows our to Snap bundled in shows select in reserve team. curated at to invest within continue We into commercials fixed brands Discover Discover we

strategy. us. have experience, You course, space just a noted and Peter critically product on with of of Naylor remains invested him over And for years to the recent the leaders important most we're and we've years, from and video XX thrilled video sales to TV and of number in But both the investment it he's in board.

Evan Spiegel

Thanks Rich. Hey, the for question.

As it based timeline cool our content. end are really continued taken XXXX. daily like our originals will some production. that that but which and can from including is before Home, There pertains the to From approach a compelling as been resume partners quarantined are really Will And production, so Will non-daily shows noted, innovative far if show you from production shows Yes, have we've release home, the super shows originals those that by principal the with impressed been have some today, photography still in of our delayed. has With of Smith. July,

usual and the normal release more releases lighter maybe then and I about June, in the timing volume slightly really than think volume think release the fall. to through is August, in July way

how engagement lot that the really overall, partners to the our really impressive driving that's a that's we're thinking about of challenge have an production. seeing. So in But risen And we're way. incredibly

Operator

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

Heath Terry

XX, XX advertisers appreciate shift give could Great, to lot then, thanks. and of wondering profile you all if from April. here. of just there's seen. sense first through few I from mid-March the that that more Really to a behind level you the seen was that of would weeks XX% imagine, us of I we've a the of your detail how

you've how of density download that in evolved. of your times, in several business seen then, verticals referenced app And participation the mix in you've direct that and what is know much curious, versus maybe seen response the represent you’ve response direct Just representing. response. the particularly, app brand of specifically, I terms they that how pricing And more and then, auction download

And you before? seeing advertising within you've there? of then, the kind launched. of you've that advertisers of advertisers referenced few that return or adoption you Snap there? the it success advertising, And are profile Appreciate platform can goal times level that share any seen you on of new has that any detail a you've types that, based to brought What

Jeremi Gorman

Heath. question Like everyone, that the we're the global thinking that marketing. shifted advertisers they're for Thanks about the has Sure. outbreak hearing way from dramatically

which business you funding Some very messaging both for have what and is fortunate to a across tough cutting while diversified paused are save they're their time to It's a others brand well are mentioned. jobs. and But exactly the rethinking VR, industry. we have

during now us with been In for our time. incredible business fact, that, over VR accounts revenue. XX% of for has this And our always overall

ecommerce at when home app that your installed are home. We've can success of the craft anything on that of line one leave the your to down fitness, are them the about do we do, create the messages We and bit features. seeing which success. that and a about talked pivoting, apps and home are are partner helping need thoughtful about about needs and sales entertainment, level is And gaming, on apps experiences. they've little really that. this apps point, now, valuable Right done you areas extraordinary that teams we're there, not primarily physically seen app focused includes That in in and the to you

return spend with because the it like grow. at what retain with continue has allows launch look incredibly to lower and opportunities ad and been helpful on here. scale we and consistently that innovated again, see spend our we've Once us, also return funnel built, to goals ad on of confidence. they results When join advertisers stable And we've advertisers towards

results. out to partners offering, but early sophisticated in still is advertising beta, ad promising it's addition, with we're our spend In it which our build shows but working early return on

look continue driven just when past the features really we few our then Even help possible. sales been worldwide learn testing split whole weeks, capabilities And targeting in in develop for our of to advertisers row it's suite continue one our to sophisticated performance the world. as advertising, we grow testing the that new such lastly, a platform, at of to most ROI best team the as to we've will and improvements dynamic products ads, achieve and advertisers and just

Operator

Please question of from go next Research Group. Mike Pivotal Levin ahead. Our comes

Mike Levin

a nascent about of and of Thanks well are that a for bit you because could some as your fabulous. more and bit platform lot growth And is product the little a the That, of is partners some talk just why rates question. response the results right fact feel great doing now. direct guys. obviously are as more advertisers you this Jeremi, competitors, is, mean, the if it struggling the I than is

of team to side in doing the that more initiatives, better So the come just the from to hear that on other crisis out stronger aside the you positioned I'd focus love position. be so is your can about categorization

Jeremi Gorman

for Michael. thanks question, the Yes,

ROI. relevance strength -- and and to growing which for optimization many the have the is of we audience. Specifically, focusing ranking of large We've years our which on been and most unduplicated important drive improving measurement, deliver

create adopted into at needs out think just which to app home of has unduplicated which digital advertisers, talked years, generation - business are changing importantly, unique and audience, look [ph] and the gives of experiences and as that [snapshot] an we our as at marketing on And really advantage We're video us this and we advertisers, advertising structures down really for is the an our real scale. the reality acceleration we all about adopted the most And has innovative economy. that and is inherent been support that at an I economy continue to doubling the augmented ad value. deliver around building partners our sales

a very, that as now. right So us we're for feeling very strong tailwind

Operator

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

Mark Mahaney

want ask are side I kind to some games had Two thanks. metrics, you've out Snap outlook just on I'm -- a you be that you about some clearly questions. been And for and that some threw learnings platform about constructive of surge, seem played about disclosed into on there to in differently? the the games a learnings you've getting any out being India, from one metrics called or a reason But good gaming the sure you to there's of had from you do the about things more need markets surge you integrated talk that activity, international -- year. on you seeing Great, about traction. then is that been has recent whether it makes any briefly, that game's a

about a market Snap unusual that talk for an I one, that's more bit its learnings history. given Just think little from

So how just that what success other in learned that whether is you think kind that you've from there seeing and of be markets. Thanks. you may there, replicable

Evan Spiegel

really Thanks Mark. again, to see pertains there. adoption it Yes, exciting accelerated the

especially also our strategy build of think relevant activities to I time, do with period around to want games validates that's think people this playing I during because together. this friends,

chatting our hanging talking and out people the time And and allows they're to play as together. games so platform same at

back So, into rolling we're and five new lot, and a releases. new we title released that titles, updates learning by title

So on. learnings going lots of

from for including seen first their time, very it's early of discovering acceleration course, period we who friends. games have Of time playing folks the this given and with but are

of games of terms So certainly that's our platform. development in exciting

pertains it about and a lot a market investing India, As really it's we're into. to definitely excited

really really reality we've culturally augmented relevant well of think seen that the custom more increasingly and things content. there work One has and been experiences

one investing India this that definitely things in that for there's well really of the product we've talking with and that's communication that bodes to really we're visually, future And embraced fluency visual happy India. are growth So people our in have see is been specifically. exciting for the evolving

Operator

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

Stephen Ju

Thanks very much.

are changing Evan, speak. is as So the but now. consumer right early, habits some this users I shared app we about doing commentary bit are specific think you your a on And what maybe

But grown of you business pretty lift have you're in engagement to ensure can seeing do past work that catalyst in your the think in type positive for since you has that the and do favor? think users spend. that guys. of will you been Jeremi, a terms the what So, to continue And, significantly around Olympics I the

budget So your think feedback to to Olympics earmarked Tokyo what is or I was from partners year, with about we thoughts that next have the any that into being going postponed going so mean, of terms budget go? to do Thanks. that in is where

Evan Spiegel

where that's are is I land. changes But -- structural paying you Steve. to. engagement will the Hi, This to the we're long-term that attention to what alluded early patterns really think

of the reality. augmented examples think, around here, I is one So

One that reality something in this things lot by been from we've that's provides utility. of believe that something this that transition increasing transition entertainment augmented we been really accelerated based the investing being And has crisis. a

their trialing with and testing and example really concerns And the an give technological platforms And paradigm evolve become companies it's a products. amount about beauty imperative business money and we to to can reality. augmented due transmission, a huge believe that I testing like to time of spend move that

of structural think seeing that's one in example we're behavior. changes I of And terms so the

reality. we're products And for more So platform, are of using adopting the what about really excited across that general, forum. people means augmented in our our

just that provide too So say will look to early like. a we'll it's tailwind, believe what that

Jeremi Gorman

of I'll the question Thanks. it events. to the take as second part pertains

we years events impacted single we our less DR, majority being were a ago. are revenue of the With than by of couple

discover or focusing from Super business we've largely is results. we've about meaningful and funds Whereas platform, ROI of and service of self Madness. that now worldwide earlier. of our This of position event test measurement the XXXX. strong ROI Of into we out doubling That become budgets continue a strong simply media try they steady advertisers or part optimization always experimental that talked the Bowl benefit agencies the and always events a to top to core independent of us But by to bonus win on puts for and have the in heavily big and bucket. course, more budget. And platform, we of any way Once we our from experiment. XXXX which March of are on become on moved brand evidenced new our strategies or the a invested brands the like fabric to moments learn events these by Olympics

Operator

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

Brian Nowak

the bit in question of Great. April. the taking the one, I've growth maybe on Thanks do business? really little direct a think non-DR guys. for out you're us in How There the growth seeing to to seems the help business quarter. about response just my in two, be we first that strong type compared

So in so what in the seeing non-DR month, of sort April. you are Dr

of I have how big us then the driver call. DR installs to been on little Maybe And about guess surprising really a strength app this isn't within that of lot a talk as people to it. big of a bit

examples of in really ecommerce, Another we're seeing Thanks. Dr? strength

Evan Spiegel

we're for become and us to being fill DR you're this And of where I seeing if what moment. terms off more and big well. about today growth a DR of on some is that's people's driver of that always back aspects really built business part with year starting think say go growth built core of in this would that We DR having about And the there. Jeremi more that a Jeremi in tells big by the is, of business core business. you last solid this always in pay in year-over-year details folks our very I as can to what mentioned, addition And quarters part of really are this driven of an the business, couple have the build the important of we you talked the doubling a really working this of very some business. becoming we business obviously, upfronts Hi, of But on buying. just a of

take you let talking aspects I'll that that about terms specific working. are over of Jeremi, in this So,

Jeremi Gorman

important have and they Thanks the seek that before, for part app advertisers And with go install make and of a are on in on for to the pricing. because absolutely as they come for ways efficient would of same we well installs always advertisers of further, our absolutely. the getting ad that able install as exciting. an as is a that activities as Yes, bidding And videos, on bidding that for is spend great looking time, honest, are and to really get they're to businesses place get ROI for mentioned advertisers. being dollar app for steady that return growth the amount are and which to for question. really we're impressions seeing funnel on all completing they app on so this so who bid advertisers down are DR or all focusing benefits $X to such forth. And looking the that goal-based people we And and elsewhere, by same be in

and the space buying with to mobile helpful about direct And TV. desktop, outpacing we have overall in for then outpacing in video really talked as addition us, that, non-video the we trends been outpacing that see just

All install. very much of platform those the on advertisers app are success seeing including

Operator

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

Eric Sheridan

Jeremi, Thanks per return price little a of as dynamic by that so in want is both as of and you can, spend interests out to in sort laid with bit much, in tonight engage get advertisers? as a better some script ups. result to sort to the of new on you follow categories dynamic of impression questions your if or of dropped Are both the Snapchat in come wanting and it function better. understand possible budget maybe is a advertisers seeing I decisions two understanding March a April, new ad

sort want profitability be of some to your against both. should of out duration investors? long-term pull take this forward think some investment the in? longer out how the so to Derek, And about Thanks there'll of over around much. investment periods, short-term certain you a being a sort made for of we smoothing that of the clarity or Just opportunity new call level advantage investments is of yourself want investments then the goals. And the of Are you are find

Jeremi Gorman

take Thanks the I'll question. the first part Sure. for here.

new just as highly As performing price as I advertisers that our the existing mentioned, per in answer, previous ROI. and both But to has well really see my allowing impression advertisers dropped. is advertising strong and

are to categories So down advertisers new while we build are focused impact period such on have as we really in, roadmap But growing entertainment, which long-term ecommerce recovery. actually seeing our the we've on helping doubled and come CPG. that industries during this outsized gaming, home

important for including us for here install, with vertical the I and so think we'll conditions them. in thing continue any share ecommerce, for partners earn facing much upside me, despite and to let's any client the market CPG types, or market that be small opportunity businesses our app is

Derek Andersen

Hi, Speaking. Derek Eric.

go Just the side. investment on further to

have is to done the backdrop cost extremely tremendous I we efficient. here two our think amount work lot of make make the over here lean. last years structure the to part infrastructure work We've of a of really that done a

and that As engagement down get cost we've line deploy seen by we've our and about costs. And as as we're for business. per big driving we investment lot to the can and place unit we had capital modest productively smart hold the make on the our a to return headcount growth really that been business investing the able relatively the really has DAU user us to how cost ensure are mechanisms into the getting in invested of a put and in the have sure And possible. we that the that efficiently improved,

the I think a we see of opportunity at moment. lot

And continuing so hire you investing community. We've can our Snapchatter to our as talent that to and as advertising been base. grow invest well community, in see our marketing, we're in

of that we're us I make the health in business. can continue expect the to sure that long-term to investing so you do And to think

make the given look you'll can to us to and our we cautious. be given so made do We cautious of built for prudent build we've the communities. to on with the we'll that our that to progress continue be sure see want invest the we momentum continue the growth though, our how our that the we want cash are mean, operating balance sheet, going appropriately cost continue that flow I goes and but on long-term strength to and sustain at structure that we're and we've I advertisers business sure make think and to we managing that rates But higher, all

So what as well see Hope quarter that we've you've that think and what you QX. I helps. indicated and this for observed

Operator

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

Justin Post

Thank a couple Great. you on usage.

XXX. thinking Internet how that thinking the in surge are see quarter know the you XQ? space. about DAUs and How help in for XQ, in that? definitely March You to in that users a about average into But does should in translate you're that I April

no And metrics overall on up a But category? like they're the TikTok do then strong. look really second, Evan, Thank that secret downloads in that spent side? talk on Can metric you you it Is maybe from How discover you spend? it what look metrics users are time you. think Is Snap? your at or lot. about time about

Derek Andersen

time. of of question. Hey, over order retention Talking performance the to the drive all improve work there. the in we've users think about that It's the for important I Derek here app the really speaking. one the Thanks is app in QX, things of and done to

to and in over as ability is that we these to see growth the build DAU, so, really important. that time we're have And moments sustain on able

by the few And that really work to the make so, last that of and lot out drive a over possible teams years.

yes, together estimate so, our for we've I that put demonstrates our that I And are that. think on, QX costs based think

user shared really on we've have done on. on the app addition, a basis particularly and engagement including around that some per content done In well, a has has engagement so metrics good growth the of of day it how some aspects just improved,

are the see you And there in for and I that estimate content app our we've having investments the that QX. come made can the so it's through on and that driving through think

part to the for turn the over for of that. I'll Even it second

Evan Spiegel

has the use of things service the look really so relationships a the differentiated and service Hi, friends as the with we in business our communicate one at to over community of Yes, our and our people close our resilient business, Justin. time their have that are made on way.

up a average Snap sure they input conversation so, quarter. like things reached metrics their the people daily and users during are finding created that on lot you Snaps see active start can look at friends making we and a this which show that in And Creation, X billion

but that innovate our service to metrics And provide course, the gives to some a and on you hopefully of pay business. across focused to sorts all community. great context, attention we we're of very So, continuing

Operator

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

Doug Anmuth

question. Thanks for the taking

your bigger Just DR, brands, wanted comes and SMBs. up follow to then also on DR across obviously

that, is that So or majority hoping this SMB at reasonable point, Thanks. accurate? SMBs revenue be exposure would think you your it on the are top to also help us that of overlay not could of

Jeremi Gorman

for the Thanks question.

spend we that our of app all right, to absolutely kinds we look big goals provide no like DR via matter our ad what are advertisers brands, actually at You're the these video advertisers, install, responsibility things. of on return is their consumption, believe list best

way not majority medium continue to can. pertains time is And DR is specifically, business. it businesses help are industry. But we of any whole hard a the to can will and the that and Businesses really small As we across hit our in those hard getting small businesses advertisers. it for

support looks like open the them, have them stores this generation so right time. able and period to brand the generation, and the messages comes they during to this Right understand how into now that of have talk doors built that helping this when is and to equity then back

it that have to as are opportunity advertisers much conditions. focused, really these diversification to continue across despite But and an SMB market we earn verticals, to with to more direct share response our so as market including segments, as exposure, online big to opportunity our then pertains well brands grow

is with plan important for and Thank We're them question. and going that time. to most this so us the but our diversification the for execute worst, do to that thing the can pleased just for at really doesn't for impact small best businesses this support it the we're we you time during

Operator

call. for as session session well as Snap attending This earnings concludes Thank conference now Inc's. may today's our and XXXX you you first question-and-answer quarter disconnect.

Snap (SNAP) 21 Apr 202020 Q1 Earnings call transcript