SNAP - Earnings call transcript Q2 2020

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Operator

Good afternoon, everyone, and welcome to Snap Inc.'s Second 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

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

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

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

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

Evan Spiegel

growing community, building Thanks team active the done daily revenue users, our has million everyone challenging to for call. an been XXX outstanding job well This million. continuing $XXX year-over-year of joining XX% to extremely time, and business, an growth our to has with our as year-over-year our as increased support XX% which

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the million also in in XXXX. in people rates This every active day North now quarters reach more in Our U.S. and community highest in average user recent growth daily XXX growth, with seeing XXX last markets and since year-over-year, than grew our We core by momentum using with three growth XX% quarter. our continues America, our strong year-over-year people Australia. million the Snapchat are Europe, the alone, on seeing

world, performance available in now India, two to emerging markets over language. over These to active helped in us app the native year. localization all growth to and invest we’ve make XXX% users with our in over Snapchat past accessible more over in continuing to like their daily billion grow faster seen We are have even service also people where efforts the people

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out and are in media Snap. ESPN a Happening as rolling Now, single summarized provides such from a of that NBC dedicated We section partners News breaking news also Discover

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advertising year-over-year revenue. Our million business XX% in to $XXX grew

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simple. even thing, is we fix We strategy when try Our do it’s quickly. work to and and mistakes our right hard, to the acknowledge

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Jeremi Gorman

Thank you, Evan.

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Derek Andersen

Jeremi. Thanks

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

month-over-month localize from sought The initial mentioned XXX active increase pleased home, daily reflecting onset fell growth the the overall our XX% XXX in DAU grow million seen our localization XX% our in an as and dissipated that of QX. of users $XXX This influencing of of people support, was to an a this community we by invest In community QX, America, Rest million. and in community to XXXX, to April Evan As can through estimate. QX daily Android was May to May year-over-year further from in variety grew across good year-over-year robust, connected our earlier of World, growth to continued earlier, active we than the million. persisted. XX growth our in to result were estimate by Rest of XX% observed community doubled conditions and users anticipated in QX. year-over-year. however, XX significant with the to quarter, and million. India, to where The informed geographies. content, of opportunity grew by the of further be continue reach increase In year-over-year language We our At in stay growth to June. to outsized to of faster be Despite level in users more lift growth user Europe, see active that our Growth partnerships entertained product the below momentum unusual or than of in daily million, as we DAU widespread growth revenue grew a shelter-in-place continued million. in circumstances final North XX reach the of application efforts shelter-in-place initial rebuild XX% broad reach DAU X% XX In example A as our our in subsequent based million. we product. follows orders, grew marketing local World and

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and other purchases, on of ad spending. We by continue measurable tied based purchases, adoption including goal see funnel to that driven directly objectives, to down objectives subscriptions, for demand pixel-verified our strong products, app are pixel-verified bidding bidding returns

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time heels annual in year. dedicate engineers XXXX, Infrastructure a and cost QX, costs cost While programs. QX, beyond the per go ad our in margins the audiences eCPM’s us helping to versus for we advertisers percentage our the to management where on DAU up DAU market to XX% deliver our Gross attract in term aspire one achieve attractive and have per by $X.XX ad prior retain is on near new point well since comes and an reported time, of return which QX projects of above units efficiency were to were cost infrastructure our position camp level lower the over lowest eCPM we relatively infrastructure ongoing spend. that and

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our this of the $XXX put given income strength the year, in near million, has right is we unfavorable compensation of balance prior offset the was term, While believe EBITDA year-over-year $X as sheet. stock-based in our decision versus for downward business EBITDA. Operating health million partially it adjusted the pressure negative long-term QX lower on the adjusted the or in decline

our interest was Net to the and by QX, EBITDA, end credit net access long-term. million spending reflects and through expense When related to more with $X.X in gains QX. noted cash management one-time convertible million are place of year-over-year, improvement with $XX but we ensures we as our cash to as to compensation long-term of our environment. stock stay we where the we through decline capital was to have prior an income While as which continue X% last we our which in in $XXX Free necessary QX view in Similar based This year-over-year combined revenue of marketable above, the the team year-over-year lower seen and billion year, do programs growth million, higher of million be compensation comes do over focused we the offset of certain working year, financial notes efficiently issued we at for undrawn $XX negative value total. in quarter, approximately outstanding year and shareholder our regardless plan proceeds the as on a course want our decline team, interest prior working reflects $XX we capital, towards business adjusted total disposal following to provide migrate our negative in of that and build the XX. of invest operating by seek stock-based not the up to income the in sustainable higher the years fully capital provide put competitive ended have to key of which from the business. in our $X continues impact guidance versus compensation grow QX, We unfavorable have to improvements than IPO. XX% continued $X.X managing the convertible input intend over assets. July flow from to a careful in related the higher diluted operating shares structures in flow in the Thus issued for the or capital were to past notes the QX how have today QX, billion We efficiently. billion have we securities, sense we far scale payments as QX to estimate to facility, approximately we in currently we to

conditions and conditions are While could remain volatile, over may these we could further cautiously also we economic are trends operating that time, sustain deteriorate. optimistic that conscious that

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million full quarter-to-date we to at point likely on have business intend to to revenue will We and growth that and users million of in be XXX be million a rate users. and revenue in XX% result or internal estimated plan QX. investment estimate this as built growth approximately structure XX million estimates our our growth quarter our our active implies best is XX in that XX%. daily actual This growth invest for Our active year-over-year rate, QX XX% is below cost to to our approximately our assume continue of between daily based XXX

percentage expect growth costs, in of will in mid-XXs, revenue which are On long-term expense grow currently side, business. in included at low combined the Adjusted that the in the invest to our EBITDA, we our of calculation of rates the QX cost year-over-year to as we continue operating and

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

advertiser and prospects now questions. business. for communities, your with is you about will growth rates long-term about the there given the pleased near-term the momentum our Thank and optimistic and our remain we today are revenue we underlying strength joining challenging continued highly for in uncertainty While call take our of operating we the environment, Snapchatter

Operator

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

Ross Sandler

Hey guys.

expect would that ago, wants be last So since the mid-teens what XXs lot. brand Just direct a July? And I advertising color rates is, XQ things to really? then revenue why reasons low have response, on from in growth up the think in to last on then couple the might talk to drop call you over baked of revenue, maybe the provided everybody the know what there minute is just for in or the off are to in color improving beyond growth And conservatism can you about not to pick a the the update any advertising Thanks plan? future? some months, any just that helpful. Or versus rates caused

Evan Spiegel

as time here quarter of rate first line. Sure. continued pause in COVID-XX and interruption. these to to straight There the for Ross. of adoption of spending working line the experienced our time call prior specific bidding bit the where our suit our environment we're they're of of continue overall from little and moment, now. we kinds final a in we Thanks advertisers number advertisers to line. business so improvement to in of operating benefit mentioned today. growth They that this of that our get the and to color wasn't our the business. We're create are growth resilient from better a did that growth give reshift, our few response seeing question for things, a saw XX% that be business pause, and to so continued to team top XX% was was just a challenging just driving you We home their was the the result other this periods this, but QX, past weeks the in proud faced but I'll direct of of the and do And not also product just through is we on work straight were that deliver really due adjusted, more had above is have challenges results it to goal-based results

recovered. the the of has the side in brand as of revenue to world business as the quarter. recover growth part in And of seen some has far rest parts, we've this this begun contributing the other As to improved results is

we but see operating and to school, in and in persist, conscious that have little to that while hopeful tent-pole prior addition, are remain familiar. be that in trends of CPG, movies streaming, to QX And et these year the the we're we're factors all the challenged that will environment that they season bit in home environment. being this recently that movie fitness season, ways of would tech we've does of categories We're continue tourism, the start unlikely continued growth less continuing restaurants, materialize in this NFL years. that things but happen, they were way summer also many observed will have challenging. just declines be of to to In things of the of contributed Examples moved in strength out see same dining of like the cetera, course the historically a like

on color some the hopefully gives that there. cautiousness So

Operator

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

Rich Greenfield

investments couple the Evan, I talked mean, questions. looks you've I you've first dramatically obviously off, Discover lot about in of guess a made different. content, a Hi,

And Android, to ago. six why out a basically better. as maybe product like are the as why lot so It see You I post specifically the to effort we Minis a seems much was growth XX is spend a European are there putting you of a it make peers, a of of Europe, Jeremi just better kind are commentary seeing on acceleration think as in boycott in there and you notably are then but your has been sure about room, and well? aware some Facebook. that the talking the are some even I'm the factored elephant you everyone were of then most literally of of of spend from in shift of And months Snap about lot calling we over Derek why on in just the flows major platforms? other stopping than How other is Facebook of and deceleration continued spends for for and other even their even QX advantage and things platforms? what Curious QX, is taking kind content advertisers growth? not sort continuing like of When and user into

Derek Andersen

first growth. your the speaking. take of around Hey, there question I'll Derek the it's Rich, part

trajectory the DAU that I we've think among our thing share year. is million we pleased seen the our of absolute growth since added the with was XX growth year-over-year QX in XXXX. that quarters highest been we've that The past I'd community of over first

markets made our specifically Europe. also Rest in in region. in growth we've in in more my healthy seen and fairly established We've of gains regions rates And the and rates Android our subsequent early of product, seen the to World localize Following application of we've our efforts I XXXX of elevated the noted some India in prepared remarks. growth rebuild our North America

further as QX And the some you that. below for XX% which growth context I share DAU estimates Our X% are year-over-year rate observed on is to for year-over-year we can X% growth, XX% in noted in to QX.

benefit of middle AR would the that launched the products QX the of of full of year in XXXX. I we reflects quarter prior note First, QX

to year-over-year comp this this tougher So a coming quarter. contributes

this growth into QX and the for growth the typically estimates addition, seasonally in is In sequential lower in QX than sequential our take QX account.

of past business So underlying we continuation that we've the our after in believe for the over reflect QX taking growth healthy trends observed the year. factors into consideration, estimates these the

base, marketing our our talent over to a why long-term. result. our to addition in we and realize our in our to see plans continue lot are to investing to our localize in to time. as product focused we've over community product of the grow to And opportunities on This a we continue efforts So this further content invest is shared premium our opportunity

So there. helpful. handle Jeremi to context thanks turn question. I hope second part to find again the the additional you this over it for I'll

Jeremi Gorman

Great, is revenue I of to on what thank difficult to question. Facebook ascertain about the specifically your for the is question. you, exactly at Rich want impact boycott this time. speak the It the Facebook boycott to

brand-safe, content door that be organization. the opened What just at of the to this highest the and and hand-curated to over advent related always addition to to is for Facebook as results in is of ads, put engage those of dynamic And deliver it's know being community. us time, revenue their at the continuing do is VR, CEO way given advertisers, also positive and environment. the or gain hall with that unvetted align user deliberate level. Some importance. segment retain ability And And And which extremely those decisions advertisers no CMO values, been is for independent town we're since boycott. we've the ago post beginning. which position broadly boycott of particular, that a with our to are boycott. paramount the do participating a evaluate not budgets, to more, With platforms, we designed which There for to overall conversation our frequently advertisers said, in years worldwide the of could an of majority levels has these us in of made marketing the targeting the an a strong the in whole

Operator

Heath, comes Our Please next open question this is on ahead. end. from Goldman of go Heath Sachs. line Terry your

Heath Terry

about you. a of sort maybe the evolution course sense if When think a was I over of base of we Thank higher give the from of the perspective, a crisis. Great. us you just wondering could level of little advertising bit things the

the And advertisers then the that new you're engage the the tech to platform, any particularly seeing the their using sort goals in Just about and behavior? seeing that in that where And and guess your to quantify terms that their the different question users sense to at you're sales it is of the of platform spend in of time seek new vertical, that's level, are channel evolving. I extent and users, they're in with the sort you. on out of spent same way the the coming that Maybe how to terms are from? platform

Jeremi Gorman

Heath. Thanks Sure. question, the for

our of and highest investments fundamentals really advertisers global in our number paid Our resulted in to early the active have build business quarter-to-date off of quarter. they've this

talked to tourism about resources are fitness do The As space. sales business, the earlier, have and all that I the on they to not, challenged mentioned our towards earlier, strength like continue spend does streaming continuing restaurants of we do team at that challenged. support which long-term of can space currently, advertisers and in whether we direct or economically to advertisers the are so but focus pivoted response the be categories continue and see continue in tech, dining CPG home to we

strong that advertisers, for continuing demand response see to direct funnel from are data optimization ROI. We looking and lower delivering

that I shift way to more economy. health digital think is accelerated global the crisis the it at a look generally the has to

seeing be ordering that would I and advertisers, pivot stores So offering banking. well online fitness, are delivery anything and but mobile those call in to advertisers, of at home is we're where education, on, restaurants new as short. retained they growing as as go is again, omni-channel services, advertisers category could areas online the the retail kind –

give take question. second kind and part for of overall over the can over then it wanted to So just I look, turn that of your

Evan Spiegel

for Thanks on engagement. it’s Evan. Heath, question Hey the

rolled outpaced really with we elevates area has for our SPS, we’re which year-over-year, creates about of that engage mentioned, of platform, different we’re obviously, Snapchat. excited also same actually increase bar than products to the DAU and these a in And at really unique, as more in people We’re new which platforms grown this seeing has the all is more XX% we all excited on huge what growth we’re across growth. in terms surface content of out content and what camera, consumption about action creation, where seeing, thing and Snap

to for sign And be so Snapchat to when first that’s great know they going people we way up. get to actually think a

the As up, you they get mentioned do know time when they over behavior service. people to evolve sign as their

from more of And so really and Snapchat. can people all by friction unlock our transition removing process different helping that from value across it platforms,

and the platform, we’re engagement, excited what about lots great of the across really So seeing is which momentum we’re driving overall. business

Operator

of go Please comes Michael Research question next Levine Our from Pivotal Group. ahead.

Michael Levine

ads. Thanks for I’d referenced Jeremi, and had product Both question that. hear more guys. little about the guys a you love Evan bit dynamic to

percentage you of think advertisers point to do need see and I product in ready guess catalog. are commerce the adoption to mean, what much. a advertisers? they do be Specifically, this just you do giving what row you go a their could start you this get time you or guys And in general, ducks ahead Thank to at able out like to have of so sense for of around I in adoption

Jeremi Gorman

Dynamic Sure. excited you really going. Yes, Michael. question, are are Ads we the how Thank for about

it’s in our on of early globally invest. the MENA, now continue success strong an and we’re area will in which Canada. solid and rollout. And seeing we to excited in growth We We’re stories learnings initial build success Europe have U.S. and to

in technology. It’s really, budgets it processing is always on about holidays and and also catalog, dynamically really will and on products other interested ready to ahead rich could it in this per catalog, most name similar the suggests, but Ads Snapchatters as and we a $XXX products broadly more to for them. day we utilize the adoption provide are designed are as of in the as relevant progress engaging list continue always are of grow. the updates advertisers in Advertisers market are adopt e-commerce absolutely the across set a pertains be excited of continue particular, relevant huge pursuit Dynamic over It’s based to milestone as And our the a from this. the of which with seeing items now that verticals. number of We million to

Operator

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

Lloyd Walmsley

if A Thanks. I couple, can.

feel doubled you’d what in already as like, maybe to planned DAU that you half of in of And commitment given is you And you secondly, growth was expectations? like, just last expectations. kind to first point this this if in below going a you share a going any would the flowing most Thanks. to I it’s then that through First, improve year. Wondering helpful. quarter guess little it results. reliable for said came of line spend Anything Anything did said, half each related or below quarter, expectations, been this it’s to with it of new was navigation commitments but upfront particular performing do the your back everything it bar? the kind Is if be on could second year.

Jeremi Gorman

Sure. take I the can part the about upfronts.

Even progress way, the with our return the in working brands on that dollar extremely on deliver now we’re are with that. this continue ROI. more is We’re experiencing. and and we’ve always are, really spend critical. they’re seen bookings though us happy confidence particular In to on an ad excited agencies upfront we committed with given dollar is right time Every and to have that in that a marketers advertisers matters that platform spent always and focused they are even

upfront commitments that advertisers we’re into sign just part experimental our budget core many for doubling XXXX further is we’ve from Our that partners. their commitments of are increasingly in a tangible the evidence a important And for graduated becoming of the strategy.

need pertains thus flexible are it another. partners our quarter far, shift case to upfronts they to spending what we’re with seeing to to one be in with from we As working

QX. movie something Temple would moved QX for earlier, So be I that examples used from that of to instance

material timing request to the but make a inbound of very significant We haven’t spend, flexible about are being seen changes. the we

Derek Andersen

part take second Hey there, it’s question there. I of can your speaking. Derek the

of terms DAU in the quarter. the texture the Just of in growth

I think And lift a with as shelter we we were with an we in initial early in in that DAU. saw lift widespread in of place the a contributed frequency pleased quarter, saw were that. lift And of pleased to in terms engagement of sustained. there really place orders we the and were in what engagement

prepared given estimate, our mentioned estimate had remarks I million our below our diminish that which faster in we’d in why shared we $X from June, April there May so continued call. to there. prior I we came in As But DAU than anticipated our and that we the on May again from also in saw approximately is sequential at then to growth growth

your terms all the launched. would about with pleased we big we’re new a with there, factor NAV early their I the not of but quarter, products that as that know results new In question in or

we’re to there. testing We make audited seeing be we’re results that with of And early pleased in what have gone through the it sure community. rigorous terms would to

So thanks is for the question and additional helpful. context hopefully that

Operator

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

Mark Mahaney

as up coming trying are you that to tap you But to ads I to did of would in the of that around Thanks. doing those it actively of then place to area big key do growth ad you’re be I or macro but you them. anything transparency $X ROW, I coming there can that but out it’s resuscitate that think dollars have, it know those don’t, And both as you that but what billion, to a those into to possible, factors ads part weakness, demo message mostly are there $X is would to political out online are or ad be dollars? have secondly, an in much chunky Is it’d call are a I anything would try Thanks anything to that billion a as tap these making into to think political and I doing parties. growth? show to accelerate you lot point a if elections trying good number. think you lot. a And we spent? will

Derek Andersen

Rest our Mark, quarters, to question. has In Rest noted, saw is World recent first the which likely region we This you’d thanks for growing part the question, Derek of often is been in speaking. rate World. of that take I’ll for the your as with growth revenue. respect of fastest

our to we’re the that Unfortunately, I X% was regions, to on revenue though, some restrictions the impacted begin fortunately the items, I related that transactions were region and by What impacted prepared factors remarks, growth the several both COVID revenue since supply the the So of seeing and to in QX. interruptions thus results disappointed we year-over-year including more part other in Rest definitely region in for mentioned is significantly far retail. QX. we’ve of e-commerce World rebound, cash better with chains in Rest is our of than in contributing World such and physical this growth rates seen then add would as

that interruptions better to disappointing seeing are So the Jeremi there the handle QX part we’re we experienced of I’ll second it disruptions now, turn your in over now. trends much the things are happy and that to with although question. looking

Jeremi Gorman

Sure.

it the year olds segment XX as a pertains to XX yes, XX are XX% serve XX% that we and to to year we in of the political going XX in actively ads, U.S. year after year of So it’s olds U.S.

political in political and with issues, is and educating we we’re To advertising any relevant are super entities paying advocacy segment to the transparency Snap on them, are, based our spends available ads that factual them and on and Snapchat, about and information in which all library. advocacy ensure working. So allowing political impression more learn critical ad issue manner publicly is the along

related and in We issues. with political providing role responsible look that ads guidelines specific elected a community have campaigns. democracy. that their path broadly, important very we to our most believe advertising play apply engage But first an we officials, time Snapchat to for and advocacy voters candidates for do elections to can with getting to engaged forward And our

Operator

ahead. go comes Jefferies. question of Thill Brent next Please Our from

Unidentified Analyst

lot. Thanks a James like? with, building the what this map with Map can to that on to At monetize you on the might timeframe Partner announced places. curious for how Snap your out deeper Brent. This comment whether look Summit, into for question. is taking my a particular you eventually for And plan product? you Thanks update go you Could strategy your then little and

Evan Spiegel

huge in understanding Hey, people today. wayfinding world your the the and opportunity, them about it Thanks in personalizing what to of excited Really we directions maps for around seeing the and the way. rather a question. James. map because personalized with Most for world map the represents we reflect than are use a view think we’re

map, adding about you. reflects around better that that we we And so snap your the the as map think important of to the your to feel world friends you, places view and also are adding

so happens that their at monetization is that see maps consumption math what and believe different to that today. wayfinding using locations friends opportunity, B sort to we a on And will time, the happening up to over people A than are typically what’s create are mass different browse see to because of the

friends. continue products reopen some in places COVID letting we lockdown, businesses well, we’ve Snap to work we’ll and terms and We a credits products, local free steps of big really monetization; create opportunity the them helping taken around following different on those to So, time. But easily especially see intermediate ad helping as Ads. that providing places lists, build categorizing recommend as over

Operator

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

Doug Anmuth

taking questions. then Derek, global the on talk And you’re obviously, the well. to significant, that prepared in of snap that Thanks for user as in wanted cultural Android and are that how how for World. a EBITDA profitability last could especially you a now, focused on the do of has can of both Evan, look as international a about while Derek. you your control, going Evan, resume about initiatives most under back Clearly, everything good then make key for that was here of app path terms hitting and Rest commented to in forward? you base, but kind and to XQ, just what remarks one One Thanks. rebuild the local relevancy you also, grow you on some more product ask get

Evan Spiegel

Thanks still investments service, Android improving momentum for more make in the on There's your we've we're to work We're and that to help world. around question. data working are made paying minimizing definitely do, consumption, world the definitely affordable about rest excited off. data of in the partnerships the performance seeing of

and local engagement. the localize onboard to creators and continuing building AR local we're increased seen which course, content, local we've product Of experiences

showing in So in they're of really place. And that excited fundamentals there, growth. lots are investment definitely the but the up

Derek Andersen

Hey Derek here, I'll take there. your next questions two

to given internal we've in provided full operating entering our of path goal however sustained revenue we the lot investment heading profitability goal stronger fairly and deliver term. a cost but we for We've prioritized level a vary investment not vary beginning a are the in with historically year XXXX. fairly of this doesn't has guidance Much set long-term our on revenue, We've and profitability QX had have so full revenue growth directly Obviously profitability, expectations much focused growth in better the investing longer environment to that lower we the these changed position of of in revenue did achieve impact shared our profitability year operating in won't in clear into adjusted changes investments, our of to intended we over structure the currently the this near-term. below direct year to emerge to the that rates that order the year. so with level on EBITDA on since carefully growth given and terms the remain In guidance quarter. set of the our our in rates environment, business path

in growth internal don't we goal resulting environment that achieve So, sustained rates, fiscal XXXX. expect revenue absent significant and improvement to in improvement for the operating

the same obviously question expand and building been profitability buckets to flow stock-based to long-term contributor further also about continue our towards though, expense and diluted positive your a growth FCC amongst and cash We over stronger. time. will managing compensation the think emerge then to that, the has is and fully free largest shares prioritize we so can that over And on we

our So over management managing of efficiently key we our time. compensation really diluted view programs a to shares is careful input stock-based fully

stock-based a we've compensation So shares over continue these the compensation capita we fully compensation in to team and quarter. by the in by on decline we'll as competitive our team, coming while And we've see ensure recent we've place the over careful these X% grow decline per the sustainable put management approximately begun in basis, sustainable diluted structures XX% IPO, addition growth part both investments are on additional optimize our this have cash of programs, in towards to our programs. And in stock-based that programs total this year-over-year to most seen to comes competitive. migrate following including time in in programs continued just down. compensation to our diminish rate of to and Due to years continues

of diluted quarters of growth fully So we've between X% actually last the year. declined to seen prior X% versus the and couple in to in X% rate shares X% the in

that So the managing shareholder key long-term attention understand we're close building to paying it. We over we're to very this. input value focused the and carefully on

that believe long-term of avenues manage progress these if time. in manage also also flow over time. over able carefully, our be course investment We and we continue investments we'll can that the make towards to line factors scale to cash up top will to open and positive additional this And additional the free

context gives really on hopefully the managing path a well of cost a portion you So bit more as we're that of our the key as base. little how profitability both

Operator

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

Justin Post

lot questions, the of acceleration of interest couple A a obviously in July. Great. in

rough on secondly, discover content content interesting just the half, And know you about in gaming that. Did you the see with the then all second there. of the lot of wonder how going wondering you at I help a June we half June big stuff pipeline us wondering was and from into of industry. first a improvement see for July? could half second if Just

then more Just the content do to in Thanks you put you the expect more in half? second able first were shows and a lot. what out half

Derek Andersen

rate the Hey, to above as take the within the of full-year Obviously part on out we a XX% we quarter saw there just swap revenue growth Justin, quarter it's at were was where we full saw can terms But first mentioned, rate. creative started. growth saw as what and speaking. we we the Derek I some pauses in – some on. interruptions so

So we've we quarter-to-date better is noted some in July recently early improvement and as the obviously result here. much obviously seen more

over to for I’ll of uneven take noted turn get question in and to the of second the been the point. So obviously trajectory reasons this of improved recently things But part there. have it more that it's earlier we've terms your to all

Evan Spiegel

we're all Yes, and released experiences about which has widely. content do that about excited question. creating the to excited the stuff super for really to friends are just also product, gaming new more in We're pipeline, the together bring Minis and Snapchat. developers our Thanks

for make super So exciting back the fun that is and we'll of a year. half

Operator

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

Eric Sheridan

Thanks talk U.S. the I there taking quick ones so the of has much can. exploring some if U.S. the government about for the question, two role TikTok of market. been Evan, in out maybe

one. for tough terms performance the and there takes maybe a a the government. You've bigger out regulatory Thanks wide commented the out question into the of question of to QX picture much. should in region-by-region landscape, U.S. is there maybe more that get on over on landscape, be the and a by you the central U.S. years? mean there. see if guys basis action in footing, Just next number not couple on only had the That in you to you landscape I over you media should much aligned form rates? know it time of What why business some a divergence be Do the business dynamic globally, wanted and to of at number Question the social broadly there QX just that growth should recovery out wanting some reason so take when overall might comps? this the in would but two, look or of think become in

Evan Spiegel

is Yes, it's interesting that States with watch government the question. Sure. success Thanks in China. of think the huge United really technology to consumer I headquartered grapple for company been

are to these I there like in base smaller consumer of think a question, leverage the that enter to and of people. second really which billion United the and economy China market success market, free massive and terms their leverage brings as us more a world businesses is able obviously States largest plus in the to markets

this fascinating the it's the now security So see with national government concerns standing. really to grapple with been obviously

the – sure of looks path success consumer ecosystem right what here, I'm with that totally China. has little So but the the think from from shifted bit I you're technologies the a note to like not

startup. world. tech asking I case that people of seems consumer think people are the in Chinese offers actually big States a And about, services many that hit the really a conglomerate question tech lot large really the fascinating be United be next the this assume that next the here hit in consumer very would to a around

think And that reformulated States. I landscape has all conceptions seeing tech the maybe we're this how the of in definitely United people's interested here So in develops.

Derek Andersen

speaking, Derek second I the it's that Hey, take Eric, of part can there. question

of the growth obviously and the why forward for here the that's operating guidance I say is rate environment quarter, that by think uncertain, looking least chosen coming think not in really I at in we're region, there are this operating to quarter. terms provide terms on the – formal what conditions I we've of would

really the been trends we'll understand macro specific that uncertain recently, particularly could operating rate environment demand position seen and the see persist, also what environment is Obviously, a recover basis think more better in deteriorate. how don't the the the we is really I commentary a on growth therefore, operating until we're on there and quarter. So hopeful by that see recently going can we're build, we give always we but expect to that has we've understand environment possibility to that

prepared we operating obviously to So as continue would environment but and it'll environment we the for want go large that on in hopeful improve, forward to part. things shifting be depend

So a it, little how at coming better sense hopefully we're that thinking gives quarter. you least about in of the

Operator

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

Snap (SNAP) 21 Jul 202020 Q2 Earnings call transcript