Snap(SNAP)2024-10-30 00:04Financial Data and Key Metrics - Total revenue in Q3 2024 was 1.25 billion, up 10% year-over-year, driven by a 16% increase in DR advertising revenue [30] - Other revenue, primarily from Snapchat+ subscriptions, more than doubled year-over-year to 132 million, up from 72 million, with operating cash flow at 153 million, driven by higher adjusted EBITDA and reduced stock-based compensation [37] Business Line Performance - Daily Active Users (DAUs) reached 443 million in Q3, up 37 million year-over-year and 11 million quarter-over-quarter [7][15] - North America DAUs were 100 million, flat year-over-year but up quarter-over-quarter [15] - Europe DAUs were 99 million, up from 97 million in the prior quarter and 95 million in the prior year [15] - Rest of World DAUs were 244 million, up from 235 million in the prior quarter and 211 million in the prior year [15] - Snapchat+ subscription business more than doubled year-over-year, contributing to other revenue growth [30] Market Performance - North America revenue grew 9% year-over-year, Europe revenue grew 24%, and Rest of World revenue grew 32% [31] - Global impression volume grew 19% year-over-year, driven by expanded advertising delivery within Spotlight and Creator Stories [32] - eCPMs were down 7% year-over-year due to inventory growth exceeding advertising demand [32] Strategic Direction and Industry Competition - The company is focused on growing its community, deepening engagement, and diversifying revenue sources, particularly through augmented reality (AR) and AI innovations [7][10] - Snap introduced the fifth generation of Spectacles, AR glasses powered by Snap OS, and generative AI innovations for its AR developer platform [10] - The company is investing in machine learning and evolving its advertising products to better serve advertising partners, particularly in the lower-funnel DR business [8] - New ad placements, Sponsored Snaps and Promoted Places, are expected to contribute incremental advertising inventory over time [28] Management Commentary on Operating Environment and Future Outlook - Management highlighted the potential for Simple Snapchat to drive content engagement among less frequently engaged users, which could be an important input to impression growth and incremental reach for advertisers [40] - The company is cautiously testing Simple Snapchat in highly monetized markets, with a broader rollout not expected until Q1 2025 at the earliest [41] - Q4 2024 revenue guidance is 1.56 billion, implying year-over-year growth of 11% to 15% [43] - The company authorized a new 637 million, up 16% year-over-year, driven by infrastructure costs related to ML and AI investments [33] - Adjusted gross margin was stable at 54%, in line with the prior year [34] - Adjusted operating expenses were $604 million, up 1% year-over-year, with lower personnel costs offset by higher marketing and legal-related costs [35] Q&A Session Summary Question: Risk Management for Simple Snapchat Transition - The company is taking a test-and-learn approach to Simple Snapchat, focusing on understanding shifts in inventory and potential impacts to monetization before a broader rollout [50] Question: Rollout Timing for Simple Snapchat in Major Markets - The company is still early in understanding the monetization dynamics of Simple Snapchat and is considering a phased rollout over an extended period to minimize disruption [53] Question: Potential of Sponsored Snaps and Promoted Places - Sponsored Snaps and Promoted Places are expected to leverage Snap's existing ad format, providing incremental advertising inventory over time [56][57] Question: Balance Between Engagement and Monetization in Simple Snapchat - The company's primary focus is on creating the best product experience for its community, which is expected to drive long-term advertising opportunities [61][63] Question: Spotlight Engagement Outside North America - Spotlight engagement has shown strong growth globally, with North America seeing a mix shift from Stories to Spotlight content [64] Question: App Install Product Performance and Q4 Revenue Growth - The company has seen strong results from app install and app purchase optimizations, with cost-per-install down 24% and cost-per-purchase down 27% [68] - Q4 revenue growth is expected to be driven by continued execution in the DR business, with limited recovery expected in Brand advertising [71][72] Question: Confidence in Outpacing Digital Ad Market Growth - The company is focused on executing its DR business roadmap, particularly in the lower-funnel segment, and growing its SMB customer base to drive sustained revenue growth [76][80] Question: Investment and Timing for Spectacles - The company is focused on building a robust developer ecosystem for Spectacles to ensure a strong library of AR experiences before widespread consumer adoption [83][84]