Snap(US:SNAP)2025-08-05 22:00Financial Data and Key Metrics Changes - Revenue increased by 9% year over year to reach $1,340,000,000 in Q2 2025, driven primarily by growth from small and medium customers and performance advertising [6][25] - Adjusted EBITDA was $41,000,000 in Q2 2025, compared to $55,000,000 in Q2 2024, reflecting a decline in profitability [30] - Net loss was $263,000,000 in Q2 2025, compared to a net loss of $249,000,000 in Q2 2024 [30] - Free cash flow was $24,000,000 in Q2 2025, with a trailing twelve months free cash flow of $392,000,000 [31] Business Line Data and Key Metrics Changes - Advertising revenue reached $1,174,000,000 in Q2 2025, up 4% year over year, primarily driven by growth in Doctor advertising revenue [25][26] - Other revenue increased by 64% year over year to reach $171,000,000, with Snapchat Plus subscribers approaching 16,000,000 [28] - Spotlight time spent grew 23% year over year, contributing more than 48% of total time spent watching content [11] Market Data and Key Metrics Changes - Monthly active users (MAU) reached 932,000,000 in Q2 2025, an increase of 64,000,000 or 7% year over year [5] - Daily active users (DAU) reached 469,000,000, an increase of 37,000,000 or 9% year over year [25] - North America MAU was flat year over year at 159,000,000, while unique Snap senders grew by 2% [25] Company Strategy and Development Direction - The company is focused on growing its community, enhancing value for advertisers, and investing in augmented reality (AR) [5][7] - A new distributed structure for engineering teams aims to align investments with business priorities [8] - The introduction of Lens Plus, a new subscription tier, aims to enhance user engagement and drive revenue growth [6][28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in Q2 related to ad platform changes and the timing of Ramadan, but expressed optimism about recovery and growth in advertising revenue [26][40] - The company anticipates continued growth in DAU and revenue in Q3, with guidance for revenue between $1,475,000,000 and $1,505,000,000 [32] Other Important Information - The company has committed over $3,000,000,000 to develop a vertically integrated AR platform over the past eleven years [7] - The introduction of new tools and features for creators aims to enhance content creation and engagement on the platform [11][15] Q&A Session Summary Question: Could you talk about the early performance of sponsored snaps and the auction pricing issue? - Management highlighted that sponsored snaps have driven significant growth in reach and conversions, with users showing higher engagement rates [38] - The auction pricing issue was attributed to changes in the ad platform, which have since been reverted, leading to improved ad revenue growth [40][43] Question: What is the current state of brand advertising revenue? - Brand advertising revenue was flat in Q2, with the majority of deceleration seen in Doctor advertising revenue [48] Question: How does Snap's approach to AR differ from competitors? - Management emphasized Snap's long-term commitment to AR and its fully integrated stack, which allows for a unique product experience [52] Question: What initiatives are in place to reaccelerate U.S. DAUs? - The company is focusing on enhancing communication features and launching new products to inspire user engagement [70] Question: What is the outlook for Spotlight monetization? - Spotlight revenue is becoming a more significant part of overall revenue, with ongoing experiments to improve monetization [66]