Q2 2023 Snap Inc Earnings Call

[music].

Good afternoon, everyone and welcome to Snap Inc. 's second quarter 2023 earnings conference call. At this time participants are in a listen only mode.

I would now like to turn the call over to David Ohmmeter head of Investor Relations.

Thank you and good afternoon, everyone welcome to snap second quarter 2023 earnings conference call with US today are Evan Spiegel, Chief Executive Officer, and co founder Jerry Hunter, Chief Operating Officer, and Derek Andersen Chief Financial Officer.

Please refer to our Investor Relations website, and Investor got snap Dot com to find todays press release slides investor letter and Investor presentation.

This conference call includes forward looking statements, which are based on our assumptions as of today.

Actual results may differ materially from those expressed in these forward looking statements and we make no.

To update our disclosures.

For more information about factors that may cause actual results to differ materially from these forward looking statements. Please refer to the press release, we issued today as well as the risks described in our most recent Form 10-Q, particularly in his section titled risk factors.

Today's call will include both GAAP and non-GAAP measures.

Reconciliations between the two can be found in today's press release.

Please note that when we discuss all of our expense figures they will exclude stock based compensation and related payroll taxes, as well as depreciation and amortization and nonrecurring charges.

Please refer to our filings with the SEC to understand how we calculate any of the metrics discussed on today's call.

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

Hi, everyone and thank you all for joining US we began the second quarter of 2023 with a strong focus on growing our community accelerating our revenue growth and leading an augmented reality our community grew to 397 million daily active users in Q2, and we are working to deepen engagement with our platform.

The number of content viewers and total time spent watching content increasing globally year over year, our focus on visual communication between friends and family as a strategic advantage that has enabled us to build engaging and retentive product and services across our platform.

To achieve a high rate of revenue growth, we are focused on three key priorities.

First investing in our products to sustain community growth and deepen engagement second investing heavily in our direct response business to deliver measurable return on spending for our advertising partners.

Third cultivating new sources of revenue to diversify our topline growth to build a more resilient business.

Generated revenue of $1 $68 million in Q2, a decrease of 4% year over year, and an increase of 8% quarter over quarter.

Q1 of this year, we made changes to our AD platform to unify that experienced across our service and retrained our models to drive more insertion click through conversions.

In Q2, we made progress toward improving results for advertisers through machine learning model updates and infrastructure improvements new ways of measuring and optimizing advertising spend.

And new leadership for our go to market efforts.

We are encouraged to see that this progress is beginning to translate into improved results with record active advertisers in Q2 up more than 20% year over year and through improved advertiser retention compared to the same period last year.

We made progress diversifying our revenues through snapshot plus our subscription service that offers exclusive experimental on prerelease features which now has more than 4 million subscribers. We are excited about the early progress we are making with our enterprise services, our first SaaS offering which helps retailers use our augmented reality platform to drive sales and reduce.

Returns on their own applications and websites.

We also rolled out my eye globally, and we recently began early testing of sponsored links and conversations with my AI.

Justifying our revenue growth is an important strategic initiative and we believe our leadership in messaging and AI technology provides a strong foundation to help connect businesses to our large and engaged community.

We are calibrating, our investment levels to build a path to free cash flow breakeven or better even with reduced rates of revenue growth. We will continue to invest with a long term perspective, especially in areas that are critical to realizing the long term opportunity of augmented reality, while our strategic investments in cloud based email infrastructure put downward pressure on margins in the <unk>.

Short term there are early signs, but the improvements to ranking and personalization of our content and AD platforms are leading to deeper engagement with content by our community and stronger returns on investment our advertising partners.

We have further scrutinize, our operating costs in order to invest incrementally only where it is necessary to achieve our strategic priorities and in particular to drive topline revenue acceleration.

Last year, we reorganized our team re prioritized our business initiatives and laid out our strategy to reaccelerate revenue growth by investing in community growth and engagement.

Proving our direct response advertising business and diversifying the sources of our revenue.

While we are still far from achieving the revenue growth to which we aspire. We believe that the momentum we have established and community growth in content engagement. The significant improvements we are seeing in return on investment for direct response advertisers and the early growth of SaaS plus more than 4 million subscribers demonstrate progress and further validate our strategic okay. Thank you.

We will begin our Q&A session.

Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two in the interest of time, we have.

That you please limit yourself to one question. After your initial question is asked your line will be muted at this time, we will pause momentarily to assemble our roster.

Our first question comes from the line of Mark Shmulik with Bernstein you May proceed.

Lead.

Yes, thanks for taking my questions Derek on the guide. This is the first time, you've guided in a while but I guess I imagine investors were hoping for a bit more sequential improvement.

These are just what's giving you the confidence to guide more formally now and just how to think about some of the puts and takes that get into that guide and then I guess as a follow up a bit more longer term focus for Gerry.

In the Investor letter you talked a lot about adding a lot of AD impression active advertisers up a lot still rebuilding the AD server launching new ad products.

Like many of your historic major AD buyers are still not back to kind of where they were.

It's a way to think about getting double digit growth. If you were to stack rank as it isn't getting these new AD buyers to increase share of wallet or really focusing on your kind of major accounts will get into the back okay.

Hey, it's Derek speaking thanks for the question and Youre right I would note that we've not provided formal guidance since the very beginning of 2022. So it is a big shift for us to begin providing formal guidance again.

I think that does reflect an increased confidence in the trajectory of our business. We have historically I think when we've approached.

Thinking about guidance one of the things that we've tried to do is make sure that we're reasonably including at the top end the attainable upside that we see in the business and then.

On the downside, making sure that we're including.

The reasonably visible and quantifiable downside on that side. So like as we enter Q3. The business is in a period of rapid transition as we invest to drive improved performance on our AD platform. You'll note that we've ramped investment in infrastructure really rapidly.

Important monetization as well as the depth of content engagement and my AI each of which is there will be a key input to monetization over time.

Given the progress we're seeing there we're pretty excited and encouraged.

We've seen active advertisers up 20% year over year higher actor advertiser retention year over year, and importantly, 30% lift in purchase related conversions. So we are increasingly confident that these investments are a key input to sustained revenue growth over time.

That said, how the continued ramp in these investments will impact the AD platform performance.

Advertisers demand and top line growth in the immediate weeks and months ahead is more difficult to predict with precision. In addition forward visibility of advertising demand remains somewhat limited we've seen continued strength with verticals, such as CPG and restaurants and travel while we've got some other sectors that continue to face challenges that are unique to <unk>.

Sector of the macro environment, and therefore make forward visibility on advertising demand, a little bit more difficult or challenging to calibrate, especially in a quarter that is typically somewhat backend weighted so.

For Q3, the guidance range calls for a range of between negative five and flat on a year over year growth basis, and we think this reasonably.

In fluids, the attainable upside in all of these risks that we see that could possibly drive us towards the low end. So I hope that is a good set of context for how we think about guidance generally given we haven't done it for a while and how we arrived at it specifically for this quarter. Thanks for the question and I'll turn it over for the other one.

Hey, Mark this is Jerry thanks for the question.

Let me just kind of give you a little bit of history, and what's going on here that we had a small number of customers who were adversely impacted by the changes that we made they were mostly concentrated North America and Thats why youll see the disruptive impact of those changes are most pronounced in North America.

But one of the thing to note is that of the type of advertisers who are impacted over half of them have recovered their spend to prior levels.

In previous years, and so we've made a lot of progress with that we're learning about what it takes to make these advertisers successful and we're working with those remaining advertisers to get them back to that level as well.

Do you feel pretty confident or comfortable about the direction. We're taking is that Derek mentioned, we are seeing more active advertisers into diverse set of advertisers. The number back to the active advertisers was up 20% year over year and we are.

Most importantly, I think we're seeing more spending year over year and advertiser spending on lower funnel optimization, which is where we've been spending a lot of our time.

Let me also just kind of give you a sense about what we're doing to increase share of wallet and grow the space grow demand a year ago, when we restructured the team and re prioritize this business.

Very experienced leadership team to drive more operational focus and I'm pretty excited about the work that's happening here first leader that joins us running Harris and we're seeing some very good progress in EMEA.

Deep mine joined shortly after that and you'll see that we're seeing progress in APAC. We've got a couple of hires and Im pretty excited about who have started working in their spaces, Rob Wolf joined recently in the Americas and Patrick Harris over as ever senior Global partnership space and they are starting to take action and their teams.

So as we look into the second half.

The core focus is accelerating revenue and what we're starting to see let's see we've improved processes for bringing in new clients are prospecting processes.

And we know that our AD platform updates or giving major new opportunities for these new clients. In addition to these are our top clients of old.

We launched several go to market process improvements, which are showing positive results. Both an increased share of wallet with existing customers and growth relative to market verticals that we're operating in.

One day in a couple of other things we're doing we're systematically improving the implementation of our AD products that means a systematic and scaled program for understanding advertiser objectives, ensuring that they've got the right implementation on the signals we need for their campaigns, making sure. Their campaigns are set up successfully and then just working with them iterating with them, which is again, where we've seen success with existing <unk>.

Customers that are back to previous spend we're also working on automating the steps that we can make sure. These are easier for advertisers going forward.

So this is just a few of the things that we're doing to improve efficiency and effectiveness. In this go to market space that I think is going to bring more customers in more demand to this space.

Thanks for that question.

Thank you. Our next question is from Rich Greenfield with <unk> partners you May proceed.

Yes.

Hi, Thanks for taking the question I guess Evan.

I guess the thing that everyone is thinking about is like there's it feels like there is this disconnect between the.

The overall headcount of the company because I think in the release you sort of talk about re prioritizing where the employee base is and I think the question is how many of the employees are sort of near term or even medium term revenue focused versus longer term projects, we've seen and not that we always love them, but you're seeing people.

Like Elon and even Bob Iger make some very hard decisions on re prioritizing initiatives, making big head count cuts.

Still have like 5300 employees working.

Are there still a lot of employees that are working on like.

Five plus year projects that are not generating revenue like I think is there some way you could frame how many people today working.

Versus spectacles versus advertising, we just mentioned some important recent hires versus the content side of it which you know what I think of like spotlight and how much spotlight and offer you in terms of growth.

How have you changed the balance of what does that look like today are you done optimizing and like do you have to still make hard decisions on head count going forward, because 5300 people with revenues declining still seems problematic for a lot of investors given how your stock's reacting after hours.

Hey, rich. Thanks, so much for the question, we've always been clear that we're building for the long term and that means that we really have to strike the right balance between growing and optimizing the business. We have today and also planting seeds for future growth and that's really core to how we've evolved from being a simple messenger to our diversified platform.

With engagement across our map augmented reality and of course content and stories and spotlight.

Engagement is a fundamental inputs of monetization on Snapchat, which is why we're focused on innovation. It's really the only way you have been able to compete with companies that are far bigger than we are and the way we've been able to grow to more than 750 million people using our service around the world and sometimes these new products or monetize we'll immediately but oftentimes as we grow engagement they become monetize the ball in the future.

And this was definitely the case for our content business and of course for our platform.

As well so when we confronted the rapidly changing economic environment, a year ago, we made the difficult decision to sunset of some products that haven't yet reached scale and we reduced the size of our team by approximately 20% as I mentioned, we support a community of more than 750 million people as well as our advertising partners and content partners and we do that with a team of about.

5000 people so on a revenue per head count basis, I think you could make the case that we should actually invest more especially given the size of our long term opportunity, but we wanted to really thoughtfully manage our cash flow and dilution because financing costs have increased in our share price has trended lower so things like spectacles. Our enterprise services for example, build on core investments that were made.

Today in our AR platform, that's driving revenue and engagement on Snapchat right now and that really represents a focused way to build on our core strengths by investing in longer term initiatives that are technically complex and more difficult to replicate so by building on those core strengths.

We're able to make long term focused investments more efficiently because these efforts represent an extension of our core platform rather than totally new.

So of course from a head count perspective, I wish we can invest more in some of our more long term initiatives I think we have the right balance for where were at today and we really need to accelerate near term revenue growth, while simultaneously setting up the business to sustain that revenue growth over the longer term. So Fortunately, we've got a balance sheet to navigate this challenging period. So we don't have to say goodbye to our.

Longer term opportunity as we tackle some of that shorter term headwinds.

Yeah.

Thank you.

Our next question is from Doug Anmuth with J P. Morgan you May proceed.

Hi, This is Katie on for Doug Thanks for taking my question.

First I just wanted to dive deeper into the infrastructure cost.

Stepping up again, you know materially get into the third quarter.

Just curious if you could walk us through again, what these are going towards and that feels like it's even higher now and how we're thinking about that in a couple of months ago.

And as Eric change there in terms of that level of investment.

How can we measure that these investments are paying off.

Yeah.

Hey, it's Derek speaking thanks for that question.

First noted.

The investments, we're making in the near term here and infrastructure are substantial.

We've been making investments into a number of areas.

Take that down for you a little bit.

First into our AD platform in order to make the advertising platform more performance.

And then second into driving ammo for content in order to drive deeper depth of engagement with our content platform and then.

A lesser portion of the investment into products like my AI, which are intended to support that product and other innovative products from our platform, but as I mentioned, a substantial portion of the investment going into things more directly related to our media monetization like the on platform and depth of content engagement.

I think importantly, as we as we made a very big ramp in the investment over the past quarter. We shared last quarter that we wanted to see results from that investment in order for us to sustain that forward and so I mentioned, a little bit of this earlier, but across each of those areas, where we're putting investment in we're really encouraged with the.

Early results, we're seeing from those investments.

That's the.

20% rise in active advertisers higher retention and importantly, the 30% increase in purchase related conversions that we saw in Q2. These are all really important signs that the investments that we're making into the DRM platform are beginning to pay off and makes us happy with the investment we've made there similarly on the content side and we started <unk>.

<unk> investments in the email to support depth of content engagement sooner and so that's been ramping over a longer period of time and you can see as a proof point. There for example, the time spent with spotlight more than tripled year over year in the most recent quarter. So again really pleased with the progress of the investments that we're putting in there it is.

Early for my AI.

And as I mentioned, it's a smaller portion of the investment, but we have shared some data points on our investor letter in recently.

We're seeing really high volumes of conversations with me my eye that provide clear intent signals about products and services that our community is interested in and of course that has obvious ramifications for our AD platform and monetization over time, so given the results we're seeing today, we do.

Expect to make a further step up in investment here in Q3 to accelerate the progress on what we're seeing here and in particular to accelerate the progress we're seeing on things related that are very directly related to monetization. So if you look at Q2 the step up in Q2 was about 11 to 70 on <unk>.

We've shared that our guide for Q3 is for a range of between 70 984. So at the midpoint of that range. It would be a similar step up in Q3 that we saw in Q2 as.

As we move forward, we're going to continue to calibrate these investments incredibly carefully to ensure that they are both productive and affordable over over a reasonable time horizon importantly, I wouldn't simply assume that the sequential increases in infrastructure per gaea, you that we've observed in Q2 and guided for Q3.

Will lead to similar increases in Q4 or future periods, we're going to measure the returns on these investments carefully and whether they are sustained forward at current levels shrink or grow from here will depend entirely on the results. We see from the spin and then particular the acceleration we experienced in our top line.

The last sort of note I'll make here is we remain committed to charting a course towards adjusted EBITDA profitability and positive free cash flow even at reduced growth rate then into the medium term and longer term margin targets that we shared at our Investor day today, I think we've been able to balance those investments carefully even through a period of incredible transition on our own.

Platform today.

Today, we've been able to deliver them that with free cash flow over the trailing 12 months had positive $81 million in.

Trailing 12 month operating cash flow at about $250 million. So we've been very careful to make that balance over a reasonable time horizon will continue to do that going forward.

Yeah.

Thank you.

Our next question is from Tom Champion with Piper Sandler You May proceed.

Hi, good afternoon.

Could you talk a little bit about the progress with Dr tools, where are you today relative to your plan and what you hope to implement and I'm wondering if you could just speak briefly on scan for dato adoption and whether that might be.

Can you recapture some lost cohorts over the last year, and I'm thinking of verticals like gaming or app download or app downloads.

Any comments there would be helpful. Thank you.

Hey, Tom Thanks, So much for the question, we're really excited about the progress we're making on our Dr. Tools, obviously over the last year a huge priority for US has been signal restoration, so creating solutions like conversions API that advertisers can integrate to pass back signals in a privacy safe way I'd say our focus right now is.

It's really more on the go to market side, because what we're finding is when advertisers have integrated our solutions and configure them correctly, they're really able to drive our strong results and this is especially the case with.

With E Commerce, and pixel purchase where we're seeing some strong momentum. So what we've been trying to do is scaled out with our go to market efforts. So for example.

We released a new dashboard for our team to be able to make sure that.

Advertisers are sharing signals correctly in a privacy safe way that is helping us find these configuration errors that if we can correct can lead to much stronger results for advertising.

Partners and we are definitely taking a more consultative approach with clients as well, so I think e-commerce advertisers.

And purchase related conversions were seeing a lot of progress there on the App side Theres still some work to do and that will be a big focus for us in the back half of the year scan will be a piece of that but there are tools like value optimization for example, where you.

Advertisers want to be able to optimize against users. They think will spend a lot of money in their app for example, and we don't offer that level of fine grain optimization today. So.

<unk> will be a priority for us, but I think the good news is we're seeing some real momentum on the e-commerce side and the work we've done to update our models and focus on click through conversions is really is delivering strong results for advertisers. So think of it as go to market is key for our E. Commerce focus advertisers and then on the App side there is a little.

More work to do but we've got a clear path to getting there by the end of the year.

Okay.

Thank you. Our next question is from Justin Post with Bank of America. You May proceed.

Great. Thank you and I apologize if these have already been asked a couple of questions first on the gross margin pressure is there a level of cost per user or a gross margin level, where you think that kind of level off.

How should we think about gross margins kind of a year or two years from now.

And then really interesting usage stats on spotlight I'm wondering if that is kind of more than offsetting the stories pressure at this point or if youre seeing overall trends flipping positive as far as usage per user related to spotlight how much of that moving the needle for the entire ecosystem. Thank you.

Okay.

Hey, there, it's Derek speaking I think on the gross margin pressure I would say on the medium and long term, we articulated what we expected margins to look like on the gross margin side at our recent Investor day, and while we've had a really substantial step up in infrastructure.

<unk> investment in.

In Q2, and we expect to make another substantial step up in infrastructure investment in Q3.

I don't view that as changing what we expect for medium and long term gross margins.

Importantly, the gross margin story for snap is going to be about reaccelerate. The top line growth and how our business scales in a growth scenario. What we're seeing right now is a significant opportunity and need to invest in infrastructure to support the performance of our direct response advertising business and it's.

Significant opportunity to invest in infrastructure to drive depth of engagement, which will contribute to our advertising opportunity over time as well as in other innovative products like my AI, where we see a direct input to understanding intent and interest which also contributes directly to the topline engagement. So what youre seeing here is a really significant.

<unk> step up in this immediate period of time in order to support the transition in our business and our top line in order to Reaccelerate.

Would those still expect that our business will show phenomenal unit economics, and as we're able to reaccelerate the top line and I wont reiterated here because I've already talked at length about the early progress we're seeing from those infrastructure investments, but we certainly I think the double down on the infrastructure investment in Q.

Three is the sign in addition to the metrics have already shared that we're incredibly confident about how those infrastructure investments are contributing to the reacceleration of top line and toward sustained longer term growth. So.

Anyway, hopefully that gives you a better understanding on on margins and I realize it's choppy in the very near term, but we think this is critical to reaccelerate the top line.

Ill turn it over to Evan to take the second question you had there on spotlight.

Hey, Thanks, so much for the question about spotlight in our content business, where we're really excited about the trends that we're seeing obviously globally content viewers and content time spend continue to grow.

Meaningfully and spotlight has been a big driver of that reaching four 1 million monthly active users in the quarter with time spent up.

Three <unk> year over year so.

We're definitely excited by that momentum in the U S. Specifically the trends we've seen.

Our essentially our friends' stories viewership.

Is trending better than we had forecast so the rates are.

Of which the front story's viewership decline is happening has slowed and at the same time, we're seeing some real momentum.

With spotlights, so I'm not sure in aggregate, if we flip positive yet I think we're getting closer which is really exciting and the trends are moving in the right direction. So globally a lot of momentum in content in the U S as well.

A combination of upfront stories.

Performing better than wed expected and then spotlight and creator stories.

Driving a lot of momentum for us.

Okay.

Thank you. Our next question is from Ross Sandler with Barclays. You May proceed.

Yeah.

Hey, guys.

Just had two questions. The first is a follow up on the.

The hot topic of infrastructure costs per user.

So theres a lot going on here with like the rebuilding of the AD model content ranking model some of the.

Generative AI products that you're building for lens creation et cetera.

And then there is my AI, which just took off like crazy for the last 10 weeks or so.

So.

Is the uptick based on the first bucket, which is all these kind of discrete projects that are going on.

The second bucket, meaning influence cost for my AI is going up and so that's just a reflection of our future usage.

And how do you expect those to be.

Buckets to play out.

As we think about that hosting costs.

Per user and then the second question is.

Those are three new regional.

Has the sales I think they've been in the seat for now.

Little over a quarter.

How do you feel about that team.

And.

The success in bringing back some of those large advertisers who have cut back.

A function of just.

Time and.

Getting more confidence around the attribution or do you expect these new sales organizations too.

Do you really start to move the needle.

On revenue any thoughts on that.

Hey, it's Derek speaking I'll take the first bit on infrastructure.

Speaking specifically about the drivers we've tried to speak to the sort of an order of magnitude.

Definitely the focus here is is in the in both Q2 and as we look forward to Q3 is in the incremental investments that we're making to drive the advertising platform, specifically and depth of content engagement.

Certainly there are other investments that we're making.

In infrastructure to drive other products and you mentioned <unk>, which is specifically one of them. The investment there is much smaller.

And then there's other investments we're making.

And things.

Like lenses and so on that you mentioned again.

The big focus here of the investment is on the investments necessary to drive the improvement in the <unk> platform as well as the investment opportunity to drive depth of engagement, which contributes directly to.

The ability to drive up inventory and grow revenue over the longer term.

In terms of how it scales over time I think.

It's been manageable so far as I mentioned in the smaller component of the overall ramp of the spend and we're continuing to watch it carefully but we've been pleased with the unit economics, so far in the relationship between.

How do we think that can contribute to intent and personalization and monetization relative to the unit costs. So we'll monitor that carefully over time, but so far we're comfortable with what we're seeing there and it's not the focus of the ramp that we're experiencing.

In general hopefully that context is helpful. There and understanding what's going on.

I will turn it over for the second part of the question.

Yes, I guess I can talk a little bit about our regional presidents, So Jerry doesn't have to pick a favorite.

Ron has been in the role of the longest started about nine months ago overseeing EMEA. He's made a lot of progress and really identified much better ways for us to go to market. There, we've been taking those learnings and applying them.

Around the World and is now leading our business in APAC. He's been here not quite as long as Ronan, but then here for a bit and and Rob just started in the Americas.

In Q2, so I think we've got a bit of work to do in the Americas, Rob has been making changes to his team quickly building out our vertical plans, so really understand where the opportunity is and of course spending time with a couple of the advertisers.

Who have not yet returned to prior levels of spend I think the reasons are pretty varied as we kind of dig into that bucket and in some cases, there are advertisers with competitors who have.

Who are actually ramping their spend considerably and seeing much better performance than they ever saw.

Before so we've really been trying to debug on a case by case basis and make sure advertisers have adopted our solutions correctly, but I think more importantly, as we look forward building a more diversified base of advertisers because we're focusing on these lower funnel goals is going to be really important for our business and I wouldn't I know Rob is thinking a lot.

How to build out the torso of our advertisers because we do we have seen a lot of success with this more focused strategy in the Americas, but it's clear we also need to diversify our advertiser base. So I know that'll be a real priority for the team, but I think just taking a step back it's been really exciting to get this regional focus on our business more broadly not just in terms of revenue but.

So in terms of user growth and partnership and of course everything we're doing.

On the content side, so seeing that focus translate into results has been really gratifying in EMEA and APAC.

We'll be excited to hopefully a return to growth.

In North America soon.

Yes.

Thank you.

Our last question is from Eric Sheridan with Goldman Sachs. You May proceed.

Thanks for taking the question I'll just squeeze one in a lot's already been asked but.

Just broadly your view of the competitive landscape for user growth engagement sort of rising utility in Europe vis vis other potential competitive companies. How are you thinking about the mixture of what you see as the competitive landscape, where youre streams fit today to invest behind and lean into and we've talked to.

A little bit about it on the call, but elements of continuing to capture rising utility on the consumer side that can produce sort of signal and measurement and advertising monetization opportunity as you look out over the medium to long term. Thanks, so much.

Thanks, So much for the question, we're really excited about this unique role we play in the market connecting friends and family with visual communication and we use our strength in that in that very frequent visual communication to build other businesses around it. So you can think about all of them.

Different platforms like our content platform or a platform as different ways to to of course increase engagement, but also monetize this core communications a use case that we provide and we actually think providing this this place for friends and family to communicate has only become more important as more and more platforms focus on public social.

Style features where people feel like they have to compete for popularity compete for likes and comments, it's never been more important to actually build deeper relationships with your friends and family and that's that's really the key utility.

Now Chad provide so anywhere that we can play to that strength.

Can really build momentum. So for example, with spotlight one of the ways, we've been able to drive more viewership and time spent is through enabling better sharing of content between friends people love to share videos with their friends and.

Laugh about them or share a video that makes them think of somebody that they care about and we've been able to use that to drive more spotlight engagement overtime I think similarly with <unk>, we saw real opportunity to play to our strength in communication to provide more utility with an AI chatbot, but also improved.

This performance by using those intense signals, which historically we'd have to infer we'd have to guess what people are interested in based on the content, they're watching our ads they are engaging with.

And with my AI, we can use very clear intent signal to better.

Rank and optimized content across our platform experiences and of course, the advertising as well. So I think we continue to occupy a really special place for supporting relationships between friends and family and we've really built our business around that over time.

Okay.

Thank you. This concludes our question and answer session as well as Snap Inc. Second quarter 2023 earnings Conference call. Thank you for attending today's session. You may now disconnect.

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