Snap Inc Q1 FY2025 earnings call

• Community growth: Reached 900 million MAUs, 460 million DAUs in Q1, with content viewers and time spent watching content growing YOY. • Revenue drivers: 14% YOY revenue growth driven by direct response advertising, SMB performance, and Snapchat+ subscription. • AR initiatives: Fifth generation spectacles launched, AR platform expanded with new features for developers. • Advertising platform: Advanced ML capabilities, enhanced privacy-safe signals, optimized ad formats; DR advertising revenue up 14% YOY, active advertisers grew 60% YOY. • AI and ML: Improved My AI responsiveness, fresher ML models for content engagement, spotlight posts less than 24 hours old doubled YOY. • Product testing: Simplified Snapchat design tested, insights used to refine interface; sponsored snaps testing in progress. • Creator ecosystem: Over 400,000 AR creators, thousands of creators onboarded to Snap Star program with spotlight posts growing >125% YOY in NA Q1.

In Q1, total revenue was $1.363 billion, up 14% YOY. Advertising revenue was $1.211 billion, up 9% YOY, with direct response advertising contributing 75% of total advertising revenue. Other revenue, primarily from Snapchat+ subscription, was $152 million, up 75% YOY, with nearly 15 million Snapchat+ subscribers in Q1. North America revenue grew 12% YOY, Europe 14% YOY, and Rest of World 20% YOY.

• No formal Q2 financial guidance due to macroeconomic uncertainty. • Updated full-year cost structure guidance: Lowered adjusted operating expenses by ~$50 million at midpoint, stock-based compensation by ~$30 million at midpoint. • Maintained infrastructure costs per DAU guidance range of $0.82 to $0.87, and other costs of revenue guidance at 19%-20% of revenue.

• Macroeconomic conditions may impact advertising demand broadly. • Uncertainty in parsing specific drivers of growth, such as the impact of changes to de minimis exemption on advertiser spending.

Q: Can you elaborate on the improvement in North American revenue growth and the Simple Snap test?

A: Evan Spiegel noted strong growth in small and medium customer segment and North America revenue, with Snapchat+ contributing. On Simple Snap, learned from testing and evolved the interface with learnings, seeing broader gains and easier monetization transition.

Q: What's the color on My AI growth and spotlight engagement?

A: Evan Spiegel mentioned My AI daily active users in U.S. increased >55% YOY. Spotlight posts less than 24 hours old doubled YOY, with view time growing ~25% YOY in Q1, driven by timely and fresh content.

Q: How is the ad business performing early in Q2 and what about China-based advertisers?

A: Derek Andersen said business is growing but saw headwinds early in Q2, with some advertisers impacted by de minimis exemption changes. China-based advertisers not broken down in detail, and business is early in Q2 with macro uncertainty.

Q: What's the outlook for North America DAUs and what's not working?

A: Evan Spiegel noted North America DAUs trended around 99 million, not expecting further declines in Q2. Confidence comes from core snapping engagement and investments in content freshness and homegrown creators.

Q: How is the balance between supply and demand and keys to unlocking demand?

A: Evan Spiegel mentioned opportunities to grow demand, with sponsored snaps providing incremental inventory. Key is bringing more goal-based bidding objectives to sponsored snaps in coming months.