Snap Inc. Q2 FY2025 earnings call

Community Growth

• Reached 932 million MAU in Q2, up 7% year-over-year, moving closer to 1 billion goal.
• DAU at $469 million, up 9% year-over-year, with North America DAU at $98 million, Europe at $100 million, and Rest of World at $271 million.

AR Investments

• Committed over $3 billion in the past 11 years to AR, aiming to launch Specs AR glasses in 2026. Lens+ introduced as a new Snapchat+ tier with exclusive AI video lenses, emoji game lenses, and early access to new features.

Advertising Platform

• Enhanced AI and ML capabilities, driving improvements in conversion attribution and personalization. Sponsored Snaps rolled out, contributing to impression growth. SMBs were a key driver of ad revenue growth.

Product Features

• Launched Snapchat on Apple Watch, enhanced group suggestions, video chat time up 30% year-over-year. Spotlight time spent grew 23% year-over-year, with over 550 million monthly active users. Acquired Saturn, a social calendar app.

Creators

• Introduced tools for Snap Stars to create content, with Spotlight posts by Snap Stars growing over 145% year-over-year in North America.

In Q2, Snap Inc. reported revenue of $1.34 billion, with advertising revenue at $1.174 billion (up 4% year-over-year) and other revenue at $171 million (up 64% year-over-year). Monthly Active Users (MAU) reached 932 million, a 7% year-over-year increase. Daily Active Users (DAU) were $469 million, up 9% year-over-year, including $98 million DAU in North America, $100 million in Europe, and $271 million in Rest of World. Snapchat+ approached 16 million subscribers, driving other revenue growth to an annualized run rate of nearly $700 million.

Q3 Guidance

• Anticipates DAU of approximately $476 million in Q3.
• Revenue guidance range: $1.475 billion to $1.505 billion.
• Infrastructure cost per DAU expected to be in the top half of $0.82 to $0.87 range in Q3. Stock-based compensation guidance lowered to $1.1 billion to $1.13 billion. Adjusted EBITDA expected to be between $110 million and $135 million in Q3.

Risks

• Ad platform issue in Q2 caused some campaigns to clear at reduced prices, though reverted. Impacted ad revenue growth. Timing of Ramadan and de minimis changes also affected revenue.

Q: Ross Sandler asked about Sponsored Snaps' early performance and auction pricing issue.

A: Evan Spiegel noted Sponsored Snaps drive incremental reach and conversion, with positive early signs. Derek Andersen explained ad platform change impact and revenue pacing.

Q: Rich Greenfield asked about brand advertising and AR approach.

A: Derek Andersen said brand advertising was flat in Q2. Evan Spiegel discussed AR commitment and vertical integration advantage.

Q: Mark Shmulik asked about U.S. MAU and Snapchat+ growth.

A: Evan Spiegel talked about calling growth and Snapchat+ reaching $700 million annual run rate.

Q: Mark Mahaney asked about SBC and Spotlight monetization.

A: Derek Andersen discussed SBC guidance adjustment. Evan Spiegel talked about Spotlight monetization progress.

Q: Justin Post asked about U.S. DAU reacceleration and ad revenue.

A: Evan Spiegel mentioned content sharing as a conversation starter. Derek Andersen discussed Q3 revenue guidance and Sponsored Snaps growth.

Q: Eric Sheridan asked about AR ecosystem and AI.

A: Evan Spiegel talked about AI investments and developer tools for AR.

Q: Dan Salmon asked about small and medium customers.

A: Evan Spiegel discussed automation benefits for SMCs.

Q: Benjamin Black asked about Lens+ reception.

A: Evan Spiegel talked about early positive signs for Lens+ and subscription growth strategy.