SNAP Earning Date, Transcript Summary & Report

User Milestone Achievement: Q1 marked an important milestone for Snap as we reached more than 900,000,000 monthly active users on the way to our goal of 1,000,000,000 monthly active users.

User Growth Milestone: In Q1, our community grew to 460 million daily active users, an increase of 38,000,000 year over year.

Q1 Revenue Increase: Q1 revenue increased 14% year over year to $1,360,000,000 driven by the progress we have made with our direct response advertising solutions.

Strong EBITDA and Cash Flow: In Q1, the combination of top line progress and expense discipline translated to $108,000,000 of adjusted EBITDA and $114,000,000 of free cash flow.

AR Platform Expansion: Since the launch of our fifth generation Spectacle Smart Glasses six months ago, we have expanded our AR platform with new features for developers and innovative Lens experiences.

User Growth in Conversational AI: The number of MyAI daily active users in the U.S. increased by more than 55% year over year, reflecting the community's adoption of conversational AI.

Content Consumption Growth: Global time spent watching content increased year over year in Q1, reflecting the continued investment in our AI and ML models for better content ranking and personalization.

Spotlight Post Engagement Growth: The number of views on Spotlight posts less than 24 hours old doubled year over year, contributing to a more engaging viewer experience.

Creator Onboarding Success: We onboarded thousands of creators to our Snapstar program, driving strong momentum with the number of spotlight posts by Snapstars growing more than 125% year over year in North America in Q1.

Revenue Increase Analysis: In Q1, total revenue was $1,363,000,000 up 14% year over year and up 15% year over year on a constant currency basis.

Snapchat Plus Revenue Surge: Other revenue, driven primarily by Snapchat Plus subscription revenue, increased 75% year over year to reach $152,000,000 in Q1, with Snapchat Plus subscribers reaching nearly 15,000,000, an increase of 59% year over year.

North America Revenue Acceleration: North America revenue growth accelerated to 12% year over year in Q1, up from 8% in the prior quarter, driven primarily by a higher rate of direct response advertising revenue growth.

Gross Margin Improvement: Adjusted gross margin was 53% in Q1, up from 52% in the prior year, reflecting improved profitability.

Positive Cash Flow Generation: Free cash flow was $114,000,000 in Q1, while operating cash flow was $152,000,000, demonstrating sustained positive cash flow generation.

Decline in Advertising Revenue: Brand-oriented advertising revenue decreased by 3% year over year, indicating a decline in upper funnel demand across all regions.

Direct Response Advertising Growth: Despite a 14% year-over-year increase in total revenue, the growth rate for direct response advertising was only 9%, suggesting potential challenges in scaling this segment further.

North America DAU Decline: DAU in North America decreased from 100 million in the prior quarter to 99 million, indicating a contraction in this key market.

Declining eCPMs Trend: Total eCPMs fell by approximately 7% year over year, suggesting that inventory growth is outpacing advertising demand growth.

Advertiser Spending Challenges: The company experienced headwinds to start the current quarter, with some advertisers reporting reduced spending due to changes in the de minimis exemption.

Sponsored Snaps Revenue Challenges: The limited testing of Sponsored Snaps as a biddable product resulted in less than $10 million in revenue in Q1, indicating challenges in scaling this new offering.

Cost Structure Guidance Update: The company has updated its full year cost structure guidance to reflect current investment plans, indicating a cautious approach amid macroeconomic uncertainty.