SNAP - NYSE

Good afternoon everyone and welcome to Snap Inc.'s Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. I would now like to turn the call over to David Ometer, Head of Investor Relations.

Thank you and good afternoon everyone. Welcome to Snap's 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 at investor.snap.com to find today's 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 obligation 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 risks described in our most recent Form 10-Q, particularly in the 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 non-recurring 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 in augmented reality. Our community grew to 397 million daily active users in Q2, and we are working to deepen engagement with our content platform, with 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 is a strategic advantage that has enabled us to build engaging and retentive products and services across our platform. To achieve a higher 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 spend for our advertising partners. Third, cultivating new sources of revenue to diversify our topline growth to build a more resilient business. We generated revenue of $1,068 million in Q2, a decrease of 4% year-over-year and an increase of 8% quarter-over-quarter. In Q1 of this year, we made changes to our ad platform to unify the ad experience across our service and retrained our models to drive more in-session 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 time period last year. We made progress diversifying our revenue through Snapchat+, our subscription service that offers exclusive, experimental, and pre-release features, which now has more than 4 million subscribers. We are excited about the early progress we are making with AR 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 AI globally, and we recently began early testing of sponsored links in conversations with My AI. Diversifying our revenue growth is an important strategic initiative and we believe our leadership in messaging and AR 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 break-even 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 ML infrastructure have put downward pressure on margins in the short-term, there are early signs that 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 for our advertising partners. We have further scrutinized our operating costs in order to invest incrementally only where it is necessary to achieve our strategic priorities and in particular to drive top line revenue acceleration. Last year we reorganized our team, reprioritized our business initiatives, and laid out our strategy to reaccelerate revenue growth by investing in community growth and engagement, improving 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 in community growth and content engagement, the significant improvements we are seeing in return on investment for direct response advertisers, and the early growth of Snapchat+ to more than 4 million subscribers, demonstrate progress and further validate our strategic focus. Thank you, and with that we will begin our Q&A session.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question is from the line of Mark Shmulik with Bernstein. You may proceed.

Yes, thanks for taking the questions. So 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. Can you share just what's giving you the confidence to guide more formally now? And just how to think about some of these puts and takes that get into that guide? And then I guess as a follow-up, a bit more longer-term focused for Jerry, in the investor letter, you talked a lot about adding a lot of ad impressions, active advertisers up a lot, still rebuilding the ad server, launching new ad products. It sounds like many of your historic major advisers are still not back to kind of where they were. What's the easiest way to think about getting back to double-digit growth, if you were to stack rank? Is it getting these new ad buyers to increase your wallet or really focusing on your kind of major accounts and getting the back? Thanks.

Hey, it's Derek speaking. Thanks for the question. And you're right. I'd 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. And I think that does reflect an increased confidence in the trajectory of our business. We've 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, 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 to support monetization as well as the depth of content engagement and my AI, each of which is or will be a key input to monetization over time. And given the progress we're seeing there, we're pretty excited and encouraged. We've seen active advertisers up 20% year-over-year, higher active advertiser retention year-over-year and a more than 30% lift in purchase-related conversions. So, we're increasingly confident that these investments are a key input to sustain revenue growth over time. That said, how the continued ramp in these investments will impact the ad platform performance, advertiser demand and topline 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. Well, we've got some other sectors that continue to face challenges that are unique to their sector or the macro environment and therefore, make forward visibility on advertising demand, a little bit more difficult or challenging to calibrate, especially in a quarter is typically somewhat back-end weighted. So, for Q3, the guidance range calls for a range of between negative 5% and flat on a year-over-year growth basis. And we think this reasonably includes the attainable upside and all of these risk 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. 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 on what's going on here. We had a small number of customers who were adversely impacted by those changes that we made. They were mostly concentrated in North America, and that's why you'll see the disruptive impact of those changes are most pronounced in North America. But one of the things to note is that the advertisers who were 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. I do feel pretty confident or comfortable about the direction we're taking. As Derek mentioned, we are seeing more active advertisers and it's a diverse set of advertisers, the number of active advertisers is up 20% year-over-year. And we are -- most importantly, I think we're seeing more spending year-over-year in 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 reprioritized this business, we've got in this very experienced leadership team to drive more operational focus, and I'm pretty excited about the work that's happening here. First leader that joined was Ronan Harris, and we're seeing some very good progress in EMEA. Ajit Mohan joined shortly after that, and you'll see that we're seeing progress in APAC. We've got a couple of hires that I'm pretty excited about. We've started working in their space as Rob Wilk joined recently in the Americas and Patrick Harris is overseeing our global partnership space, and they're starting to take action in 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 or prospecting processes, and we know that our ad platform updates are giving major new opportunities for these new clients in addition to these -- our top clients of old. We launched several go-to-market process improvements, which are showing positive results, both in increased share of wallet with existing customers and growth relative to market verticals that we're operating in. A couple of other things we're doing. We're systematically improving the implementation of our ad products. That means a systematic and scale program for understanding advertiser objectives, ensuring that they've got the right implementation on the signals we need for their campaigns, making sure that their campaigns are set up successfully and then just working with them, iterating with them, which is, again, where we've seen success with the existing customers that are back to previous spend. We're also working on automating those steps so 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 the go-to-market space that I think is going to bring more customers and more demand to the space. Thanks for that question.

Thank you. Our next question is from Rich Greenfield with Lightshed Partners. You may proceed.

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's this disconnect between the overall headcount of the company because I think in the release, you sort of talked about reprioritizing where the employee base is. And I think the question is, how many of the employees are near-term or even medium-term revenue focused versus longer term projects. We've seen and not that we always love them, but you've seen people like Elon and even Bob Iger made some very hard decisions on reprioritizing initiatives, making big headcount cuts, you still have like 5,300 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 work in AR versus spectacles versus advertising? You just mentioned some important recent hires versus the content side of it, which is what I think are like spotlight and how much spotlight can offer you in terms of growth? Like how have you changed the balance? What does that look like today? Are you done optimizing? And like do you have to still make hard decisions on headcount going forward? Because 5,300 people with revenues declining still seems problematic for a lot of investors given how your stocks reacting after ours?

Hey Rich, thanks so much for the question. We've always been clear that we're building Snap 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 a diversified platform with engagement across our map, augmented reality and, of course, content and stories and spotlight. As you know, engagement is a fundamental input to monetization on Snapchat, which is why we're focused on innovation. It's really the only way we've been able to compete with companies that are far bigger than we are, 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 are monetizable immediately, but oftentimes, as we grow engagement, they become monetizable in the future. And this was definitely the case for our content business and, of course, for our AR platform as well. So when we confronted the rapidly changing economic environment a year ago, we made the difficult decision to sunset up some products that hadn't yet reached scale and we reduced the size of our team by approximately at 20%. And as I mentioned, we support a community of more than 75 0 million people as well as our advertising partners and content partners, and we do that with a team of about 5,000 people. So on a revenue per headcount 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 and our share price has trended lower. So things like spectacles or AR enterprise services, for example, build on core investments that we're making 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 in AR, 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 bets. So of course, from a headcount perspective, while I wish we could invest more in some of our more long-term initiatives. I think we have the right balance for where we're at today. And we really need to accelerate near-term revenue growth will 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 sigabite our longer-term opportunity as we tackle some of the shorter-term headwinds.

Thank you. Our next question is from Doug Anmuth with JPMorgan. You may proceed.

Hi. This is Katie [ph] on for Doug. Thanks for taking the question. First, I just wanted to dive deeper into the infrastructure cost. It feels like you're stepping up again materially get into the third quarter. So just curious if you could walk us through again what these are calling towards. I mean it feels like it's even higher now than how you were thinking about things a couple of months ago? So is there a change there in terms of that level of investments? And how can we measure that these investments are paying off? Thanks.

Hi, it's Derek. Thanks for that question. So first noted, the investments we're making in the near-term here in infrastructure are substantial. We've been making investments into a number of areas. And so I'll break 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 ML 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 on the platform. But as I mentioned, a substantial portion of the investment going into things more directly related to a media monetization like the ad platform and depth of content engagement. I think importantly, 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. So whether 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 of the investments that we're making into the DR ad 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 ramping investments in ML 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, that timespan was 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's early for My AI, and as I mentioned, it's a smaller portion of the investment. But I -- we have shared some data points in our investor letter and recently that we are seeing really high volumes of conversations with My AI to 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 $0.11 to $0.70 on per DAU we've shared that our guide for Q3 is for a range of between $0.79 and $0.84. So, at the midpoint of that range, it would be a similar step-up in Q3 that we saw in Q2. As we move forward, we're going to continue to calibrate these investments incredibly carefully to ensure that they're both productive and affordable over a reasonable time horizon. Importantly, I wouldn't simply assume that the sequential increases in infrastructure per DAU 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 spend and then in particular, the acceleration we experienced in our topline. The last sort of note I'll make here is we remain committed to charting accords towards adjusted EBITDA profitability and positive free cash flow even at reduced growth rates and 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 ad platform. Today, we've been able to deliver on that with free cash flow over the trailing 12 months at positive $81 million and 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, and we'll continue to do that going forward.

Thank you. Our next question is from Tom Champion with Piper Sandler. You may proceed.

Hi, good afternoon. Can 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 4.0 adoption and whether that might be helping you recapture some lost cohorts over the last year, I'm thinking of verticals like gaming 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 tell you, our focus right now is 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 strong results. And this is especially the case 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's helping us find these configuration errors that if we can correct can lead to much stronger results for advertising partners, and we're definitely taking a more consultative approach with clients as well. So, I think for e-commerce advertisers and purchase-related conversions, we're seeing a lot of progress there. On the app side, there's 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 app advertisers want to be able to optimize against users, they think we'll spend a lot of money in their app, for example. And we don't offer that level of fine grain optimization today. So app 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 focused advertisers. And then on the app side, there's a little more work to do, but we've got a clear path to getting there by the end of the year.

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 can 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 more than offsetting the stories pressure at this point, or if you're 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.

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 investment 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 reaccelerating 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 a 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 top line engagement. So what you're seeing here is a really significant 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. I would though still expect that our business will show phenomenal unit economics as we're able to reaccelerate the top line. And I won't reiterate it 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 Q3 is a sign in addition to the metrics I've already shared that we're incredibly confident about how those infrastructure investments are contributing to the reacceleration of the top line and towards sustained longer-term growth. So anyway, hopefully, that gives you a better understanding on margins. I realize it's choppy in the very near-term, but we think this is critical to reaccelerating the top line. And I'll turn it over to Evan to take the second question you had there on Spotlight.

Thanks so much for the question about Spotlight and our content business. 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 400 million monthly active users in the quarter with time spent up 3x year-over-year. So we're definitely excited by that momentum. In the US specifically, the trends we've seen are essentially friend stories, viewership is trending better than we had forecast. So the rate at which the viewership decline is happening has slowed. And at the same time, we're seeing some real momentum with Spotlight. 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 US as well, a combination of friend stories performing better than we had expected and then Spotlight and crater stories driving a lot of momentum for us.

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

Hey, guys. I just had two questions. The first is a follow-up on the hot topic of infrastructure cost per user. So there's a lot going on here with like the rebuilding of the ad model, the content ranking model, some of the generative AI products that you're building for lens creation, et cetera. And then there's 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 or the second bucket, meaning inference costs for my AI is going up, and so that's just a reflection of like future usage? And then how do you expect those two buckets to play out as we think about that hosting cost per user. And then the second question is you guys have three new regional heads of sales, I think they've been to see for now a little over a quarter. Just how do you feel about that team? And is 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 to 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. And speaking specifically about the drivers we've tried to speak to the sort of an order of magnitude. But definitely, the focus here is in both Q2 and as we look forward to Q3 in the incremental investments that we're making to drive the advertising platform, specifically in depth of content engagement. Certainly, there are other investments that we're making in infrastructure to drive other products. And you mentioned my AI, which is specifically one of them. The investment there is much smaller. And then there's other investments we're making in 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 ad 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 my AI scales over time, I think it's been manageable so far, as I mentioned, a smaller component of the overall ramp in the spend. And we're continuing to watch it carefully, but we've been pleased with unit economics so far and the relationship between how we think that can contribute to intent and personalization and monetization relative to the unit cost. 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'll turn it over for the second part of the question.

Yes. I guess, I can chat a little bit about our regional presidents. So Jerry doesn't have to pick a favorite. Ronan 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, actually and applying them around the world. Jeet is now leading our business in APAC. He's been here not quite as long as Ronan but been here for a bit. 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 quickly building out vertical plans to really understand where the opportunity is. And of course, spending time with a couple of the advertisers who've 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 know Rob is thinking a lot about 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 will 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 also in terms of user growth and partnership and of course, everything we're doing on the content side. So seeing that focus translated into results has been really gratifying in EMEA and APAC, and we'll be excited to hopefully return to growth in North America soon.

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 maybe just broadly, your view of the competitive landscape for user growth, engagement, sort of rising utility in your app vis-à-vis other potential competitive companies. How are you thinking about the mixture of what you see as the competitive landscape, where do your strengths fit today to invest behind and lean into? And we've talked 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 or monetization opportunities as you look out over the medium to long term? Thanks so much.

Yes. 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 very frequent visual communication to build other businesses around it. So you can think about all of our different platforms like our content platform or AR platform, has different ways to, of course, increase engagement, but also monetize this core communications use case that we provide. And we actually think providing this place for friends and family to communicate, it's only become more important as more and more platforms focus on public social media 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 really the key utility that Snapchat provides. So anywhere that we can play to that strength, we can really build momentum. So, for example, with Spotlight, one of the ways we've been able to drive more viewership and time spend 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 over time. I think similarly with MyAI, we saw a real opportunity to play to our strength in communication to provide more utility with an AI chatbot, but also improve business performance by using those intent signals, which historically we'd have to infer, we'd have to guess what people were interested in based on the content they are watching or ads they were engaging with. And with MyAI we can use very clear intent signal to better rank and optimize content across our platform, AR experiences and, of course, 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.