Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Snap Inc (SNAP, Financial) reported a 15% year-over-year increase in total revenue, reaching $1.37 billion in Q3 2024.
- Daily active users grew by 37 million year-over-year, reaching 443 million in Q3 2024.
- The company saw significant growth in its direct response advertising business, with total active advertisers more than doubling year-over-year.
- Snapchat+ subscription revenue more than doubled year-over-year, contributing to the diversification of Snap Inc (SNAP)'s revenue sources.
- Snap Inc (SNAP) achieved $132 million in adjusted EBITDA and $72 million in free cash flow, indicating improved financial performance and operational efficiency.
Negative Points
- Brand-oriented advertising revenue declined by 1% year-over-year, reflecting weak demand from certain consumer discretionary verticals.
- The rollout of Simple Snapchat poses potential risks of disruption to user engagement and monetization, requiring careful testing and iteration.
- Infrastructure costs increased due to investments in machine learning and AI, impacting overall cost structure.
- Total eCPMs decreased by approximately 7% year-over-year as inventory growth outpaced advertising demand.
- The company faces challenges in reaccelerating upper funnel brand revenue growth, with no significant recovery expected in the near term.
Q & A Highlights
Q: How is Snap managing the risk associated with the transition to Simple Snapchat, and what measures are in place to prevent monetization headwinds?
A: Evan Spiegel, CEO, explained that Snap is excited about the long-term potential of Simple Snapchat, particularly for new and less engaged users. However, they are taking a cautious approach by iterating and testing before a broader rollout. This includes understanding inventory shifts and potential monetization impacts, such as moving story ad delivery to interstitial placements. The goal is to ensure both the community and partners benefit from these changes.
Q: Has Simple Snapchat been rolled out in major markets like the U.S., U.K., France, and Germany, and is Snap willing to accept near-term revenue disruption for a superior product?
A: Evan Spiegel stated that Snap is still early in understanding the monetization dynamics and inventory shifts. While they are excited about engagement improvements, they are taking time to understand these dynamics and ensure partners are prepared. Snap is considering a phased rollout to manage the transition effectively.
Q: Can you elaborate on the potential of Sponsored Snaps and Promoted Places and their long-term impact?
A: Evan Spiegel highlighted that these new ad placements leverage Snap's performance advertising foundation. Promoted Places has received positive feedback, focusing on driving in-store traffic and strengthening customer relationships. Sponsored Snaps are set for testing, and Snap is eager to share data once available.
Q: What are the key objectives for the simplified app launch, and how does Snap plan to increase advertiser spending across its products?
A: Evan Spiegel emphasized that the North Star for Simple Snapchat is creating a product experience that users love. Simplifying the app and unifying content experiences are crucial steps. For advertisers, Snap aims to manage the transition to benefit both community engagement and advertising partners, similar to successful strategies at Google and Meta.
Q: How is Snap progressing with Spectacles, and how does it compare to Meta's Orion?
A: Evan Spiegel expressed excitement about the fifth generation of Spectacles, focusing on building a developer ecosystem to create compelling lenses. The goal is to solve the "chicken and egg" problem of needing engaging lens experiences for consumer adoption. Snap is leveraging its unique assets like Lens Studio and hardware investments to advance this vision.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
