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spk12: Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the Roblox second quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again press the star one. Thank you. Stephanie and Natalia, you may begin your conference.
spk01: Good morning, everyone, and thank you for joining our Q&A session to discuss Roblox's Q2 2023 results. With me today is Roblox co-founder and CEO David Buzuki and CFO Mike Guthrie. As a reminder, our shareholder letter press release SEC filings, supplemental slides, and a replay of today's call can be found on our investor relations website at ir.roblox.com. On this call, we will make some brief opening remarks and reserve the rest of the time for your questions. Our commentary today may include forward-looking statements. including but not limited to our expectations of business, future financial results, and business and financial strategy. Forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those described in our forward-looking statements. And such risks are described in our Excuse me, everyone. Risks are described in our risk factors, including in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q. You should not rely on our forward-looking statements as predictions of future events. We disclaim any obligation to update any forward-looking statements except as required by law. During this call, we will also discuss certain non-GAAP financial measures, reconciliations between GAAP and non-GAAP metrics, for our reported results can be found in our press release as well as our supplemental slides. For our webcast participants, please note the question icon at the bottom right of your screen where you can submit your questions. With that, I'll turn it over to Dave.
spk02: Thank you, and good morning, everyone. Q2 was another quarter of strong growth across all our key metrics, and we welcome you today. Bookings were 780 million, up 22% year on year. Our DAUs were 65.5 million, up 25% year over year. And our hours engaged in Q2 were 14 billion, up 24% year over year. We generated $28 million of operating cash. Our cash is now north of $3 billion at $3.25 billion. We showed a gap loss of $283 million and covenant-adjusted EBITDA at $37.9 million. These results powered by all of our investments in innovation and as we discussed last quarter, we continue to be on track with our bookings growth and our expense control to generate positive operating leverage. We highlighted in the first half of this year that our bookings are growing faster year on year than our cost of goods sold. We continue to expect in Q3 of this year that our bookings growth year on year will be faster than our infrastructure growth year on year. And we continue to expect in Q1 of 2024 that our bookings growth will be faster than our headcount expense. We expect to return to double digit covenant adjusted EBITDA margins in Q4 and 2024 as a whole. Let's dive into the business. We're driving continuously to our vision and mission of a billion daily active users. And it's part of our four-part growth strategy. I want to highlight some results in all areas, including international, all ages, really the utility of Roblox and driving towards a daily product for everyone and our economy and ecosystem. Let's start with international and I want to highlight that many of our huge international cohorts are really big and growing faster than our overall bookings and DAU rate. Let's start with some key geographies. Germany DAUs 25% year-on-year growth, Korea 34% year-on-year growth, Brazil 38% year-on-year growth, India DAUs 40% DAU growth year on year. And Japan, one of the largest consumer gaming market spaces, DAU growth of 107% year on year. A product highlight supporting this, we mentioned Semantic Search last quarter for Japan. We turned this on everywhere in Q2. This improves search for out of catalog searches and pop culture terms. And we've seen a significant increase in global click-through rate because of this north of 3%. We're no longer talking about aging up. We are a platform for all ages. Our 13 and over cohort is five times larger than our under 13 cohort. And our 13 and over cohort is growing at 33% year on year for DAUs. Our 17 through 24 cohort is growing at 36% year-on-year for both DAUs and ours. And I do want to highlight that we introduced experience guidelines this quarter. You can read about it in our blog. Around the world, 17 through 24 and our 25 and up cohorts consistently show higher bookings per hour than other age cohorts. Let's take a look at our dev ecosystem. We are on track for our developers to earn $800 million in 2023. Our DevEx payouts in Q2 were $165 million, up 16% year-on-year. And I want to highlight the growing variety of content on our platform. In the last 12 months trailing, the 10 highest earning creators earned an average of $27 million each. These are growing and larger significant businesses. But at the longer tail, developer number 1,000 is now growing two times faster over the last three years and is making $64,000 a year. That's thousands and thousands of people making a living on Roblox. And as far as content variety, versus a year ago, within the top 150 experiences, we're seeing 9% more variety of new experiences created in the last 90 days this year. A cool feature that we introduced for all devs is product analytics. It's ways for developers to monitor user acquisition, performance, benchmarks. And I want to highlight in the last six months, use of analytics by the top 10K devs has gone from 22% to 40%. We think this is a good signal. This is 10,000 developers with 40% of them paying deep attention to analytics to help, we believe, improve the quality of their experiences. For those that are deep into our ecosystem, want to highlight that the anti-cheat technology we acquired from Bifron is live now. It's made a significant impact in the quality of experiences on our Windows platform. where a lot of our more serious gamers are playing and really significantly reduced exploits and bot activity. As we're moving towards our vision and mission of connecting a billion people daily, We're making significant advancements in our product to make Roblox a daily utility. And I want to highlight we believe we have significant headroom even in our core market where we got our start, which is USA 9 through 12. A highlight, we introduced MetaQuest on beta. We saw a million downloads in the first five days on that platform. And it highlights our vision of Roblox being available everywhere. And it highlights the vision that when a creator makes an experience on Roblox, It immediately runs on all platforms and is immediately dynamically translated into all languages. We believe that's part of the DAU growth we've seen around the world. Getting into utility high-frequency communication on our platform, in the USA, we now have 12% of our 13 and up daily actives using voice. And 2 million voice DAUs worldwide as of the end of Q2. This is a 30% growth over the last six months. And we have strong evidence that as people become more immersed with voice, it has uplift in key metrics, both on hours spent and on Robux. Facial animation we just turned on for 100% of voice users. I want to highlight this coupled with voice we believe makes Roblox communication much more connected and realistic. And we also turned on animated heads for everyone using voice. We have some great stuff coming on animation as well. On the social side, I want to highlight we've been hard at work improving the way people connect and the way real-life friends connect. And we've seen a 9% year-on-year growth in real-life friending in the first week, which we feel is significant. And once again, strong directional evidence that this benefits retention.
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spk02: On our economy, we're creating products and systems to build a vibrant economy and empower our creator community to offer them more ways to earn and be discovered. advertising is now live in its early form. I want to highlight some key things there. We have promoted Christina Wooten to Chief Partnership Officer to help drive our connection with brands. We've now done over 200 brand activations on the platform. And we'll make revenue this year in advertising. We're going to share at Investor Day in November our expectations for this for 2024. But I do want to highlight that on the supply side now, 19% of the top 100 experiences on our platform have ad units. And this has been added organically by the creator community. And I also want to highlight that there are areas already where we see strong demand and more demand than supply for advertising on the platform. I want to welcome some of our advertisers that are live, including NARS Cosmetics, H&M, Spotify, NASCAR, and iHeartRadio. I'm really excited about really the vision that we've been talking here, that this is a new form of immersive advertising. This is a form of advertising that actually allows people to go to an immersive experience and experience a brand. highlighting that we are on track on our UGC economy to get to full avatars throughout the ecosystem by the end of the year. We think this is going to significantly change the look and feel of Roblox, really looking forward to that. Also, just highlighting on search and discovery on the efficient frontier, in Q2, We've been able to increase both the impact of bookings and the engagement on our search and discovery system at the same time, which is what we've been talking about doing for a while. Let's talk a little about AI and just how big it is for a platform like Roblox. We have approaching 14 billion hours of engagement on Roblox in Q4. There are many, many, many areas that we're already live on the platform with ML and AI stacks and more to come. I want to highlight that we have 70 machine learning training stacks right now. We have trained, for example, our own translation model with a billion parameters. This is the model that helps auto-translate all experiences when a creator makes them. And the range of verticals that we have live right now, we've mentioned material generation and code generation have shipped. We mentioned that we're making really impressive gains in both quality and cost throughout our safety systems on all types of assets. which is live. We've mentioned that we're building our own model internally and running our own inference on voice safety. Internally on search we're live and we have a lot of 3D generative coming as we move to creation everywhere and our avatar project. I want to highlight two key things on our platform. First, we've got five, you know, approaching five billion hours of human interaction on our platform every month. And this human interaction can help us and does help us reinforce the quality of our civility system. We believe long term that on our platform, because we can run infrastructure inference on our own infrastructure. There's an amazing opportunity to run inference all over the platform and run it at extremely low cost. I'll give you an example. Our personalized recommendations right now, 100% of these are running on our own infrastructure, running inference and doing it really cheaply at scale. Also, all of our safety pipelines, image, audio, voice, text, and 3D are running on our own platform, doing inference on our own platform at significant, you know, efficiencies of cost and driving quality there. Longer term, look for us to build bigger and more sophisticated models, first around voice, text, and language supporting safety and civility. Look for bigger and more interesting advanced models for us for 3D generation. and ultimately look for models from us on general human simulation and NPCs, once again running at extremely high performance and low cost on our own infrastructure. Finally, just to cap it off and then we'll start taking questions, we do have a research group that is producing some really high quality technology that we will be wrapping into our product over the next two to four years. under Dr. Morgan McGuire. Check out research.roblox.com. Manish Agrawal just published a great paper on adding conditional control to text-to-image diffusion models in 2023, and you can see all of what we're doing there. With that, thank you, and we'll welcome questions.
spk12: Thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then the number 1 on your telephone keypad. And your first question comes from a line of Andrew Crum from Stiefel. Your line is open.
spk09: Okay, thanks, guys. Good morning. So, Dave, I think in your prepared remarks, you made a comment that the company is on pace to pay out $800 million in developer exchange fees this year. That would imply an acceleration in the second half over the first half against conceivably a deceleration of bookings growth. Just want to make sure those assumptions are correct and what's driving that uptick in the second half. Thanks.
spk08: Hey, Drew. It's Mike. You know, generally backup revenue in our business is higher than the front half of the year. It's pretty simple. So it's straightforward. You know what the roughly what the payouts are. And so that's what's driving the 800 million number.
spk09: Got it. Okay. And then just a quick follow-up. Can you address Your plan to enable developers the ability to offer subscriptions within their experiences? Any sense on timing and if or how Roblox would share in the economics of the accompanying bookings that are generated through subscriptions? Thanks.
spk02: Yeah, so thanks for highlighting this Roblox way of thinking about things. A lot of our developers would like to offer VIP subscriptions directly for their experience. We are working on it. We plan to support this. We're not going to give a date or a time. We do think it'll be significant, and we do think it'll interact with subscriptions on the platform and recurring revenue. Thanks, guys.
spk12: And your next question comes from a line of Eric Handler from Roth Capital Partners. Your line is open.
spk15: Yes, good morning. Thanks for the question. I wonder if you could talk about what the impact has been on various cohorts for now having 17-plus rated content.
spk03: I want to share that it's early.
spk02: That said, we have started to see some organic traction, which is just the same as we've seen in all areas. We have started to see developers build specific 17-plus experiences, and they're starting to show up in our in our sorts. We think this is going to continue to grow and get bigger, but you can check it out on the site.
spk15: Great, thanks. And just as a follow-up, with advertising beginning to roll out now, how are you pricing the inventory?
spk02: Yeah, this is really exciting. We've been a little gentle on the pricing right now. We expect at some point in the future to float the price. And when we do this, we will see the true value of what we believe is an extremely new and valuable ad unit, which is a teleport into an immersive experience. This is a new ad unit, unlike a video ad unit, unlike an image ad unit. It's literally moving real-time people on Roblox into one of our partners' experience, and we will self-discover that in the free market as we float pricing.
spk03: Thank you very much.
spk12: And your next question comes from the line of Clark Lampkin from BTIG. Your line is open.
spk00: Thanks. Good morning. I have two. Dave, I want to start with some of the AI commentary you made in the shareholder letter. Understanding that it's an accelerant to creation across the platform, I think the consequence from a user side seems fairly obvious in terms of the overall experience improving. But as we think about the developer side, how does that increase sort of in volume and velocity of content creation impact developers? Does it make it a more competitive ecosystem? And if it is, is there a need to, I guess, sort of offset that with potentially higher developer distribution rates over time?
spk02: We think that, I mean, we're entering an exciting new period on our platform. You highlighted that for users, traditionally when users create immersive 3D content or social content, they're used to doing it with graphics tools and 3D type creation. We think experiences, for example, a fashion design experience is going to migrate all the way from using a virtual sewing machine and scissors to purely based text prompts and ultimately will enter an age on Roblox where anyone can make their avatar or clothing 100% through text prompts. So if I or you wanted to build a piece of clothing, we could describe it. We're going to see that created in real time. We think for developers, this is going to accelerate quality up and down the stack. You know, there's a great video clip. We're not going to claim when we will achieve this on Westworld, where there's a text-braced interaction of 3D creation. And we do think that's the product vision, where developers will have all tools at their disposal. We'll see a greater diversity of experiences. We will see people who before didn't expect to be creators making immersive 3D experiences and we'll see the ones that are created by developers become more rich and dynamic. We may ultimately even see experiences that are dynamically personalized for each individual player. So it's really early, but we think it's a really exciting frontier for 3D creation.
spk00: That's helpful. I appreciate the comments. Maybe one for Mike as a follow-up. I want to kind of pull out the thread that you've dangled a moment ago with saying the back half of the year is going to be bigger than the first half traditionally. I think that sort of implies an acceleration or I guess at the very least steady growth into the back half of the year. Assuming that sort of persists, if not improves next year with product cycles that are unfolding and sort of improving, you know, we talked about advertising already. Could you help us, I guess, Think about ongoing rates of margin improvement with the business. You know, you identified the sources, I guess, across OPEX, but maybe simplifying a lot of those things between COGS, ITS, and R&D over time. Does that, roughly speaking, translate to sort of 200 to 300 basis points per year? Is it a little bit more, or would you be willing to quantify at this point? Thanks.
spk08: That was a long question, but a good question. Sorry about that. That's okay. We will see leverage against pretty much all of the cost areas over the next 12 months. You know, we think we'll see a little bit of leverage in cost of goods sold because we've, you know, slowed down hiring leverage against our compensation expenses because InfraTrust and Safety, we've slowed down a little bit there. We've already closed the gap pretty meaningfully on both of those two. Just to give you a few numbers, you know, in the first quarter, InfraTrust and Safety was growing at about 33%. Year-over-year bookings were growing at 23%. And then just last quarter, InfraTrust and Safety was growing at 24 and bookings were at 22. So you can already see there's a lot of leverage that we've already shown and obviously well on the way to seeing leverage in Q3. Same thing with personnel, the headcount costs were growing far in excess of bookings in Q1, much less in Q2, and we've already taken steps so that we'll see leverage in Q1 of 24. So we really feel like all the cost areas, there is opportunity for leverage while we continue to invest in growing the top line. It will really depend on both a combination of how the costs roll out and how fast our top line grows, obviously, but I don't really, you know, we're not giving guidance on what the year is going to end up. We're just saying Q4 is, you know, we're a seasonal business. Q4 is back into double digits, and we should be able to run double digits for 2024 as a whole.
spk02: Yeah, and on the higher end, I just want to highlight, We continue to hire a lot of people. The year-on-year incremental headcount compensation costs will go down slightly. We do expect bookings in Q1 2024 to be growing at a year-on-year rate higher than the headcount compensation. And the final thing just to add, I said once again in my statement, is we do expect double-digit covenant adjusted EBITDA margins in Q4 and 2024 as a whole.
spk12: And your next question comes from the line of Brandon Ross from LightShed Partners. Your line is open.
spk16: Hey, thanks for taking the questions. Your beta with MetaQuest actually opened a few questions in my mind. One of them is, while we're on new platforms, is there any update on opening Roblox to other new devices and game platforms like PlayStation or Switch? And then I have a follow-up.
spk03: It's a great question.
spk02: High level, we believe immersive 3D human co-experience should be on every platform. We, of course, have our eyes on those platforms and stay tuned.
spk16: Okay. And then, Dave, it seems like in the past you haven't shown all that much interest in VR. I could be wrong. But do you believe that VR now will become an important tool for accessing your platform? And does the Apple Vision Pro change your perception at all of how people will experience 3D interactive in the future? And then maybe if you could talk a little bit about technically how much more complicated it is to build for VR and AR and still create the same experience across all the platforms you work with.
spk02: Yeah, hey, I tweeted a few weeks ago that we had a million installs on MetaQuest. There's a lot of good information in the comments there where people who haven't used VR before are used to certain Roblox experiences on their phone or their computer, and they put on a VR headset. It's like, oh my gosh, this same experience is all around me. I'm deeply immersed in it and it's the same experience I'm used to. So we do believe it's a really immersive experience. Our strategy has always been that immersive 3D should be everywhere. We want the highest quality experience everywhere. We want a creator to make once and run everywhere. We've done a lot of work on performance and on human interaction. So those same experiences out of the box work on MediQuest. A lot of that work, of course, is the same work we would do on Apple Vision, just as a lot of the work we've done on Xbox would be the same work for PlayStation. And we are really excited that some of the performance work we would do for MetaQuest reflects throughout our whole ecosystem. So we're already pretty good at build once, run everywhere. As you correctly note, there's a lot of opportunity for both immersiveness on VR and more platforms.
spk03: Thank you.
spk12: And your next question comes from the line of Matthew Koss from Morgan Stanley. Your line is open.
spk05: Hi, everybody. Thanks for taking the question. Maybe I'll just revisit DevEx for a second. step down to like 21% of bookings in 2Q, down a little bit from 1Q. And given your expectation of $800 million of bookings, excuse me, of DevEx for the full year, it would imply that as a percentage of bookings in the second half, it would have to step up depending on your bookings assumption, two points, maybe even three. So I guess I'm wondering, you know, given that it's a formula that the DevEx payouts are based on and you have gift cards offsetting, you know, some of what's happening in the second half, what changed in 2Q and then what's going to change in the second half to kind of cause that ratio of DevEx payouts to go up? And then I have one follow-up. Thank you.
spk02: Yeah, yeah. So hey, I want to go high level on this, and we believe over time, more and more ways creators earn money on our platform. Traditional DevX, engagement-based payouts, we have advertising coming, and potentially subscriptions and other things. So this is going to be a very rich ecosystem. We've also highlighted that by Q1 of next year, we expect year-on-year bookings growth to be faster and greater. then cost of goods, then infra, and then headcount. That leaves either cash generation or DevEx. And that puts us in this wonderful place to balance really how much cash we generate versus how much we distribute to developers. So at a high level, the more we drive to this, the more opportunity we have for both earnings and DevEx. With that, I'll kick over to Mike for detail on this.
spk08: Yeah, and then just on the quarterly timing, just look at 22 as a year. DEVX rates were 23, 22, 22, 20 in the fourth quarter, 24 in the first quarter. So the timing of prepaid cards doesn't, in fact, affect the payout ratios back to 21% this quarter. That number, if you can consistently look over time, it's moving up. And it's moving in the, you know, 22, 23% range. Again, 24 in the first quarter. It's going to be in that it's not entirely formulaic because you do have engagement-based payouts on top of the normal formulaic piece. And to Dave's point, other things that developers can also participate in over time. So, you know, the number will fluctuate 100, 200 basis points quarter to quarter sometimes. And overall, you know, so it implies that we're going to, again, be a bigger business in the second half than we were in the first half. And it implies, you know, a good healthy payout ratio for our developers, which is ultimately we're always investing in the developers.
spk05: Great, thank you. And then just on the AI model, there's a comment in the shareholder letter about creating a multimodal generative AI model. Dave, you were talking in prepared remarks about how efficient you're able to be on the AI side. So I guess from a headcount and infrastructure perspective, Are all the investments, if not in place, at least in the plan, in order to create those AI models that you're going to need to go to the next generation of what the platform is going to be capable of? Or could we conceivably be in a position where, as you try to build these tools, it requires maybe more investment and that's a worthwhile thing to do?
spk02: Yeah, I want to highlight that right now we have a lot of people working on AI internally. So we have a fairly significant team. And it's a fairly significant team considering, once again, the scale of what we're doing. We're running 70 different vertical training models right now. And we built fairly significant tech on the trust and safety side. You know, I don't want to comment on the future opportunity there. We're always open to things. But right now we're still on track. to have our bookings expense beat our headcount expense in Q1 of 2024. And we have a really great, sophisticated AI team already in place. Great. Thank you.
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spk12: And your next question comes from a line of Omar Dazewski from Bank of America. Your line is open.
spk07: Hi, thanks for taking the question. You launched UGC Limited in April. I was wondering if you could update us on your commercial learnings thus far, and I'm particularly curious if you saw a corresponding increase in the mix of subscriptions. And I have a follow-up question.
spk02: Yeah, I'll tell you, right now, Limited UGC is the long-term vision. Right now, it's a smaller proportion of our marketplace. One could say that UGC Limited is more accurately near the economics of the real world as far as scarcity, as far as cost of goods sold, as far as creating really a rich and vibrant economy. And we do expect ultimately for every cohort, every type of asset to follow this pattern of more similarly mirroring the real world. The pricing on UGC items is 3x, the non-UGC or non-limited pricing, which is a really, really good sign. And it's a good sign that we're moving in the direction of strong economic theory supporting how we build a virtual goods marketplace. We'll be rolling out expansions of this over the next two quarters, and ultimately it's our long-term direction.
spk07: Any comment on the effect on premium subscriptions? Because from my understanding, you have to have a premium subscription in order to participate in the trading.
spk02: Yeah, I believe we may be referring to be a creator. And we're using that most likely more as validation of user account. We'll have to check on that. I want to validate that. But we're not requiring subscription necessarily, I think, to buy UGC Limited. And we'll check with the team on that. Understood. So, yeah, we're not trying to – yeah, just I want to clarify, we are not trying to drive subscriptions with UGC Limiteds.
spk07: Got it. And how much do you think UGC Limiteds could influence the trajectory of monetization in your core markets in the next few quarters?
spk02: Hard to say. We are doing experiments once again through every cohort trying to optimize mirroring of real life. All of the projections we talk about as far as bookings versus expense and Q1, really headcount expense acceleration or not acceleration, but really bookings beating headcount expense. I don't believe we have huge gains from this built-in. I believe we have a lot of upside there.
spk03: Thanks a lot, David. Appreciate it. Yep. Thanks.
spk12: And your next question comes from a line of David Karnofsky from JP Morgan. Your line is open.
spk04: All right. Thanks. Dave, I was wondering if you could discuss for, and I know it's early for games that have added advertising units, how that's impacted the overall experience Is it purely additive in terms of monetization? How does it impact engagement? And then your shareholder letter noted giving measurement and attribution to brands. Wanted to see if you could unpack that a bit, how much targeting you think you can provide for marketing purposes.
spk03: Yeah, two things to unpack.
spk02: One is developers have a lot of analytics right now on a platform, and they're opting in to these ad units, once again, to the tune of 19% of the top 100. We're optimistic that these types of ad units are native, immersive, non-blocking, and additive. We're not talking things that prevent you from playing or pre-roll or things that get in your way. We're talking about ad units that somewhat simulate the real world. We're walking around. We can see a portal to go to one of our know brand experiences and then people have a back button and they can come right back so we're really optimistic about this i i would say uh can you just highlight once again the second part of your question yeah it was just about in the shareholder letter you talked about giving measurement and attribution tools to brands um just wanted to see if you could discuss that yeah you know what level of targeting you got willing to get We're building a full ad marketplace for this new type of ad unit. Brands will have Within the constraints, of course, of safety and civility on our platform and PII rules and COPA rules and all of those types of things, as well as our own vision, the ability to, I think, thoughtfully do some targeting. We're not going to be doing this for U13s on the platform. This is all for 13 and up. And we are already seeing signs in certain areas, for example, 17 through 24 female, of strong demand, potentially being greater than supply for these ad units.
spk03: Thank you.
spk12: And your next question comes from a line of Matthew Thornton from Truist Securities. Your line is open.
spk14: Hey, good morning, David and Mike. Two, if I could, one on AI and one on ads. On AI, I don't know if this is for Mike or not, I think you guys have got thousands of trust and safety headcounts on the platform at current. I think that's an area where you could certainly point AI to drive efficiencies. I'm curious if you have any color or thoughts on a timing of attacking that and what that impact might look like from a margin lift perspective. And then just second on ads, as we think about the back half of the year, it sounds like we're getting a lot more color here at the investor day in November, which is great. But as we think about the back half of the year and into next year, how should we think about, number one, just the biggest friction points that you see that you still need to unlock to kind of grease the wheel for acceleration there or said differently, maybe milestones we should look for. in that ad business, and then a follow-up to your prior commentary on ads. I'd be interested to hear what developers are opting for in terms of ads, portal versus billboard, if you have any kind of splits there would be great. Thanks, guys.
spk02: Okay, yeah, so two things. One is We'll give you a little hint here that we've indicated our year-on-year bookings growth is going to be faster than our infra costs in Q3 of this year. Infra includes all of our infrastructure hardware. It also includes cost for trust and safety. And we'll also say that all of our asset review pipelines are moving more and more to higher quality and lower cost with AI acceleration, all five of those pipelines I mentioned. On the advertising thing, the thing to watch for us will be, and we're not going to give a date, when we fully float the advertising market. And so you can see true pricing out there. We're excited about it because we're seeing supply-demand really being interesting in some cohorts. As far as portals Of the 19% of the units that we've placed, I believe most of them, I think 12% or 13, I'm looking, it's about 12%. Great. So 12 of the top 100, I'm grabbing the data. Yep, cool. So 12 of the top 100 are placing portal ads. Do I have the right data there? 10-4, thanks. And I'll kick it over to Mike.
spk08: Yeah, thanks, Matt. On friction, again, maybe just I'll keep it high level for a second. Ultimately, In my mind, it's the total volume of brands that get engaged on the platform. So brands today, agencies, working with agencies and working with us, how many of those brands are building and engaging on the platform? We know that there's over 200 brands that have engaged with us at this point. a double over last year. And that rate of growth and that rate of adoption is really what makes the platform a rich and open opportunity for advertisers. So that's the number I track almost more than anything. I don't think it's technology. I think it's the volume of brands and agencies that are working with us and getting their content onto the platform. So that's really what I look at.
spk02: Yeah, and then one final thing. The unlock, when we say float pricing, the complementary unlock there is everything we're doing is completely self-serve. We're not building a hand-holding platform. We're building a platform where any brand on their own can come and start using our platform for portal and image ad.
spk03: I appreciate the color.
spk12: And we have time for one more question. Your final question comes from the line of Tom Champion from Piper Sandler. Your line is open.
spk06: Hi, this is Jim for Tom. Thanks for taking the question. I guess one for Dave. So you mentioned some detail around decreases to the premium payout program. Can you just touch on that a little bit?
spk02: I'm trying to think. I don't think we've mentioned any detail around that.
spk03: More color on that?
spk08: I believe we've addressed premium payouts on the call. What was the comment?
spk02: Yeah, so we've been talking about DevEx and also engagement-based payouts. We haven't announced any changes in either of those programs.
spk06: Okay, great. And then I guess just one more on the developer exchange fee. Is there anything we should keep in mind with respect to FX here for payouts that are going to non-US dollar developers?
spk02: Yeah, I'll chime in. I believe we pretty much normalize everything to the U.S. dollar in all of our payouts and do that in real time as we pay out.
spk03: Okay, great. Thank you.
spk01: Well, thank you for joining us today. That's a wrap for us. Rob, you can close it out.
spk12: Thank you. And that does conclude today's conference call. Thank you for your participation.
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