Snap Inc.

Good afternoon, everyone, and welcome to Snap Inc.'s second quarter 2020 earnings conference call. At this time, participants are in a listen-only mode. After the prepared remarks, there will be a question-and-answer session. If you would like to ask a question during that time, please press star, then the number 1 on your telephone keypad. This call will be recorded. Thank you very much. Mr. David Ometer of Investor Relations, you may begin.

Thank you and good afternoon, everyone. Welcome to SNAP's second quarter 2020 earnings conference call. With us today are Evan Spiegel, chief executive officer and co-founder, Jeremy Gorman, chief business officer, and Derek Andersen, chief financial officer. Earlier today, we made a slide presentation available that provides an overview of our user and financial metrics for the second quarter 2020, which can be found on our investor relations website at investor.snap.com. Now I will cover the safe harbor. Today's call is to provide you with information regarding our second quarter 2020 performance in addition to our financial outlook. This conference call includes forward-looking statements. Any statement that refers to expectations, projections, guidance, or other characterizations of future events, including financial projections, future market conditions, or the impact of COVID-19 on our business and on the economy as a whole is a forward-looking statement based on assumptions today. Thank you for joining us. Our commentary today will also include non-GAAP financial measures, and we believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found on our press release issued today, Thank you. Thank you. Thank you. This additional detail may be one time in nature, and we may or may not provide an update in the future on these metrics. Please refer to our filings with the SEC to understand how we calculate our metrics. With that, I'd like to turn the call over to Evan.

Thanks, everyone, for joining our call. This has been an extremely challenging time, and our team has done an outstanding job continuing to support the growth of our community, which increased 17% year over year to 238 million daily active users, as well as building our business with revenue growing 17% year over year to 454 million. While our revenue growth rate continues to be impacted by ongoing market disruptions, the fundamentals of our business are strong and the high levels of engagement on our service are backed by years of investment in our self-serve advertising platform, which is helping our partners achieve success and grow their businesses in this uncertain environment. I am most proud of our team for the work they did to create our Snap Partner Summit this quarter, which was delivered virtually in an augmented world. We announced several new products like minis, voice scan, camera kit, places on the Snap Map, emoji for third-party games, as well as several new partnerships and a fresh slate of content. We also made Snapchat easier to navigate with our new action bar, which provides top-level navigation to more easily access the Snap Map, Chat, Camera, and Discover resulting in more surface area and accessibility for each of these platforms. We are working hard to overlay new computing experiences on the world through augmented reality and the Snap Partner Summit showcased some of our latest AR products including local lenses that allow people to share augmented reality experiences together overlaid on their neighborhood cityscape. and SnapML, which empowers members of our community to bring their machine learning models directly into lenses on Snapchat. This enabled Gucci to leverage Wannabuy's foot tracking technology to help people try on their latest sneakers in Snapchat and even buy them directly within the lens. These sorts of augmented reality experiences are especially powerful in the post-COVID retail environment where brands are investing more in virtual try-ons. In addition to our new augmented reality products, we also released minis to enable developers to build interactive and social experiences for our community. For example, when movie theaters reopen, friends will be able to browse and purchase tickets together in the upcoming Atom Tickets Mini. We're excited to help our partners understand how they will benefit from our long-term vision for Snap and the many ways that they can use our products and platform to connect with our community and build their businesses. Our community grew by 17% year-over-year, with 238 million people using Snapchat every day on average in the quarter. This continues our recent momentum in daily active user growth, with the last three quarters seeing our highest year-over-year growth rates since 2017. We now reach more than 100 million people in the U.S. alone and are also seeing strong growth in our core markets in North America, Europe, and Australia. We are also continuing to invest in app performance and localization to make our service more accessible to people all over the world, with Snapchat now available to over 2 billion people in their native language. These efforts have helped us grow even faster in emerging markets like India, where we've seen over 100% growth in daily active users over the past year. As the changing public health landscape accelerates the adoption of digital products, We believe there is a large opportunity for us to further empower new behaviors with AR, entertainment, and commerce. For example, we continue to see increasing engagement with our camera and the number of snaps created every day grew at double the pace of our daily active user growth over the past year, making Snapchat one of the world's most used cameras. We're especially excited to see that the adoption of our AR platform is also accelerating with the number of people playing with lenses every day growing by 37% year over year. This growth has been driven in part by the community of talented lens creators and partners that are creating and distributing lenses on Snapchat. Creators are quickly adopting new Lens Studio capabilities to create lenses that put a lightsaber in your hand, turn the entire world into spaghetti, and let you try on clothes and makeup. Today, Snapchatters play with lenses created by our community six times as often as they did just last year and these lenses now drive more than a quarter of all lens engagement on Snapchat. We are excited to see that our product innovation in AR is empowering the creativity of our lens creator community, which in turn has driven growth in user engagement. With so much happening around the world today, our Discover platform is more important than ever in helping our community stay educated and informed about current events. Snapchat has become a go-to destination for credible and accurate news content during the pandemic, with more than half of the entire U.S. Gen Z population watching COVID-related news created by our partners. Additionally, following the murders of George Floyd, Ahmaud Arbery, and Breonna Taylor, we published curated community stories featuring powerful snaps from our community, which range from breaking news about peaceful protests to a dialogue about what it means to be living while Black in America. We are also rolling out Happening Now, A dedicated section of Discover that provides breaking news for media partners such as NBC News and ESPN summarized in a single snap. In addition to news, Discover has also provided a premium mobile entertainment experience for our community as they are sheltering in their homes. For example, Will from Home, which culminated in a Fresh Prince of Bel-Air cast reunion, was watched by more than 35 million people. and many more. which is up from six fewer minutes on mobile in 2018. We believe this trend is driven primarily by the younger generation whose time spent watching TV is a fraction of their older counterparts. This creates an opportunity for our media partners, several of whom spend significant resources to create high quality content for TV to expand their total audience to include these younger viewers. Several shows that are finding success on Discover were originally shot for linear TV and these shows have reached an audience of over 100 million people on Snapchat so far this year. We added more than 180 new Discover channels this quarter and recently announced newly expanded partnerships with Disney, ESPN, NBC, ViacomCBS, the NBA and the NFL as we continue to expand our curated content business. The strong engagement with our platform and products is driving results in our advertising business Despite the many macro headwinds currently experienced by our partners, our advertising business grew 17% year-over-year to $454 million in revenue. We are pleased to see the continuing growth in our revenue, especially in the face of extreme dislocations in the market. As heavily impacted companies like travel and in-theater entertainment pull back spend, we have transitioned to helping them plan for a future recovery led in part by our audience. We have also seen that certain industries like CPG, gaming, streaming services, and e-commerce have benefited from some of the COVID-related changes in consumer behavior and have been leaning in as advertisers on our platform. Our significant investments over the past few years in our team and our ad platform helped us provide substantial value to both direct response and brand advertisers as they navigate these rapid and unprecedented shifts in the market. Our direct response business continues to drive meaningful return on investment at scale, especially during the current environment where performance-oriented apps and e-commerce advertisers look to reach customers who are increasingly engaging and transacting on the Internet rather than in person. This has been accelerated by the major improvements we continue to make to our ad products and back-end optimization, which have helped us increase the scale at which we're able to deliver results for direct response advertisers. For example, we are rolling out dynamic ads globally so that retailers like Sephora and Adidas can run e-commerce campaigns on Snapchat that automatically optimize across their entire catalog. These product improvements also drive a virtuous cycle for our direct response business. As we onboard more advertisers, the increased quality and diversity of our advertising demands means that we have more relevant ads to choose from when deciding which ad to show a particular person at a particular time. This in turn drives more value for advertisers with fewer wasted impressions while simultaneously reducing the perceived ad load for our community. While these uncertain times have impacted many businesses in different ways, one consistent theme across all brands has been the focus on reaching customers in thoughtful and genuine ways. Brands have collaborated on many of the new products we are building, including by investing heavily in our new AR capabilities, to engage an audience that is not able to visit their stores or see their products in person. We recently launched brand profiles, an important first step towards building a native home for all of the organic experiences that brands are building. Snapchatters can now visit the profiles of brands like Dior, Target, and Tim Hortons to watch their stories, play with their AR experiences, and even buy their products through our native commerce integrations. We are excited to evolve our relationships with brands of all sizes as we continue to build tools for brands to organically engage with our audience. Finally, the growing focus on brand safety and privacy across the entire industry places us in a unique position of strength as we have invested in these areas from the beginning of our business. The very foundation of both our consumer product and our advertising business has been built around our commitment to protecting the privacy of our community and to delivering a safe environment for brands. We believe that building trust with our community and providing a safe environment on Snapchat is critical to our long-term success and helps us live up to the high expectations of both our community and our advertising partners. This reflects our broader commitment to making a positive impact with our company and our products. Our strategy is simple. We try to do the right thing even when it's hard and we work to acknowledge and fix our mistakes quickly. Looking forward, we expect that the current operating environment will become more complex. This year alone, we have seen sweeping changes to our global economy, the privacy and regulatory landscape, public health and social behaviors and the direct confrontation of a legacy of injustice and extreme inequality in America. This means that our strategy of trying to do the right thing isn't just a moral imperative. We believe that it is the only way to achieve the long-term vision for our business. We have a lot to learn as we grow our global audience and expand our advertising and content partnerships and it gives me great hope to see our team, community, and partners actively engaged in building a better future. Thank you again for joining us today. I'll now turn the call over to Jeremy to share more about our business.