Snap Inc.

Good afternoon, everyone, and welcome to Snap Inc's third quarter 2021 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 one on your telephone keypad. This call will be recorded. Thank you very much. Betsy Frank, Senior Director of Investor Relations. You may begin.

Thank you and good afternoon, everyone. Welcome to Snap's third quarter 2021 earnings conference call. With us today are Evan Spiegel, Chief Executive Officer and Co-Founder, Jeremy Gorman, Chief Business Officer, and Derek Anderson, Chief Financial Officer. Please refer to our Investor Relations website at investor.snap.com to find today's press release, slides, a copy of our prepared remarks, and our updated 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 forward looking statements, please refer to the press release we issued today as well as risks described in our most recent form 10Q, 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.

Thank you all for joining us. This quarter, we celebrated SNAP's 10-year anniversary, and as we reflect on the progress we've made over the past decade, we have never been more excited about our future. Bobby and I grew up with social media, and we wanted to build something different. a way for people to have fun and express themselves without the permanence and pressure of public likes and comments. We built a camera to make it easier for people to communicate with close friends and family and express themselves visually. And today we reach more than 500 million people, including more than 75% of 13 to 34-year-olds in the United States, Canada, France, the UK, Australia, and the Netherlands. we have innovated on top of our camera and built augmented reality, content, and mapping platforms that each reach hundreds of millions of people. We are now operating our advertising business at scale, providing us with the resources we need to invest in our long-term vision of computing overlaid on the world through our camera. And we are just getting started. This quarter, we grew daily active users to 306 million, marking our fourth consecutive quarter of more than 20% year-over-year growth. We grew sequentially in North America and Europe, which represent our largest monetization opportunities in the near and medium term. And we continue to build on our momentum in the rest of world geographies, where we see massive long-term potential. Our DAU and rest of world represents just 5% of the overall rest of world smartphone population, which is currently more than 2 billion people and growing. many of the mixed engagement trends we observed during the pandemic and that we discussed on our last earnings call have continued through the third quarter. On one hand, while total content viewership and time spent has grown year over year, user generated stories continue to see year over year declines in overall time spent. On the other hand, we are seeing quarter over quarter improvements in engagement with the Snap Map, story posting, new friend connections, and bi-directional communication and we are cautiously optimistic about the ongoing reductions in pandemic-related restrictions worldwide. We grew our revenue 57% year-over-year to reach $1,067,000,000, delivering adjusted EBITDA of $174 million and $52 million of free cash flow. While we are excited about the continuing growth of our business and improvement in our cost structure, we missed the lower end of our guidance by $3 million due to a few key factors, including changes to advertising tracking on iOS and macroeconomic factors that have impacted our advertising partners. Our advertising business was disrupted by changes to iOS ad tracking that were broadly rolled out by Apple in June and July. While we anticipated some degree of business disruption, the new Apple-provided measurement solution did not scale as we had expected. making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS. We have remained very focused on driving ROI for our advertising partners, and we continue to see strong, consistent performance on our ad platform based on first-party data and conversion list studies, and are working on building flexible first-party tooling and measurement solutions to serve the diverse needs of our advertising partners. This impact was compounded by the ongoing macroeconomic effects of the global pandemic with our advertising partners facing a variety of supply chain interruptions and labor shortages. This in turn reduces their short-term appetite to generate additional customer demand through advertising at a time when their businesses are already supply constrained. The ongoing magnitude and duration of these global supply and labor disruptions are inherently unpredictable. And in the meantime, we are focused on supporting our partners in this uncertain environment. While it is difficult to predict the trajectory of these challenges, the growth of our audience, the adoption of our new products and platforms by our community, and the underlying efficacy of our advertising products for performance advertisers gives us confidence in the future of our business and our ability to navigate this environment as we continue to invest in our long-term vision. Augmented reality is one of our most exciting long-term opportunities because it is simultaneously very early in its technological development and already used by hundreds of millions of people. More than 200 million people engage with AR every day on Snapchat across a variety of use cases, including entertainment, fashion, education, and the arts. This quarter, we partnered with SignAll to introduce three AR lenses teaching Snapchatters how to fingerspell in American Sign Language. We featured a number of community try-on lenses to celebrate Fashion Week, and we partnered with Sotheby's to allow Snapchatters to experience Christo and Jean-Claude's artistic rendition of the Arc de Triomphe from anywhere in the world. We are also doubling down on the early successes we have seen helping people try on clothing, beauty products, and accessories with augmented reality, and are working closely with partners like Ralph Lauren, Mac Cosmetics, and Zenni Optical to expand our AR shopping experiences on today's smartphones. In the longer term, we are investing in new ways people can interact with the physical world around them, including using our AR-enabled spectacles. We are thrilled to see the unique experiences our creator community has developed for this new form factor as we iterate on our long-term hardware product roadmap. Our content partners continue to find success on our platform with 15 different partners, each reaching over 50 million Snapchatters this quarter. Two of our new Snap Originals launched this quarter, Me Mom and Honestly Lauren, and each reached over 10 million viewers. We are also introducing more locally relevant content as our community grows worldwide. In France, we partnered with MCs, our first major French broadcast partner for entertainment content. to bring 400 episodes of their TV shows to Snapchat. In MENA, we partnered with ITP Media Group to bring more than 200 show episodes from some of the region's biggest and most influential creators. We are very excited about the long-term potential of Spotlight, our newest platform designed to shine a light on the best snaps created by our community. In recent months, we have focused on building the tools and infrastructure to help creators of all kinds thrive on Spotlight. We have re-engineered the Spotlight Incentive Program to reach more creators who are publishing a greater diversity of content in more markets. We are committed to making Spotlight a platform on which professional creators can grow an audience and build a business, and both gifting and the creator marketplace for Spotlight are now live. We are extremely pleased to see daily Spotlight submissions more than double when compared to last quarter and are encouraged by ongoing quarter-over-quarter growth in both daily active users of Spotlight and daily time spent per user. We will continue to build Spotlight into a unique entertainment destination for our community and a rewarding creative outlet for people expressing themselves through our camera. We are also continuing to innovate and improve our products for both our community and our partners. We launched the Places Tray, which allows the 250 million Snapchatters that use the Snap Map each month to save their favorite locations and explore what places are popular among their friends. We expanded our minis offerings to include our first co-watching experience with HBO Max, as well as a new birthday mini to provide reminders for friends' birthdays. Our new Run for Office mini, which helps young people run for local office, encouraged more than 2 million Snapchatters to explore local election opportunities, and more than 45,000 people have nominated a friend to run for office. Profiles now support Next Generation 3D Bitmoji, letting people express themselves through a variety of options for backgrounds, poses, and facial expressions. As we reflect on the past decade, we are fortunate to have grown our business in a favorable economic, regulatory, and geopolitical environment. We prioritize growing our business responsibly and sustainably rather than scaling as fast as possible. And our commitment to privacy and empowering self-expression through our camera led us to build our products in a way that we believe enables our future success over the long term. As we look to the future, these fundamental decisions, along with the scale we have already achieved in our business and operations, gives us confidence that we have the resilience to maintain our momentum through a changing macro environment. Now I'll turn the call over to Jeremy to share more about our business.