Snap Inc.

Good afternoon, everyone, and welcome to SNAP, Inc.' 's Fourth 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 1 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 fourth 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, 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 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.

Thank you for joining our call. The fourth quarter marked the end of an exciting and productive year for Snap. We grew our community, expanded our product offerings, and demonstrated the power of our augmented reality platform, both inside and outside of the Snapchat application. We faced some fresh challenges in 2021, but posted strong results, reflecting substantial progress on our journey to sustainable growth and positive cashflow generation. We grew revenues 64% year over year in 2021, including 42% year-over-year growth in the fourth quarter. We achieved adjusted EBITDA profitability for the second consecutive year. We recorded our first full year of positive free cash flow, and Q4 marked our first quarter of positive net income. Achieving positive free cash flow for the full year is an important milestone, as we are increasingly able to self-fund our investments in the future, which positions us well to accelerate our vision for computing overlaid on the world through augmented reality. In Q4, our community grew by 20% year over year to 319 million daily active users. We grew sequentially in each of our three regions. While North America and Europe represent our largest monetization opportunities in the near and medium term, rest of world represents our largest community growth opportunity. We've made a concerted effort over the past year to organize our team and make investments in our products to realize these monetization and community growth opportunities. Our expansion efforts in India continue to prove successful, and we are using our learnings to inform how we approach community growth in new geographies. Our desire to build a better way of communicating visually through our camera has evolved into a leading platform for augmented reality. Our AR products and services are driving major impact at scale today as Snapchatters use our services to shop, play, learn, explore, and entertain themselves. Over 200 million people engage with augmented reality on Snapchat every day, And our community now plays with AR lenses an average of more than 6 billion times per day. This momentum and the creative energy of the Snapchat community makes us incredibly excited about the future of augmented reality. At our LensFest AR developer event in December, we gave an update on the strength and diversity of our AR developer community, which continues to grow. There are now over 250,000 lens creators from more than 200 countries and territories who use Lens Studio to build AR experiences. They have made more than 2.5 million lenses that have been viewed by Snapchatters now more than 3.5 trillion times, and over 300 creators have each reached more than a billion views of their lenses. As Snapchatters explore new AR experiences to enhance what they see and do in their daily life, we will continue to develop tools to empower lens creators to push the boundaries of what is possible through the Snapchat camera. At LensFest, we also shared the ways that we are supporting creators and evolving the tools they use to build for our platform. We introduced a lens call to action feature that lets creators include a link within a lens, making it easy to drive Snapchatters to a new destination like a shop from within the AR experience. We've made a catalog of licensed music and audio clips available to integrate into lenses so the creators can build more immersive experiences. We rolled out our gifting feature, which lets Snapchatters directly support Lens creators through story replies, and announced Ghost, our AR innovation lab, providing grants of up to $150,000 and Snap team support for creative AR projects. In addition to the momentum with augmented reality on Snapchat, we are very excited by the growing demand from businesses who want to bring Snap's AR capabilities into their own apps and websites. We are meeting this growing demand through Camera Kit, which enables partners to easily integrate our AR technology and creator ecosystem in ways that meet their business objectives. With their Camera Kit integration, DressX invites users to try on and wear digital fashion in real time, supporting unique experiences that combine the physical and digital realms. DressX has seen incredible success and engagement, as 75% of their total app users engage with AR lenses. and users try on AR looks 22 times per day on average. By extending the reach of their AR lenses onto the DressX public profile within Snapchat, DressX drove a 120% increase in their public profile subscriptions. This quarter, we made significant progress with our Spectacles AR glasses, the fourth generation of a product line that we first introduced more than five years ago as a fun hands-free camera designed to help capture your perspective while staying in the moment. Hundreds of creators from 30 countries have now developed AR lenses for Spectacles, overlaying computing on the world in an immersive and interactive way. We have continued to make software improvements and offer new capabilities for developers, including connected lenses, which link multiple Spectacles users to participate in the same AR experience together, and location triggers, which lets creators customize lenses to adapt as they visit specific locations. Our content business comprises two of the five main screens of our application. Stories and Spotlight. Despite substantial competitive pressure over the years, Stories remain our largest driver of revenue. It's a platform where Snapchatters share snaps with their friends in narrative form via friend stories and watch content from professional publishers and influencers in Discover. Spotlight, our newest platform, surfaces the most entertaining snaps from our community, and we've been overwhelmed by the positive response from viewers and increasingly creators. On our Discover platform, our content partners continue to find success. In Q4 2021, 25 different Discover partners each reached over 50 million unique Snapchatters globally. This captures a wide range of genres from Universal Music's Rebel Labs to Social Publisher Jungle Creations lifestyle content, Team Whistle sports content, and creator-driven shows from Jelly Smack. We are also introducing more locally relevant partners worldwide. We added more than 160 new channels in the quarter from Discover partners outside of the U.S. and onboarded new partners, including Seven One Entertainment Group in Germany and Canal Plus in France. We are also investing in content from underrepresented voices through the 523 Content Accelerator program we launched in Q4 to support and promote small minority-owned content companies that lack access and resources relative to their larger competitors. Snap Originals are another successful element of our strategy to reflect the diversity of our community through our content. In 2021, over 50% of Snap Originals featured diverse leads or hosts. We rolled out successful new shows, including the Me and You Show, which stars Snapchatters and their friends using our Cameos feature, and reached over 50 million viewers in Q4. In Q4 2021, the number of content viewers on Snapchat continued to grow at a significantly faster rate year over year than overall time spent watching content, as a decline in time spent watching stories created by friends was offset by growth in time spent watching premium content in Discover as well as content in Spotlight. This is a continuation of the trend we have observed throughout the pandemic, and friend story posting and viewing per daily active user have not returned to pre-pandemic levels. While we are hopeful our community will in time return to the friend story behaviors that we observed prior to the pandemic, we are focused on innovating on our content offerings to better serve our community today. With so many different types of content on Snapchat from friends, creators, and media companies, we want to make it easier for Snapchatters to find what they want to watch when they want to watch it. We're optimistic about the results we're seeing from early experiments and look forward to rolling out more product changes this year. We also continue to make progress building out Spotlight. We have learned a lot from our creator community that will drive the evolution of the overall Snapchat content experience, including the relationship between Spotlight and Discover. Already more than 20 Spotlight creators are syndicating shows on Discover. This supports our vision of Spotlight as a platform where audiences can discover new creators, topics, and communities, and then engage with them more deeply on Discover. We have also been able to effectively utilize creator incentives to grow and diversify Spotlight content. In its first year, we rewarded more than 12,000 creators through a variety of programs. More recently, we have shifted our incentives to reward a broader range of content across categories and geographies. We are focused on supporting a diversity of platform native content creation in order to build robust, sustainable content supply. In Q4, we prioritized helping creators reach new audiences. and we saw the number of Spotlight viewers subscribing to creators more than double versus the prior quarter. These efforts have also improved the viewer experience, with the number of Snapchatters favoriting Spotlight snaps increasing by 20% sequentially. Since launch, we have seen our creator community grow dramatically in scale, and we have been particularly encouraged by how creators are investing in the platform. Today, we see three times as many monthly posts per creator than we did when Spotlight launched a year ago. We created Spotlight to amplify the best of Snapchat, and today over 65% of Spotlight submissions use one of Snapchat's AR lenses or creative tools. We are adding utility in other areas of Snapchat as well. We've made our map even more personal by launching our first two layers, memories and explore, which allow users to view their saved snaps by location and explore new snaps submitted around the world. These layers have been used over 100 million times since launch. We also continue to build engagement by making places easy to discover, favorite, and share with friends. Within our communications platform, we continue to add new games and minis to further promote shared experiences with friends and add additional utility for our community. Developers are finding opportunity and success with games on Snapchat. For example, we signed a deal with partner Vudu Games to build at least 20 games for Snapchat in 2022 on the heels of five new games built in 2021. Another partner, MojiWorks, released their second hit game, Trivia Party, following their hit Ready Chef Go. MojiWorks has now reached nearly 100 million players across the two games. We've rolled out new use cases for minis with partners ranging from startups to established brands finding success on our platform. For example, after a successful greetings card mini, Givingly recently launched a gift card e-commerce mini that enables Snapchatters to buy branded gift cards such as Sephora, DoorDash, or Taco Bell, and easily gift them to their friends on Snapchat. Given the enormity of the opportunity in front of us, both in terms of the Snapchat application as well as our augmented reality platform, 2022 will be a significant investment year for us as we work to accelerate our roadmap and deliver against our long-term vision of computing overlaid on the world. We will continue to remain focused on doing the right thing to promote the safety and well-being of our community, investing in new technologies and teams to protect Snapchatters and ensure they have a positive experience with our products. The trust of our community is essential to us, and we don't take it for granted. We work every day to improve, and we are always learning how we can better support our community. I'll now turn it over to Jeremy to discuss more about our business.