Snap Inc. (SNAP) Earnings Call Transcript & Summary

All right. Good afternoon, everyone. We're thrilled today for our next keynote with Evan Spiegel, the CEO of Snap, for our Wednesday afternoon keynote. So how are you doing, Evan?

I'm happy people showed up despite the virus.

That's right. That's right. You drive through this snow and you get rewarded. So now this is great. Well, thank you for coming. Before I get started, I have to read the disclosures. So please note that all important disclosures, including Personal Holdings disclosures and Morgan Stanley disclosures, appear on the Morgan Stanley public website at www.morganstanley.com/researchdisclosures, and then also available at the registration desk. Some of the statements made today by Snap may be considered forward-looking. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. Any forward-looking statements made today by the company are based on assumptions as of today, and Snap undertakes no obligation to update them. Please refer to Snap's Form 10-K for a discussion of the risk factors that may affect actual results. Thank you again for joining us, Evan. This is great. So it's a highlight of the conference, so we appreciate you having here.

Happy to be here.

We are in year 9 for the company, and it's transformed a lot. I even feel like it's 9 years, they feel like the last 12 months, the last 24 months, a lot has changed. And so I guess, maybe just to start off -- my mic's a little close to my mouth. To start off, maybe talk to us about, through all the changes, what are 1 or 2 of the factors that you're most focused on right now? And what excites you about 2020 and 2021 for the company from a user side or an advertising side?

I think what's been most thrilling for us over the last 8, 9 years has really been the transformation of the way that people use their cameras and the way that that transformation is accelerating. So if you look at the early -- let's call it, the last 100, 150 years of cameras, it took a really long time for everyone to start using cameras to document their lives, save memories that were really important to them. But it's really only taken 8 years using Snapchat to transform the camera into a way to communicate. And I think that that acceleration in the way that people are changing their behavior around the camera is evident in the next step which is augmented reality. And that's where we're investing and spending a lot of our time. So today, the Snapchat camera has really transformed photography, in that now people are using their camera all day long, every day to stay in touch with their close friends and family because communicating visually is so much more expressive, it's faster, it's more fun. But increasingly, they're using our augmented reality platforms, and the majority of people using Snapchat now every day are using our augmented reality platform to express themselves but also to experience the world around them. And that's really the beginning of this next transition in computing. And so I think for us, just to be a part of this incredible journey of the evolution of the camera and the role in people's lives is really the highlight of the last 8, 9 years and what we're most excited about looking forward.

One of the things that has changed, too, is that you've brought in some very experienced new senior management to the team, they're actually there. And I guess, so from an external perspective there's always this question of what's changing? Why are you changing each of these different roles? And so maybe talk to us about which -- how the company's execution has changed as you brought in some of these new personalities? And how has your role changed?

I think I should just say I'm so grateful for and proud of our team because I think if you look at how quickly our company has grown and evolved, it's incredibly difficult to keep pace with that change. And I think that necessitates occasionally changes in leadership, certainly, changes in strategy and the way that you're executing. And I think the hallmark of our team today is really the way that they're working well together and supporting one another. And so I think when you have that sort of chemistry on your team, that sort of magic and real belief in and connection to the core values, that is when really anything is possible. And so I think if you look at how the business has evolved, I can remember, it was like a 1-year period, we went from being like 100 people to 1,000 people. That was a really difficult period of time. And I think we did that in order to serve our community and our community that's been growing so tremendously. But what we tried to do through all of that growth and all that change in structure, leadership and process is stay true to those core values because that's why people love and use our products and why we're able to continue innovating. So I think our team has just done an incredible job leading through all these changes, and we're in a really good place moving forward.

You mentioned earlier about sort of the focus on AR and sort of the changing consumer behavior around AR. You've got a lot of new products between the cameras to chatting to Discover to Maps to Memories to Spectacles. There's a lot of product innovation coming out of the company. And so I guess maybe talk to us about how you and the management team sort of approach the product development process. And of all of those that I named, and maybe if there's one I didn't name, which of the new or emerging products are you most excited about from a platform perspective?

So I love that you used the word platform because I think the thing that's most exciting for us is when a product goes through that transition to become a platform. So very often at Snapchat, we start internally working on new features, whether that's premium content, we build our own premium content channel to experiment. Or with augmented reality, we built the first AR lenses that people used on Snapchat. And then over time, we build tools to make those platforms accessible to a much wider audience, whether those are our publisher partners or studios or whether that's just a kid using Lens Studio to build augmented reality. And what we see when you go through that transition of having sort of first-party product to a real platform is that innovation just explodes. So what we've seen on the content side over the past couple of years has really been the birth of mobile content. Experimentation with new formats, like Publisher Stories and Shows, which are premium, high-quality, made-for-mobile content around the AR side. I think there's over 700,000 Lenses, which are these AR experiences on Snapchat, that have been built by our community. And so for us, that inflection point is always really exciting. So I think if you look at products like the Map, for example, that's something that we really see as a huge opportunity to innovate, mostly because the maps that people use today on their phones aren't actually really personalized for them. So if you and I open Google Maps or something like that or Apple Maps, we're going to get the exact same map even though we live in different places, we have different friends, we go to different places. And so it's very odd to us that the map has not yet been personalized the way that's so much -- so many of the technology products we use today has been. And so I think for us, that would be, looking forward, a really cool product to platform transition, and we're really excited about the innovation on the horizon for that Maps product, especially given all the engagement around it today.

Still a very -- a big opportunity for a lot of the platforms in the space in monetizing local, and the Map is sort of almost the underlying architecture behind all that. So makes sense. There's a lot of innovation for the long term. Unfortunately, in the near term, there is this uncertainty around coronavirus and sort of the way to think about the overall ecosystem. And so I guess a couple of questions. One, talk to us about any impact you've seen to date, either from an advertising perspective or an engagement perspective. And then how do you think about sort of the long-term impacts of the situation potentially playing out on the platform?

Yes. Well, fortunately, for our business, the impact to date has been minimal. I think that's largely due to the fact that our community is concentrated both geographically and demographically in places that are less impacted, at least from a health perspective from the virus. So you know that Asia, for example, has seen sort of an outsized impact. Our community is mostly outside of Asia. And if we look at the health impacts to young people, our service, large, 13- to 34-year-old population, they don't exhibit the same sort of symptoms that may be more advanced age folks do. So I think from a health perspective, the health of our community and our business, so far the impact has been minimal. The thing we're really paying attention to, as the situation evolves, is how our advertising partners will be impacted, and we really want help support them to grow their business during this volatile period. So we're going to continue to try to drive a lot of value for them, and I think we are optimistic that this will be a short-term impact.

There, I think, are different verticals that have sort of called out advertising impacts. Travel is probably the one that stands out most. Is that a material category for you guys yet? Or is that not sort of a piece that would impact the business?

So far, as I mentioned, the impact has been minimal. We'll keep an eye, obviously, on the situation as it evolves.

Got it. Okay. The competitive environment, like whenever we get together, the competitive landscape, it continues to change. We had Instagram Stories launching 4 years ago. TikTok has now emerged as a new player in the space, a new use case. You still have incredible reach, to your point, around 13- to 24-year olds across the platform. So maybe talk to us about how when you sort of sit back and watch what young people are doing on the platform, how do you differentiate your products versus those other competitors, both new and more established? And what type of innovation do you need to keep them coming back to the platform over and over again?

Well, the products that you mentioned are really products that provide mobile content, and it is fascinating to see how mobile content is evolving very rapidly. It's something we've thought a lot about. The core use case for Snapchat is really around communication and staying in touch with your close friends. And so that's how we continue to drive this really high-frequency, highly differentiated behavior because we provide a lot of value in helping people stay in touch with people that they care about. But looking at the content side of the business, in particular, I do think it's fascinating to see the rise of services like TikTok because they embrace a lot of the ideas that we've been thinking about for a long time. And TikTok, in particular, focuses much more on the engagement around a piece of content rather than who created it. And if you look at social media today, social media privileges the creator of the content, really regardless of how engaging that content is. So when you follow a bunch of people, you get a bunch of content from them. On TikTok, on their For You page, the content is really ranked in terms of its engagement, how often are people watching it, how long are they spending watching it, did they rewatch it. And I think that's really interesting because it starts to disaggregate identity from content creation on social media. And for us, that's in line with our thesis, going back 5 or 6 years now when we launched Discover, the consumer taste for mobile content was going to evolve very rapidly, similar to how we saw consumer tastes evolved with radio or television, where they demand higher-quality content over time. And so TikTok represents a step forward towards more premium user-generated content, away from sort of status-oriented content mostly because that status-oriented content is getting boring, especially if it's created by someone who's not really that close to you. So your best friend or your partner could post a really boring photo, and it could be fascinating because you know them. But the farther and farther that person gets away from you in terms of your friendship with them, it gets less and less interesting. And so I think social media content has started to feel very repetitive to people, and that's why they're moving to more compelling content on other platforms. And that's certainly what we're seeing with our Discover product. So many years ago, we believed that people were going to demand higher-quality content for their phones, and so we started investing very heavily in this premium content that's now expanded to original shows, Publisher Stories and things like that, and we continue to see very significant growth. So I think we talked about on our last earnings call, like 35% growth on time spent watching premium content and a meaningful increase in the number of people watching that content because there's just such a hunger for better, higher-quality mobile content.

So evolving use cases on the platform. A year ago, a big topic of discussion was the Android app rollout. So it's been about a year since you rolled it out. So I guess, 3 questions. The first one, your biggest learnings from that rollout, areas of success. Second one, as you sort of evaluate the app versus the iOS app, what are sort of the areas where you still think you can improve it? And then the third one, with a couple of billion people on Android phones, talk to us about the key strategy to really drive more Android adoption throughout 2020, 2021.

The thing that really motivated our work on Android was this desire to reach a giant community outside of our -- the markets we've -- that have historically been core for us. And for young people, in particular, they're using Android phones around the world in many end markets that are -- the vast majority of people in those markets are using Android. And so to have a communications product that doesn't very -- it worked very well in a market that's predominantly Android, due to performance issues with the application made it really hard for us to grow and serve those customers. So we invested really heavily in improving the Android application. We've been thrilled to see the results of that hard work. And one of the things I'm most excited about is that now a lot of our new features actually start on Android because all of the investments we made to make it easier to build for Android, to make Android faster and more performant have also sped up innovation. And so what you're seeing now is our Android community is sometimes getting features before iOS. And that was never possible until a year ago. And so that, to me, just shows our commitment to Android, and I think we're building a lot more trust with that Android community now because they know how much we care and how invested we are in making sure they get a world-class product.

And then sort of the go-to-market to really grow the users, and I know you started an ad campaign. Are there any other sort of strategies you see yourself using to really capitalize on the size of the Android global install base?

So one of the things that we try to do is recognize areas around the world where there are pockets of people or communities already using Snapchat, who love it, who understand the power of visual communication and then help accelerate their adoption. So one of the things that we find helpful there is making sure that the product is locally relevant. So are there locally relevant AR experiences, is there locally relevant content, is it really easy to find your close friends in that market. And so the more that we can invest there, just in accelerating the growth of the engagement that we already have around the world, that's really where we see a lot of opportunity.

Okay. On the Ad product, again, a lot of changes, a lot of improvements over the course of the last 12 months. Launch of self-serve, a series of new ad products, new measurement partners, new advertiser objectives, they can sort of bid to, et cetera, restructured ad team. Jeremi and team have been very, very busy. So I guess the question is of all of those changes, which of the 1 or 2 do you think have really had the biggest impact to improve advertiser onboarding? And then sort of looking forward, what is the hurdle you still need to jump over to really continue to bring on more and more advertisers and get a bigger share of wallet?

So the most important changes we've made have been the ones that drive advertiser ROI. So you mentioned self-serve, but we continue to invest very heavily in performance and optimization of our ad stack to make sure that it's easy to find the customers that you really care about. So if we can serve fewer impressions to reach that customer that you want to convert them into the purchase flow, for example, that you desire or whatever action you'd like them to take, that means that advertisers will retain very well and will increase their spend over time. So first and foremost, we've been really focused on just improving optimization to generate higher ROI for our advertisers. And then the second thing that we've noticed is that if you look at a survey of advertisers that use Snapchat, the advertisers that are using it get a huge amount of value from Snapchat, and they talk really effusively about the ROI, for example. But when you talk to people who've never tried Snapchat before, their perception of the platform and how much value it can drive is very low. And I think that's where our sales team and our marketing team have been so important over the last year and certainly will be critical going forward is to try to drive that -- the perception of Snapchat and the value it can provide more towards the reality. And that, I think, involves obviously sharing the case studies, sharing the success that we're seeing on the platform, but it also just involves going and meeting with tons and tons of advertisers and business owners and demonstrating for them how we can drive value.

And is the -- in the -- sort of you break apart the advertising world into a branded versus Direct Response bucket. Is it the same hurdle for both players? Is the plumbing there now, where you could deliver a scaled Direct Response offering to advertisers? Or is there more tech to sort of still be built out?

Our Direct Response business is growing really nicely. And one of the great things about Direct Response is when the sentiment around the company a year or so ago was really, really negative, the Direct Response folks don't care. So we invested really heavily against many of those verticals to make Direct Response advertisers as successful as possible to drive revenue growth when the broader market was saying, "Oh, Snapchat is failing or the redesign was stupid or whatever it was" because some of the brand advertisers can be perception-driven. And so I think now that we have this really strong base of performance-based advertising, it allows us to go back to a lot of the folks who maybe were scared away from Snapchat or felt like our community wasn't going to keep growing, things like that, and show them all of the success that these Direct Response folks have had and really bring them back onto the platform and deliver great results.

Part of it sort of seems like the way people engage on -- with the platform, it can have an impact on the ad load or the types of ads you can serve. The time spent per user is sort of -- it's been consistently over 30 minutes. You guys have been pretty clear about that, quarter in, quarter out. But you mentioned Discover, you mentioned sort of different things, Maps, different things that people are doing on the platform. So how has the mix of time of the way people spend their time on the platform changed? And how does that sort of impact the pace at which the advertising dollars flow?

Well, it really depends where a given person is sort of in their life cycle using the product. So as a new user comes on board, they have to learn how to use it, learn how to communicate, then discover all of our content and become more engaged with that. And so we see that sort of engagement time spent ramp over time. And so as we're adding new users, that's how you're seeing the time spent number sort of stay above 30 minutes. We've got this great user base. They're getting more and more engaged. So even as we're adding new users, the time spent metrics are obviously still leading, at least in terms of applications. And I think then the important thing is to sort of look at the different ad products we have and where the engagement is against our service. So for example, tons of people are using augmented reality, sending lots of snaps every day. We have a huge amount of inventory available for these augmented reality experiences that are being created by advertisers, and so we're going to continue to increase fill there. Similarly, with content, we have a huge amount of engagement against the content on our platform. We see a huge opportunity to continue to grow there as well. And so when you just look at the audience today, 75-plus percent of 13- to 34-year-olds in the U.S., for example, the huge amount of engagement on the platform and our ad products, we see a very clear path to ramping ARPU to catch up with other players in the space.

On Discover, I think that product launched 2015. And I think the video strategy, it's somewhat evolved over the years between unscripted content, scripted content. It has some shows now. I guess the first question is sort of philosophically, how do you make sure that Discover is differentiated versus the other leading video platforms around what type of content are you really focused on having on the platform from a video perspective?

One of the great things is that we have so many people using our platform every day that we get to experiment a lot. And we get to look at what people find compelling on our service, what they're watching and then make more of that and get inspired by that. And so a lot of what we've done is just learn from our community what they find really interesting and use that to grow the platform.

Got it. And the premium content, do you think that -- do you see a world where you have a bigger amount of premium license or professionally produced content? Do you see that being a key differentiator long term for that Discover tab?

Yes, I certainly think that will be important to growth. And I think the reason why it's really interesting is it's sort of compelling to all of our stakeholders. So our community loves getting premium content. Publishers and studios really like monetizing their content on our platform against our audience, and advertisers are desperate to reach those 13- to 34-year-old audience in a premium environment with a premium ad unit that we call Commercials, which is a non-skip unit. And so because linear television is really collapsing, especially for the 13 to 34 demo, there's just this massive opportunity around video, not only in terms of what consumers are looking for, but also in terms of advertisers, and of course, Studio. So we're very focused on investing there.

A couple on user growth. Here's something else that I got wrong last year. Your user growth was incredibly strong throughout last year globally from a DAU perspective. I know -- you mentioned it a lot. You mentioned the Android changes. You mentioned sort of the innovation, et cetera. But talk to us about how you think about the 1 or 2 biggest drivers of that acceleration in user growth you saw last year. And then in 2020, is it the same drivers? Or talk to us about the biggest drivers of global DAU growth this year.

Well, when people use our product, they love it. And we've talked a lot about the amazing retention that we see. Someone's used our product for a year, I think their annualized retention rate for the next 5 years is like above 95% or something like that. And so really then the question becomes how do you remove friction from people coming into the service and experiencing that value. And so we've sort of gone down the list and tried to remove as much friction as possible, both domestically and internationally. So Android is a great example. Another good example is data affordability. So we've now partnered with tons of carriers all around the world to make data free if you're using Snapchat, which is really important to our community, especially in places where data is more expensive. And another thing that we're always looking at and watching is connectivity. That has to do, of course, with cellular connectivity and how fast those speeds are, but also where we locate our data centers to serve different communities. So we've been investing a lot also in improving the back end so that it's really fast to send a Snap, which is part of what makes visual communication so fun. So I think just the most important thing we can do is remove friction from using our product, and that's really what we've just been heads-down focusing on.

In the U.S. and Canada, I understand you like to sort of focus on the oldest market where it all began. I think you've talked about how you reached 90% of 13 to 24 year olds, 75% of 13 to 34 year olds, and you mentioned the retention stats earlier. The retention stats, it's impressive. Talk about how do you crack into the older demo, the old man like me, the 35-year-old-plus demo. Where have you had successes? And what do you think sort of you still have to fix for the older people to get them on the platform more consistently?

Actually, the much more important thing is just continuing to engage young people because the retention rates are so high. And given that we have a long-term perspective for our business and we're really investing in the future, that works for us because it allows us to continue to innovate to serve an audience that's really receptive. So oftentimes, just trying to explain the power of visual communication to someone who's been communicating in a written form or verbally for 50 or 60 years, it's harder than explaining to someone who grew up with a phone in their hands, the power of communicating visually. So I think we're going to continue to focus on innovating and to attracting more young customers. And you know, that is just a massive market globally, especially in developing countries, where sometimes the majority of people in a given country are under the age of 34. So I think that continues to be a huge opportunity for us, and we'll stay focused on building really innovative, compelling products, making sure retention stays really high and continuing to attract young customers.

A few questions I have sort of about the individual new products that you have, that you've come out with, either in beta or in full launch. I wanted to start with the e-commerce area. Because in e-commerce, you've had -- you have Collection Ads, the Pixel and then the Catalog, and the product catalogs. So within e-commerce, talk to us about what you've seen, from a consumer behavior perspective, areas of success. And then when -- even from a year perspective, when can we think about that e-commerce vertical really being a material contributor to the ad business?

On the ad side, particularly, we're very excited about the momentum that we're seeing, especially after we released Pixel Purchase optimization, which really allows down-funnel optimization even around basket size and things like that, which is really useful to e-commerce advertisers. So I think we're making a lot of great progress there, and obviously, with Dynamic product ads, which allow retailers to upload their product catalog and optimize against our audience. Those are growing quite nicely. So we just expanded the beta there, and we're really happy with the ROI that advertisers are seeing. And then looking at the consumer side of things, it's obvious that e-commerce is incredibly important. It's going continue to grow the share of retail, especially for young people, and so it's really important that we invest in that consumer product experience. So one of the ways that we've done that is by making it really easy to integrate your Shopify store if you have an account on Snapchat. And what we're seeing more and more is that people are really using content to drive commerce, and I think that's a trend that's just going to continue. Another thing we're really excited about and experimenting with is augmented reality. There seems to be a huge amount of excitement around augmented reality in the way that it helps people visualize what they're shopping for, which I think is really important. So I think trying to get people past that sort of try-on hurdle with augmented reality is a really exciting opportunity for us to invest in.

The Pixel point, I think, is something that's missed by a lot of Wall Street and people external. In particular, when -- where everyone is reading Adweek or reading blogs about cookies and cookies dying, and Google's getting rid of cookies, et cetera, et cetera. So maybe talk to us about how the Pixel fits into your long-term ability to kind of prove efficacy on and off the platform even if cookies do go away.

Yes, that's a great question. So the Pixel allows any advertiser to integrate Snapchat services into their platform and allows us in a privacy protective way to match purchases to advertising. So this is obviously not unique to Snapchat. Facebook and Google offer similar solutions. Although we try to take really a privacy-oriented approach with our implementation. So I think that, of course, cookie-pocalypse is on horizon, but there is a huge amount of opportunity ahead to innovate around privacy and to really make sure that consumers are getting that benefit, while also driving performance for advertisers. So I don't really think this is like a zero-sum catastrophe. I just think that advertising practices are evolving and becoming more protective of consumers, and I think that's a very positive trend.

On maps, yes, I feel like there are a very few keynotes that I do that, that I'll ask about maps. Map monetization, map something. So map monetization, maybe talk to us about how you think about a go-to-market to bring on local SMB advertisers into the map ecosystem. Does that require a sales force build? Do you think those local SMBs would start spending through self-serve? How do you monetize that map engagement that you're building?

Well, I think the most important thing is to build a map that's used for exploration and discovery because we often find that user engagement and behavior is actually what just drives the success of an advertising business. And so if you look at most maps today, they're really used for getting from A to B for directions, and they're not really used to find B. And so I think one of the things that's really compelling about Snap Map is the way people are using it to explore the world around them, to see what their friends are up to, to see what's happening at local venues. And so I think just continuing to lay that foundation in terms of the products and the user engagement around maps will be the most important thing to monetization. So that's really what we're focused on. And we see so much opportunity around augmented reality and content that we really want to focus our sales team there. That near-term opportunity is so massive. I can be tempted to -- you can be tempted to grab that next shiny thing, and really, the headroom is just so substantial. We want to make sure our team is focused there while we build the user engagement, and then we'll think about layering in monetization.

The other sort of next shiny thing you mentioned has been games. You rolled out a games platform. What can you tell us about sort of user engagement, time spent with those games, learnings for the types of genres that seem to be resonating well? And then over time, do you see yourself needing to become more of a first-party game developer? Or sort of staying more third-party and partnering?

We're really excited about what we've been seeing in terms of gaming. I want to be careful not to steal the thunder of our team because we're having a partner summit on April 2. We're going to talk a lot about what's happening with gaming and the evolution of those products. But I think the really cool thing has been the pace at which we've been able to innovate around what games really work. And we're seeing the different types of people gravitate to different genres, which is really fun, and that's teaching us a lot. People like playing different games together, and they definitely like playing different games when they're apart, but we can use things like leaderboards to help make that a more community-oriented experience. So we've been experimenting a lot, learning a lot. It's been really fun to see the success of our partners. We've been able to reach a really large audience with a differentiated gaming product because it allows multiplayer experiences in a way that have so much friction. If you just try to do that on your phone, you're having to install an app and find your friends, get everyone to play together at the same time. Snapchat Games enables that instantly with one tap. And so that's just been a really exciting. I guess, what, it's close to a year now that we've had games. And so we're excited to give a comprehensive update in, I guess, like less than a month now.

Great. I have one more, and I will open it up to audience Q&A, so the mic runners can kind of get their shoes on. On costs and breakeven, since Derek's gotten there, it does seem like there's more discipline being put in on the OpEx side and you have a stated objective to be EBITDA profitable for fiscal '20. So talk to us about sort of the levers within the OpEx to achieve that. And then maybe after you get to breakeven, how do you sort of weigh the puts and takes of needing to continue to invest to really -- to deepen the moat and just expand the use case, expand the overall advertiser platform and offering even after that? Is there investment coming after breakeven?

Yes. So if you sort of look at our financial milestones, really -- we met a really important one in Q4, which was adjusted EBITDA profitability. And of course, because we don't have a ton in the way of CapEx, the conversion from adjusted EBITDA to free cash flow is close to 1:1. And so I think as we're looking at sort of the cash flow generation in the business, looking at this year, we're really excited, not only to work to achieve full year adjusted EBITDA profitability, but also to flow cash flow which will be the next big milestone and one that's very exciting. Then looking to the future, of course, we really want -- are focused on dilution management, which is important for us. So as we work really hard to increase the value of the business, the market cap, would be nice to increase the share price also. And so I think by managing dilution going forward, as we look out the next couple of years, that will sort of be the next big challenge to tackle. And I think in the midst of all of that, we've really continued to innovate, to invest a lot in the future of the business. There's so much opportunity, whether it's content, AR, gaming, like you mentioned, some of the future products that we have in the pipeline. We're going to really want to invest there. And I think if you look at the last couple of years, we've benefited from the fact that we invested really heavily as the business got going. To go from 100 people to 1,000, 3,000 really, really rapidly, meant that there was also a lot of room to improve efficiency, which we really focused on over the last year or 2. And now I think going forward, we see a ton of opportunity to invest. We're going to invest in line with the growth of the business, with revenue and with our financial goals in front of us as well. And it's just so exciting to be in that inflection point. As a company, to be able to do all of that, is really exciting for us.

So managing dilution, I mean, potentially has a -- capital return or repurchases sort of offset dilution. Is that the way you're thinking about that?

I probably should not go into too much detail there, but I think that's sort of the next challenge on the horizon. I'm sure Derek will fill everyone in when relevant.

Got it. Questions from the crowd? Any hands at all? Let me ask you about video. I think one of the things we recently learned is about YouTube monetization. The YouTube ad revenue on a per minute basis, it was a lot smaller than -- certainly, I thought a lot smaller than I think a lot of investors thought, I think. And Discover is sort of monetizing that, that video engagement is a big part of the long-term story. And so when you talk to advertisers about spending dollars around online ad-supported video, talk about sort of the hesitation. Is there a hesitation? Is it price? Is it delivery? Is it performance? Like how is the discussion with the online ad video market? And in your view, is money moving out of television yet? Or is it more just sort of moving out of non-television budgets?

Well, I think advertisers are looking for lots of different things. It's important to have a full product suite to meet their needs. So for example, Direct Response advertisers and even some brands are starting to think of sort of a brand and Direct Response ad as being really important to them. So they want to tell a story, but they also want whoever is watching that ad to take an action. And so with things like Snap Ad, we're able to drive a lot of these intent-based actions against video advertising. I think that's a really compelling ad product for DR and, increasingly, for brands who are thinking about their advertising campaigns that way. There are other advertisers who really, really care about where they're ad lives, sort of what content it's adjacent to, whether or not you can skip that ad, sort of the narrative power of that advertising unit. That's why we've built Commercials, which have that premium content adjacency, which are non-skip and are really in a lean-back environment. And I think that's been driving a lot of really powerful results for advertisers who are focused on that. So I think the most important thing with video is that it's not really one-size-fits-all. I think it's really important to have video products that meet the needs of all sorts of different advertisers, and that's really what we've been focused on.

Great. A lot of changes, a lot of excitement. Evan, thank you, as always.

Yes, thank you.