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TWEET SHARE LINKEDIN
Wall Street didn’t like Snap’s Q1 earnings report Wednesday, the company’s first quarterly report sinc...
now we get to hear from CEO Evan Spiegel. I’m just waiting for some classical music to end so we can get
on with the call....
Khan says that Snap has a lot of room to grow in terms of ad load. That means he’s not worried about the
ratio of ads to u...
2:16 pm PT: Someone just asked Spiegel to comment on the product roadmap. He did not, and did not
provide any hints or are...
2:21 pm PT: Sorry, I missed the last batch of questions because I had to tweet out that quote. Really a great
response.
2:...
determined to grow the right way.
2. Spiegel is not backing down to Facebook. His quote above about Yahoo/Google is great....
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Snap Q1 2017 Earnings Conference Call Notes

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The complete minutes of Snap Inc's first earnings conference call with Wall Street analysts. Snap Inc is the developer of the very popular SnapChat app. Snap Inc had its IPO on March 2, 2017.

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Snap Q1 2017 Earnings Conference Call Notes

  1. 1. TWEET SHARE LINKEDIN Wall Street didn’t like Snap’s Q1 earnings report Wednesday, the company’s first quarterly report since going public back in early March. Snap missed analysts’ revenue estimates and reported a massive $2.2 billion net loss on the quarter, which the company says is tied to stock units that vested as part of its IPO. The company’s initial release was short on details, but now company executives are talking to analysts and investors on a conference call to explain what’s going on. We are listening in, and you can follow along live below. 1:29 pm PT: Hello and welcome to our live coverage of Snap’s Q1 earnings call. A lot of folks have been waiting on this call for some time — Snap’s IPO was the most highly anticipated of the last few years, and BYKURTWAGNER MAY10, 2017, 5:37PMEDT Live notes from Snap’s first-ever earnings call MORE converted by Web2PDFConvert.com
  2. 2. now we get to hear from CEO Evan Spiegel. I’m just waiting for some classical music to end so we can get on with the call. Snap’s stock is down big on the numbers, so there will be lots of explaining to do. 1:32 pm PT: Here we go. CEO Spiegel, Head of Strategy Imran Khan and CFO Drew Vollero are on the call. Snap is reporting non-GAAP financial measures for its earnings, which is interesting because Facebook just stopped using non-GAAP. 1:36 pm PT: Spiegel is now running through the company’s main metrics, which you can read about here. One metric not listed on the report: Spiegel says users are creating three billion snaps (messages) every day. He also says that more than 20 percent of the company’s ad impressions are coming from its ads API — its automated sales software. It’s imperative for Snap that this number keep getting bigger, and quickly. He also said Snap is getting better at adding Android users, which was an issue before. 1:40 pm PT: Khan, who basically runs all of Snap’s business operations, is now speaking and running through some positive advertising use cases. If you’ve ever listened to a Facebook earnings call, this is the part of the call that COO Sheryl Sandberg usually provides. The takeaway here seems to be that Snap is looking for some big-name advertisers, mentioning some big brands like L’Oreal and Anheuser-Busch as those that are advertising on the platform. 1:45 pm PT: Vollero just took over from Khan, who spoke for a while about the ad business and the kinds of things the company wants to do moving forward, like track ads that actually drive users into physical retail stores. (Facebook is also trying to do this.) It’s not super surprising that part of the call was so detailed — Snap’s business is still really young and people want to know exactly what the heck Snap is doing here. 1:47 pm PT: Vollero just mentioned North America as being a huge driver for the company’s future revenue growth. Snap hasn’t been shy about its plans to focus on big, developed ad markets. You can read more about that strategy here. 1:50 pm PT: Vollero says 90 percent of Snap’s new hires are in engineering and sales, which reiterates that the company is very much in growth mode here. It has 2,360 employees now. He also just touched on the massive $2.2 billion net loss the company reported this quarter. That includes stock compensation for employees and CEO Evan Spiegel, which were tied to the company’s IPO. We wrote about Spiegel’s bonus here. 1:53 pm PT: Okay, we are now opening it up to questions. 1:54 pm PT: Spiegel is addressing a question about Snap’s user growth, and says the company is trying hard to avoid “growth hacking” strategies that have become popular with consumer apps, like having people add their entire contact book when they sign up, or sending annoying push notifications to get people opening the app more often. “We don’t think that those sorts of techniques are very sustainable over the long term,” he added. 1:56 pm PT: Spiegel continued to say that the growth will come from “reducing friction” so that people can share more often. He believes making it simpler to share will help create a positive user growth outside of growth hacking. Unrelated: Vollero just said that the company won’t be issuing financial guidance for the rest of the year, which it didn’t issue for Q1 either. 1:59 pm PT: One man’s opinion here: Spiegel seems pretty cool and comfortable on this call so far. Speaking quickly, but with authority. I thought he sounded a tad nervous at the very beginning of the call, but he seems to have settled down. converted by Web2PDFConvert.com
  3. 3. Khan says that Snap has a lot of room to grow in terms of ad load. That means he’s not worried about the ratio of ads to user content that it’s showing people right now. Not surprising for a young business like Snap’s, but this is something Facebook is finally dealing with in News Feed. 2:02 pm PT: Spiegel just mentioned his grandma. And *I believe* teaching her to use email. I missed the context, but I am now picturing him sitting there explaining Gmail and that sounds like a fun video. Spiegel also says the 25+ user demo is up for Snap in both total users and total time spent with Snapchat. 2:04 pm PT: Spiegel is now talking about the company’s hardware strategy, like the Spectacles glasses. (“We’re going to keep experimenting there.”) More than five million Snaps have been created with Spectacles to date, he says, which is small, especially when considering they said earlier on the call that users create three billion snaps per day. Now Vollero says the company is not breaking out Spectacles revenue, but it sold roughly $8 million in glasses last quarter. 2:08 pm PT: Vollero just said the company got little revenue boosts throughout the year in 2016 from a bunch of current events, including the election, college football and the Olympics. Snapchat also does a lot around Stories related to these kinds of events. 2:10 pm PT: Spiegel is now talking about Snapchat Shows, saying the company has about one show per day right now and that will grow throughout the year. He thinks shows, which are short video shows made for mobile phones, are special because they are created specifically for Snapchat, not just repurposed TV content. (Though some of it is also available on TV, just in different formats, I guess.) 2:13 pm PT: Khan is now talking about Snapchat’s self-serve ad products, which let advertisers buy ads through a computer program instead of dealing with a human salesperson. Khan says the company will continue to invest here. He says that Snap’s human ad sales folks get credit for ads their clients buy through the platform to help minimize drama between selling by hand or through the API. Facebook and Google make boatloads of money from automated ad sales, so if Snap continues to grow, the automated ad sales will be a big reason why. It takes a lot of work to sell stuff by hand! 2:15 pm PT: Stock update: Snap stock is down 24 percent ... ouch. converted by Web2PDFConvert.com
  4. 4. 2:16 pm PT: Someone just asked Spiegel to comment on the product roadmap. He did not, and did not provide any hints or areas of interest, either. He said he wants to continue to surprise people. 2:17 pm PT: Khan is talking again about Snap’s sales organization. He’s pleased — what else are you gonna say? Spiegel is now talking about DAUs again, too. He reiterated, again, that he wants to make the product as “frictionless” as possible to help grow the company’s user base. Product improvements = growth, apparently. 2:18 pm PT: Here’s the question of the day so far: “Does Facebook scare you? Why or why not?” Spiegel laughed, and talked about the importance of creativity. “People are going to copy your products if you make great stuff. ... We believe everyone is going to develop a camera strategy.” Also this gem: “Just because Yahoo has a search box, it doesn’t mean they’re Google.” converted by Web2PDFConvert.com
  5. 5. 2:21 pm PT: Sorry, I missed the last batch of questions because I had to tweet out that quote. Really a great response. 2:23 pm PT: Khan is talking about seasonality to user growth, and kind of dismisses the idea. He said user growth is tied to product improvements. There have been lots of questions about Snap’s user growth, which is not surprising as it has slowed since mid-2016 when it seemed to be growing very quickly. The biggest concern for Snap investors: That Snap user growth slows and the company becomes another version of Twitter, and not another version of Facebook. (Or at least maybe another version of Instagram.) 46 57 62 71 80 86 94 107 122 143 153 158 166 Q12014 Q22014 Q32014 Q42014 Q12015 Q22015 Q32015 Q42015 Q12016 Q22016 Q32016 Q42016 Q12017 Millionsofusers 0 20 40 60 80 100 120 140 160 180 Credit: Snap S-1 Snapchat daily active users 2:26 pm PT: Spiegel is now talking about competition. He did not mention Facebook, which I imagine will be the norm. He says the company is “digging out of a performance hole” on Android — the company said Android technical challenges were a big growth issue in Q4. 2:28 pm PT: Spiegel was just asked about his thoughts on China and Japan. “In terms of China, we’ve learned so much from the Chinese market,” Spiegel said. Added that he’s in awe of Tencent, who was an early investor, but says that’s about the extent of the business there. Added that Japan is a good market for Snapchat, and is thinking about tools specific to that market moving forward, but didn’t offer details. 2:30 pm PT: We just had the last question, which is about cloud services. Oh boy. Snap works with both Google and Amazon for cloud services. He says long term the “dream for the cloud” is “containerization.” I don’t know what that means. 2:31 pm PT: And that’s a wrap! My key takeaways: 1. Investors are thinking lot about Snapchat’s growth. That storyline will not go away, and the company seems converted by Web2PDFConvert.com
  6. 6. determined to grow the right way. 2. Spiegel is not backing down to Facebook. His quote above about Yahoo/Google is great. Whether or not he should be scared is another question. 3. These calls are probably going to get old fast given Snap doesn’t seem interested in talking at all about its product roadmap or future plans. No revenue guidance, no product guidance. Spiegel is notoriously secretive, and doesn’t look like running a public company will change that. See you in three months! MORE FROM RECODE The massive, worldwide ransomware attack was stopped by a researcher ‘accidentally’ Three things we learned from Snap’s no good, very bad week A global cyberattack on hospitals and other organizations so far hasn’t crippled the U.S., an official says NBCUniversal spent around $230 million to buy the video tutorial site Craftsy Lawmakers want answers from the White House after Trump’s ‘tapes’ tweet Hillary Rodham Clinton is coming to Code converted by Web2PDFConvert.com
  7. 7. Terms of Use • Privacy Policy • Communications Preferences Contact • SendUs a Tip • Masthead • Sponsorships • Podcasts • Newsletters All Systems Operational .Checkout our status page for more details. Advertise withus RECOMMENDED Recommendedby THE LATEST The massive, worldwide ransomware attack was stopped by a researcher ‘accidentally’ BYKURTWAGNER Three things we learned from Snap’s no good, very bad week BYKURTWAGNER A global cyberattack on hospitals and other organizations so far hasn’t crippled the U.S., an official says BYTONYROMM NBCUniversal spent around $230 million to buy the video tutorial site Craftsy BYJASON DEL REY The FCC is being flooded by fake, vicious comments as it begins debating net neutrality What's the Most Comfortable Mattress? Sponsored| YahooSearch See What’s New in Windows Mixed Reality for Devs Sponsored| Microsoft This Brilliant Company Is Disrupting a $200 Billion Industry Sponsored| EverQuote Snap’s Spectacles business isn’t a big business Recode Daily: The real reason Snap lost $2 billion converted by Web2PDFConvert.com
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