Snap Inc. (SNAP) Q2 2020 Earnings Report, Transcript and Summary

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. [Operator Instructions] 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; Jeremi 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. 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 annual report on Form 10-Q for the year ended March 31, 2020, particularly in the section titled Risk Factors. This information can be found in our other filings with the SEC when available. 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 in our press release issued today, a copy of which can be found on our Investor Relations website. 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 nonrecurring charges. At times in our prepared remarks, or in response to questions, we may offer additional metrics to provide greater insight into our business or our quarterly and annual results. 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, Bitmoji 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 Wannaby’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-on. 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 two 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 ranged from breaking news about peaceful protests to a dialog 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 from 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. Snap Originals continue to attract audiences that rival those of top TV series, and have reached more than 75% of the U.S. Gen Z population so far this year. In addition, many of our media partners are finding success adapting their television properties for our platform in order to reach an incremental audience that is not watching TV. According to eMarketer, the average U.S. adult spends 29 more minutes with mobile content compared to TV, 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 backend 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 ecommerce 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 demand 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 Jeremi to share more about our business.

Thank you, Evan. We’re pleased with our results for this quarter amidst a challenging and evolving global environment and we continue to see significant upside and opportunity for our business as we support our community and advertising partners. In Q2, we generated total revenue of $454 million, an increase of 17% year-over-year. We are confident that our business is well-positioned for the long-term, evidenced by the resilience we are seeing with direct response advertisers, as well as our continued success helping brands craft valuable messages and effectively reach our community. We’ve had a lot of conversations within Snap about how our team, our products, and our business can be forces for positive change in the world. In the U.S., our platform reaches 90% of 13 to 24 year olds and 75% of 13 to 34 year olds. This audience is critical for advertisers as the Snapchat Generation develops lifelong habits, but also because young people are focused on driving change in the world and building a better future. We take our responsibility to educate, inform, and support this incredible generation very seriously and we’ve committed to using our business as a force for good. Given the relationship we have built with the Snapchat community worldwide, we’ve been able to help brands deliver timely messages that resonate with 13 to 34 year olds, who see the world differently than their parent’s generation. This is particularly important against the backdrop of current events, as advertisers look to appropriately align their messages with what our community seeks; positivity, good will, and most-importantly, authenticity. We have partnered with many brands in verticals that are well-positioned in the current environment, such as consumer packaged goods, gaming, streaming, and e-commerce, while also helping our partners with recovery roadmaps for industries that have experienced an outsized impact from COVID-19. We had the opportunity to work closely with Monster Energy to adapt a new campaign for Snapchat in response to stay-at-home orders with their #CrushQuarantine campaign across Snap Ads, Commercials, Story Ads and Lenses. Monster’s multi-ad product exposure ultimately generated a 12 point lift in ad awareness and a 5 point lift in message association. Our large audience, creative formats and advanced measurement tools provided a significant opportunity for brands such as Monster Energy to reach Snapchatters during the global pandemic. Our team has also been working hard to provide useful products and resources for businesses as they manage the current economic landscape. We added multi-country targeting capabilities, allowing advertisers to optimize for the best performing customers, regardless of location, catering to location agnostic products and services, like commerce, fintech, and games. In addition, we launched Places on our Snap Map, which highlights businesses that are popular with our community and offers information like hours, reviews, and delivery options via third party partners. While we are just getting started with this opportunity, as parts of the world begin to reopen safely, we will be there to help the Snapchat Generation support their favorite local businesses and discover new ones. We remain focused on making progress against our ARPU opportunity through our three key priorities. First, investing in our ad platform in order to drive improved relevance and deliver measurable ROI. Second, efficiently scaling our sales and marketing functions to support our advertising partners globally. And third, building innovative ad experiences through video and augmented reality that deliver real business value. Our three priorities along with our unique reach and growing, global audience allow us to drive performance at scale. Since completing the transition to our self-serve ad platform, we have been able to reliably translate improvements in relevance, optimization, and measurement into revenue growth by delivering increased ROI. During a time of disruption, marketers must make difficult decisions. They need flexibility, creativity and strong relationships, but most importantly, they need performant media. Advertisers are becoming more performance-oriented, and the economic conditions only accelerated that trend this quarter. Our flexible and advanced self-serve platform, our strong suite of performance ad products, and our relentless focus on measurement and ROI, continue to help our advertising partners deliver positive results. The global health crisis has also accelerated the shift to a more digital economy. Our advertising partners are exploring more ways to offer services digitally, including at-home fitness apps, online education programs, retail stores and restaurants offering online ordering and delivery services, and mobile-first banking and trading. This crisis is encouraging all business owners to adopt digital marketing methods to engage with their customers globally, and we are well-positioned to take advantage of this shift. Our early investments in building the fundamentals of our global business have paid off, and have resulted in our highest number of active advertisers to date this quarter. We’ve built a full suite of ad products designed to meet advertisers’ needs in this new world, particularly for ecommerce, such as swipe-to-call, pixel-verified purchase, app re-engagement, and Dynamic Ads. We recently launched Dynamic Ads globally, and we are finding that advertisers are already seeing early success with this new ad format. Rob Seidu, Senior Director of Media Activation at Adidas, said "In the wake of the COVID-19 epidemic, Adidas has further accelerated its digital business. With ecommerce a key focus for us in 2020 and beyond, we were excited to Beta test Snapchat’s Dynamic Ads in the UK, Germany, France and the Netherlands. Within weeks we saw 52% growth in return on advertising spend and we have subsequently grown our investment." More and more e-commerce businesses are adopting our Snap pixel to optimize for down-funnel purchase objectives, demonstrating the increased demand we are seeing from businesses measuring campaigns via first party attribution. For example, in Q2 2020 Chipotle launched a new free delivery campaign on Snapchat to drive purchases both on Chipotle.com and within their app. Their campaign drove over 3x the number of attributed purchases compared to their Q1 2020 campaign and 171% increase in return on ad spend compared to the prior quarter. We remain focused on helping businesses such as Chipotle translate measurement and optimization into meaningful conversions and strong ROI. Our second priority is to grow demand through better service of our advertising partners. We continue to hire talented sales professionals to build out and improve our verticalized coverage that serves many advertisers across the globe. While we are not able to host in-person meetings with our advertising partners, our teams have quickly pivoted efforts to virtual industry education, and our team has led thought-leadership webinars during quarantine and partnered with many industry leaders like Shopify and Smartly.io to further educate advertisers about our robust ad tools and capabilities. We are also supporting advertisers by building out more on-demand learning tools such as Snap Focus, which includes six learning courses that walks through everything advertisers need to know to create their first ad campaign. Our third priority is to lead the way with innovative advertising. Over the past five years, we’ve been building a powerful video business with the goal of connecting brands and advertisers to the Snapchat Generation. For example, COVERGIRL Clean Fresh came to Snapchat to get in front of the hard-to- reach Gen Z and Millennial female audience. Their campaign leaned heavily into Premium Video, featuring Snap Select Commercials, Snap Ads and Filters. Of the total audience reach, 62% was unique to Snap. The campaign drove a 9 point lift in Ad Awareness, and a lift in Purchase Intent that was 4.5x the Snap US CPG Norm. This is just one example of many that signals a broader shift in how Gen Z and Millennials consume content. It is getting harder and harder to reach this audience on linear TV or commercial-supported streaming, and it is not just the younger generations, average daily Discover content viewership by people over 35% has increased by over 40% year-over-year. Based on this growth and in response to the evolving needs of our advertising partners, we introduced First Commercial, giving advertisers a way to reserve the first Commercial a Snapchatter sees during the first Show they watch, allowing brands to make that all-important first impression. Our Commercials are designed for both Social Video and Online Video buyers, with the goal of attracting incremental Online Video and TV budgets into our hand-curated, brand-safe content environment. In fact, the content on our Discover platform is brand-safe by design. In order to provide advertisers with fixed priced, reserved inventory next to this content, we introduced Snap Select, where ads only appear in our hand-curated selection of Shows and content from media brands like ESPN, NBC, and People. In Q2 we expanded our Snap Select curated ad placement options to five topics, 'Sports', 'Entertainment', 'Beauty', 'Lifestyle', and 'News', enabling advertisers to reach viewers within each vertical. We believe that the future of customer interactions is immersive. The most engaging and creative ads on our platform are powered by our augmented reality Lenses. Brands from every vertical have worked with us to provide Snapchatters with fun ads that they play with and share with friends. Ultimately we want to enable advertisers with the tools to build the digital layer around their products. For example, we recently launched our augmented reality Lens ‘try-on’ campaign with luxury brand Gucci, which allows Snapchatters to virtually try on and purchase some of Gucci’s most iconic shoes via Snapchat. The Lens was played with by our community for 22 seconds on average and in some markets generated a five times Return on Ad Spend. Snapchatters are actively looking for more and more ways to engage with brands on our platform, and we’re excited to help partners like Gucci connect with them during this time. We believe that AR try-on is going to be incredibly important to the future of commerce and we are excited to work with more partners to build out incredible experiences for our community. Longer-term, we see a significant opportunity for brands to provide utility for Snapchatters while generating real business value across our service – not just via ads in content. Brands are starting to invest in Snapchat beyond advertising by building fun, engaging, and useful experiences for Snapchatters. The launch of Brand Profiles this month, which Evan highlighted earlier, is a key pillar of this future. Today, our focus is on giving Brands a home for all the innovative AR experiences that they create, alongside their stories. In the future, we believe that Snapchatters will engage naturally with businesses of all sizes across our service. For a brand like Target, this could mean they visit the Target Store on the Map to check store hours; use a Mini to find the best offers with friends; try on the latest looks via an AR Lens; and more. In the five years since we launched ads on Snapchat, we’ve created the industry’s first-ever vertical video format, brought branded AR experiences to the mainstream, and pioneered privacy-safe, mobile- first advertising in order to help advertisers everywhere reach our community. We will continue to invest for the long-term by demonstrating measurable ROI for our advertising partners, empowering our teams to speak strategically to the value of our ads, and leading the way with innovative advertising products and services to help advertisers scale. We’ve built a robust advertising platform to reach the Snapchat Generation, who are digitally native and uniquely positioned to help jumpstart the recovery. Given our young and influential community, their depth of engagement on our platform, and our overall opportunity to take share of the growing digital advertising market, we believe we are well- positioned to drive business results for advertisers over the long-term. With that, I’ll turn the call over to Derek.

Thanks Jeremi. Our Q2 financial results reflect our priorities of growing our community, making focused investments in the future of our business, and scaling our operations efficiently in order to drive towards profitability and positive free cash flow. As Evan mentioned earlier, our community grew to 238 million daily active users in Q2, reflecting year-over-year growth of 17% or 35 million. Growth in our community was robust, however, the final result fell below our earlier estimate of 239 million. At the onset of widespread shelter-in-place orders, as people sought to stay connected and entertained from home, we observed an increase in daily active users that informed our initial estimate. This initial lift dissipated faster than we anticipated as shelter-in-place conditions persisted. Despite the unusual circumstances influencing user growth in the quarter, we were pleased with the overall level of growth and that growth continued month-over-month from April to May and May to June. The growth in our community continued to be broad based in Q2. In North America, DAU grew by 9% year-over-year to reach 90 million. In Europe, DAU grew by 12% to reach 71 million. In Rest of World, DAU grew by 37% to reach 77 million. The outsized growth in Rest of World follows the rebuild of our Android application in 2019, and our subsequent efforts to further localize the product. A good example of this momentum can be seen in India, where daily active users more than doubled year-over-year in Q2. We see a significant opportunity to continue to grow our community as we further invest in localization of our product through language support, local content, and marketing partnerships across a variety of geographies. Q2 revenue was $454 million, an increase of 17% year-over-year. While our growth rate for the full quarter exceeded the early quarter-to-date result we shared in our prior call, the path to this outcome was not a straight line. The operating environment has remained challenging as COVID-19 continues to impact macroeconomic conditions, and the businesses of our advertising clients. Many of our advertisers have seen interruptions in their businesses, especially those that rely on in-person interaction with their customers such as restaurants, entertainment venues, transportation services, physical retailers, and hospitality providers among others. In addition, many advertisers paused spending for periods of time during the quarter in order to swap out their ad creative for messaging that was more appropriate for the given moment. These challenging circumstances interrupted otherwise robust momentum in our self-serve platform. We continue to see strong adoption of our goal based bidding products, driven by demand for down funnel bidding objectives, including pixel-verified purchases, pixel-verified subscriptions, app purchases, and other objectives that are tied to directly measurable returns on ad spending. For example, revenue from pixel-verified purchases increased more than 4x year-over-year in Q2, and is now among our most important goal based bidding products. From a regional perspective, our North America revenue grew 18% year-over-year in Q2, or roughly in line with the business overall. In Europe, revenue grew 30% year-over-year as the end of stay at home orders in Europe has contributed to an improving operating environment in this region. In addition, Europe was relatively less impacted by advertisers pausing spend to swap out creative messaging in Q2. In Rest of World, revenue grew 2% year-over-year in Q2 with the relatively lower growth rate reflecting COVID-19 related operating headwinds that were more pronounced for our advertising partners in this region, including limitations on cash transactions in some countries where cash transactions remain important to direct response advertisers, and supply chain issues that impacted certain ecommerce categories more significantly in this region, among other factors. ARPU was stable in Q2 as year-over-year growth in daily active users was approximately equal to year-over-year growth in revenue. Higher sell-through of impressions, and strong growth in content engagement, have contributed to nearly doubling year-over-year in Q2. As a result, eCPM declined 24% year-over-year in Q2, which is roughly in line with the decline observed in the prior quarter. While we aspire to achieve a market level eCPM for our audiences and ad units over time, relatively lower eCPM’s in the near term position us well to attract and retain new advertisers by helping to deliver an attractive return on ad spend. Gross margins were 47% in Q2, up one percentage point versus the prior year. Infrastructure costs per DAU were $0.69 in Q2, which is the lowest cost per DAU we have reported since Q1 of 2017, and comes on the heels of our annual infrastructure cost camp where our engineers dedicate time to infrastructure efficiency projects that go above and beyond our ongoing cost management programs. On the content side, we have been doubling down on our investments in premium content, and we are seeing productive returns on these investments with the daily average number of Snapchatters watching Shows growing more than 45% year-over-year in Q2. In addition, we continue to see our overall Discover audience mature, with the daily average number of Snapchatters in the 35 and over age group engaging with Discover content growing at a rate of more than 40% in Q2. We are particularly pleased that we have been able to grow our community at a robust rate, and make investments in premium content, while continuing to expand our gross margins. Operating expenses were $307 million in Q2, up 19% year-over-year. This increase reflects continued investment in our talent base, driven primarily by growth in our engineering and monetization teams. We’ve observed a steady and significant improvement in employee retention over the past year, and this has helped ensure that the investments in our talent base are highly productive, which is evidenced by the product innovation showcased during our recent partner summit. We have also made investments in marketing to grow our advertiser base and Snapchatter community, which have contributed in part to robust growth in these areas. These investments have been partially offset by savings related to lower travel and event related spending while our teams largely continue to work from home. Adjusted EBITDA was negative $96 million in Q2, or $17 million unfavorable versus the prior year. While we have carefully prioritized our investments given the uncertain operating environment, we have remained focused on investing in the long-term growth of our business in order to build on the momentum we have established with our community, and our advertising partners. While this has put downward pressure on adjusted EBITDA in the near term, we believe it is the right decision for the long-term health of our business given the strength of our balance sheet. Operating income in Q2 was negative $311 million, or $6 million unfavorable versus the prior year, as lower stock-based compensation partially offset the year-over-year decline in adjusted EBITDA. While we have continued to grow our team, we have seen stock-based compensation decline year-over-year by approximately 5% in total. This decline comes as our team continues to migrate towards sustainable and competitive compensation structures that we have put in place in the years following our IPO. We view careful management of our stock based compensation programs as a key input to efficiently managing our fully diluted shares outstanding as we seek to build shareholder value over the long-term. Net income in Q2 was negative $326 million, or $71 million unfavorable versus the prior year, which reflects the flow through from operating income noted above, higher interest expense related to the convertible notes issued over the course of the past year, and the impact of one-time gains in the prior year related to the disposal of certain assets. Free cash flow was negative $82 million in Q2, an improvement of $21 million year-over-year, as lower adjusted EBITDA, higher interest payments and higher capital spending were more than offset by improvements in net working capital as we continue to scale our business efficiently. We ended Q2 with $2.8 billion in cash and marketable securities, up from $2.1 billion at the end of Q1, which reflects the proceeds of the convertible notes issued in Q2. When combined with our undrawn credit facility, we currently have access to approximately $4 billion in total capital, which ensures we have the working capital necessary to stay focused on the long-term regardless of the operating environment. Similar to last quarter, we do not intend to provide financial guidance for Q3, but we do want to provide a sense for where we are today and how we plan to invest in our business. Thus far in Q3 we estimate year-over-year revenue growth to be 32% through July 19. While we are cautiously optimistic that these trends could sustain over time, we are also conscious that operating conditions may remain volatile, and that economic conditions could further deteriorate. For example, advertising demand in Q3 has historically been bolstered by factors that appear unlikely to materialize in the same way they have in prior years, including the back to school season, film release schedules, and the operations of various sports leagues. At this point in time it is difficult to predict how these factors may impact advertising demand in the remainder of Q3. Our best estimate at this point is that our full quarter revenue growth rate is likely to be below our quarter-to-date estimated actual growth rate, and as a result we have built our internal investment plan based on revenue growth of approximately 20%. We intend to continue to invest in our business in Q3 and our estimates for our cost structure assume that daily active users will be between 242 million and 244 million in Q3. This implies year-over-year growth of approximately 15% to 16% or 32 million to 34 million daily active users. On the expense side, we currently expect that our combined cost of revenue and operating costs, which are included in the calculation of Adjusted EBITDA, will grow year-over-year in Q3 at percentage rates in the low to mid-20s, as we continue to invest in the long-term growth of our business. Given that a small minority of our cost structure varies directly with revenue in the short-term, we do not currently expect substantial variance in the cost growth estimate regardless of the revenue outcome in Q3. While there is continued uncertainty about near-term revenue growth rates given the challenging operating environment, we are pleased with the strength of the underlying momentum in our Snapchatter and advertiser communities, and we remain highly optimistic about the long-term prospects for our business. Thank you for joining our call today and we will now take your questions.

That concludes the prepared remarks for today’s earnings call. And we will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Ross Sandler of Barclays. Please go ahead.

Hey guys. Just I think what everybody on the call wants to know is, are things improving or not really? So can you talk about what might have caused the growth rates to pick up from mid-teens in 2Q to the low 30s in July? And then maybe beyond the reasons provided a minute ago, why you expect that to drop off in the future? Or is that just some conservatism baked in to the plan? And then any color just over the last couple of months, since the last update on growth rates for brand advertising revenue versus direct response, advertising revenue, any color there would be helpful. Thanks a lot.

Sure. Thanks for the question Ross. I'll give a little bit more color here is that we're really proud of the work that our team did to deliver results for our business. We're working from home and they're challenging operating environment this past quarter and continue to do today. We mentioned this on our prior call that we experienced a growth rate of 15% through the first few weeks of Q2, so our final results of 17% was just above this, but the result wasn't in a straight line. There were periods of time where advertisers had to pause, to reshift, to create of these kinds of things, so it was not straight line. They faced the challenges in their business due to COVID-19 and other interruption. And we also saw a number of advertisers pause spending as time just get adjusted, better suit the moment, but to be specific our direct response business improvement just was resilient and we have continued to benefit from the growth in adoption of our goal-based bidding product and that is driving the continued growth in the top line overall that you are seeing now. As far as some of the other parts, the brand side of the business has begun to recover as revenue growth in the rest of world has recovered. And this is contributing in part to the improved results we've seen this quarter. In addition, we see continued strength in categories like CPG, streaming, home fitness and tech and of course we're continuing to see declines in things like tourism, dining restaurants, while they continue to be challenged in this environment. We're hopeful that the trends that we've observed recently will persist, but we're also conscious that the operating environment does remain challenging. And many of the factors that have historically contributed to the growth of Q3 are unlikely to materialize in the same way this year that they have in prior years. Examples of that would be the start of the NFL season, tent-pole movies being moved out of summer movie season to school, et cetera, all of these things will happen, but just in ways that were a little bit less familiar. So that gives some color hopefully on the cautiousness there.

Our next question comes from Rich Greenfield of LightShed Partners. Please go ahead.

Hi, a couple of questions. I mean, I guess first off, Evan, you've talked a lot about the investments you've made in content, obviously Discover looks dramatically different. You are putting a lot of effort into Minis and other things basically a lot of spend to make the product better. Curious then why are we seeing sort of a deceleration in user growth? It seems like Snap is so much better than it was six and 12 months ago. And I maybe even specifically calling out Europe, like why is European growth kind of post the Android, why are we not continuing to see a continued acceleration as content flows in over there as well? And then just on kind of the elephant in the room, there has been a boycott as I'm sure you and everyone are aware of some of your peers, but most notably Facebook. When you think about the commentary that Jeremi and Derek were just talking about for Q3 and even Q4, what is factored in for shift of spends from other platforms? How are you taking advantage of major advertisers literally stopping their spend on Facebook and even some of the other platforms?

Hey, Rich, it's Derek speaking. I'll take the first part of your question there around the growth. I think the first thing that I'd share is we've been pleased with the growth trajectory of our community over the past year. The 35 million DAU that we added in Q2 was among our highest quarters of absolute year-over-year growth that we've seen since 2017. Following the rebuild of our Android application in early 2019 and our subsequent efforts to localize our product, we've seen elevated growth rates in the Rest of World region. And I noted specifically some of the gains we've made in India in my prepared remarks. We've also seen fairly healthy growth rates in our more established markets in regions of North America and Europe. Our estimates for DAU in Q3 are for 15% to 16% year-over-year growth, which as you noted is 1% to 2% below the year-over-year growth rate we observed in Q2. And I can share some further context on that. First, I would note that Q3 of the prior year reflects the full quarter benefit of AR products we launched in the middle of Q2 of 2019. So this contributes to a tougher year-over-year comp this coming quarter. In addition, the sequential growth in Q3 is typically seasonally lower than Q2 and our estimates for the sequential growth in Q3 take this into account. So after taking these factors into consideration, we believe our estimates for Q3 reflect the continuation of the healthy underlying growth trends that we've observed in the business over the past year. So we continue to see a lot of opportunities to grow our community over the long-term. And we are focused on investing in our product to realize this opportunity as a result. This is why we've shared our plans to continue to invest in our talent base, our premium content and marketing in addition to our efforts to further localize our product over time. So thanks again for the question. I hope you find this additional context helpful. I'll turn it over to Jeremi to handle the second part there.

Great, thank you, Rich for the question. I want to speak specifically about the Facebook boycott to your question. It is difficult to ascertain exactly what the impact of the Facebook boycott is on revenue at this time. Some of the Facebook boycott could also be related to overall content marketing budgets, just given the environment. What we do know is that it's always positive to engage at the highest levels of an organization. And this conversation has opened the door for us to do that extremely frequently at the CEO and CMO level. And in particular, we've been designed in a brand-safe, hand-curated way since the beginning. There is no town hall or ability for an unvetted user to post to our whole community. And as advertisers evaluate platforms, which align with their values, these deliberate decisions made years ago are of paramount importance. With that being said, the majority of our revenue is VR, which is a segment not broadly participating in the boycott. And with the advent of dynamic ads, the addition of worldwide targeting and more, we're continuing to deliver results for those advertisers, which put us in a strong position to gain and retain those advertisers over time, independent of the boycott.

Our next question comes from Heath Terry of Goldman Sachs. Please go ahead. Heath, your line is open on this end.

Great. Thank you. When we think about things from just maybe a little bit of a higher level perspective, I was wondering if you could give us a sense of sort of the evolution of the advertising base over the course of the crisis. Just in terms of the vertical, the goals that you're seeing then and seek out and sort of the tech in sales channel that they're using to engage with you. And particularly to the extent that you're seeing advertisers new to the platform, any sense where their spend is coming from? And I guess at the same level, that question about your users, how are the users that are new to the platform sort of different in their behavior? Maybe quantify it in terms of time spent on the platform and the way that's evolving.

Sure. Thanks for the question, Heath. Our early investments to build the fundamentals of our global business have really paid off and they've resulted in our highest number of active advertisers in quarter-to-date this quarter. As I mentioned earlier, we do continue to see strength in categories like CPG streaming at home fitness and tech, and we talked about tourism and dining restaurants earlier, which do continue to be challenged. The sales team does continue to support advertisers of all space currently, whether they are economically challenged or not, so that we can focus on the long-term of the business, but have pivoted our resources towards the advertisers that are continuing to spend in the direct response space. We are continuing to see that strong demand from direct response advertisers, looking for lower funnel data optimization and delivering ROI. I think generally the way to look at it is that the global health crisis has accelerated the shift to a more digital economy. So anything in that category is – are areas where we're seeing new advertisers, retained advertisers and growing advertisers, those again, would be kind of the at home fitness, online education, retail stores as they pivot to omni-channel as well as restaurants offering online ordering and delivery services, mobile banking. I could go on, but the call is short. So just wanted to kind of give that over overall take look, and then I can turn it over for the second part of your question.

Hey Heath, it’s Evan. Thanks for the question on engagement. We’re really excited about what we’re seeing, obviously, on the content platform, as we mentioned, where a content consumption has grown more than 40% year-over-year, and also in terms of growth and unique, same thing that we’re seeing in the camera, huge increase in Snap creation, which has outpaced DAU growth. And what we’re really excited about is this new action bar we rolled out at SPS, which actually elevates all of these different platforms and creates more surface area for people to engage with all of our products across Snapchat. And so we actually think that’s going to be a great way for people to get to know Snapchat when they first sign up. As you mentioned when people sign up, they do evolve their behavior over time as they get to know the service. And so by removing friction from that process and helping people transition across all of our different platforms, it can really unlock more value from Snapchat. So we’re really excited about what we’re seeing across the platform, lots of great momentum and engagement, which is driving the business overall.

Our next question comes from Michael Levine of Pivotal Research Group. Please go ahead.

Thanks for the question guys. Both Evan and Jeremi, you guys had referenced dynamic product ads. I’d love to hear a little bit more about that. Specifically, I mean, do you have a sense of what percentage of adoption you think you could see out of commerce advertisers? And I guess just around adoption in general, like are advertisers ready for this at this point in time or what do they need to do to get their ducks in a row to be able to go ahead and start giving you guys the product catalog. Thank you so much.

Sure. Thank you for the question, Michael. Yes, we are really excited about how Dynamic Ads are going. We’re seeing strong growth globally and we’re excited to build on the success and learnings of our initial U.S. rollout. We now have solid early success stories in MENA, Europe and in Canada. And it’s an area in which we will continue to invest. We are really, really excited about the progress ahead of the holidays and seeing the adoption across a number of verticals. Advertisers are absolutely ready for this. It’s designed similar to other products in the market and Dynamic Ads is now processing over $100 million products per day from catalog, which provide a list of rich set of items that Snapchatters are interested in engaging with and are the most relevant to them. It’s a huge milestone in our pursuit of always on budgets as it pertains e-commerce in particular, but could also utilize more broadly as we continue to grow. And as the name suggests, it dynamically updates based on the catalog, and we will always be relevant as advertisers continue to adopt this technology.

Our next question comes from Lloyd Walmsley of Deutsche Bank. Please go ahead.

Thanks. A couple, if I can. First, last quarter you said the upfront commitments doubled this year. Wondering if most of that spend is kind of planned for the second half or if it’s already been flowing through first half results. And do you feel like, it’s a reliable commitment given everything going on this year. And then I guess just secondly, going back to the DAU growth you said, it did improve each quarter, but it was a little below your expectations. Anything in particular you’d point to as to what came in below expectations, like, was any of it related to kind of maybe this new navigation bar? Is that performing in line with expectations? Anything you could share would be helpful. Thanks.

Sure. I can take the part about the upfronts. We’re really happy with the progress that we’ve seen with upfront bookings and we’re excited that brands and agencies have confidence in our platform and advertisers are committed to working with us in an always on way, given the return on ad spend that they’re experiencing. In this particular time marketers are extremely focused on ROI. Even though they always are, right now is even more critical. Every dollar spent is a dollar that matters and we continue to deliver that. Our upfront commitments are a tangible sign that for many advertisers we’ve graduated from the experimental budget into a core part of their strategy. And the doubling of commitments in 2020 is just further evidence that we’re becoming increasingly important for our partners. As it pertains to what we’re seeing thus far, we are working with our partners to be flexible with upfronts in case they need to shift spending from one quarter to another. So examples of that would be something that I used earlier, Temple movie for instance moved from Q2 to Q3. We are being very flexible about the timing of the spend, but we haven’t seen a significant inbound request to make material changes.

Hey there, it’s Derek speaking. I can take the second part of your question there. Just in terms of the texture of the DAU growth in the quarter. I think early in the quarter, we were really pleased with what we saw in terms of a lift of engagement as widespread shelter in place orders were in place and sustained. And we saw an initial lift in the frequency of engagement there that contributed to a lift in DAU. And we were pleased with that. As I mentioned in our prepared remarks diminish faster than we had anticipated in our estimate, which is why we came in at approximately $1 million below our estimate that we’d given on the prior call. But I also shared there that we saw sequential growth in DAU from April to May and then again from May to June, so continued our growth there. In terms of your question about the new NAV or not a big factor in the quarter, but I would know that we’re pleased with their early results there, as with all new products that we launched. We have gone through rigorous testing to make sure that it would be audited to the community. And we’re pleased with what we’re seeing in terms of early results there. So thanks for the question and hopefully that additional context is helpful.

Our next question comes from Mark Mahaney of RBC. Please go ahead.

Thanks. Is there anything that you’re doing actively to try to resuscitate growth in ROW, you did call it out as an area of weakness, but is there anything that are those mostly macro factors or anything you can do to accelerate that growth? And then secondly, we have a lot of political ads coming out online I don’t, if $3 billion or $4 billion, but it’s a big chunky number. And I know you are making it a point to show as much transparency around the ads as possible, but what are you doing to tap into those ad dollars? I would think that part of that demo you have, will be key to both parties. I would think in these elections coming up and I would think it’d be a good place to message to them. But are you trying to trying to tap into those dollars that political ad spent? Thanks a lot.

Mark, thanks for the question. This is Derek speaking. I’ll take the first part of your question, which is with respect to the growth rate that we saw in Rest of World. In recent quarters, as you’d likely noted, Rest of World has often been our fastest growing region for revenue. So we were definitely disappointed with the 2% year-over-year growth in Q2. Unfortunately, the Rest of World region for revenue was more significantly impacted by several COVID related factors than our other regions, including some of the items, I mentioned in our prepared remarks, such as restrictions on cash transactions and interruptions to supply chains impacted both physical and e-commerce retail. What I would add though, is that fortunately we’ve seen since then the revenue growth rates in the Rest of World region begin to rebound, and this is contributing in part to the better results that we’re seeing thus far in Q3. So happy with the trends that we’re seeing there now, although the interruptions and disruptions that we experienced in Q2 are disappointing things are looking much better now. I’ll turn it over to Jeremi to handle the second part of your question.

Sure. So as it pertains to political ads, yes, it’s a segment that we are actively going after we serve 90% of 13 year to 24 year olds in the U.S. and 75% of 13 year to 34 year olds in the U.S. So educating them, allowing them to learn more about the issues, any factual based manner is super critical and we are, that is the segment in which we’re working. To ensure transparency in political advertising on Snapchat, all political issue and advocacy ads are publicly available along with relevant information on impression spends and paying entities and our Snap political and advocacy ad library. We have very specific guidelines for political advertising that apply to ads related to elections and advocacy issues. But most broadly, we do believe that Snapchat can play an important role in getting first time voters engaged with our democracy. And we look forward to providing a responsible path for our community to engage with their elected officials, candidates and campaigns.

Our next question comes from Brent Thill of Jefferies. Please go ahead.

Thanks for taking my question. This is James on for Brent. At your Partner Summit, you announced the update to the Snap Map with, with places. Could you go a little deeper into your strategy for building out this particular product? And then curious whether you can comment on how you plan to eventually monetize map and what that timeframe might look like? Thanks a lot.

Hey, James. Thanks for question. Really excited about what we’re seeing with the map and we think it represents a huge opportunity, because we are personalizing in the map to reflect your view of the world today. Most people use the maps for wayfinding and directions rather than understanding the world around them in a personalized way. And so as we think about adding your friends to the map, and also adding places that are important to you, we feel that the snap map better reflects your view of the world around you. And so over time, we believe that will create a monetization opportunity, because people are using the math to browse to see what their friends are up to see what’s happening at different locations and that sort of mass consumption is different than the A to B wayfinding that typically happens on maps today. So, we’ve taken some intermediate steps in terms of monetization; well, helping local businesses reopen following the COVID lockdown, providing free ad credits and letting them easily create Snap Ads. But we’ll continue to work on those products, especially as we build products around categorizing places and lists, helping recommend places to different friends. We see that as a really big opportunity over time.

Our next question comes from Doug Anmuth of JPMorgan. Please go ahead.

Thanks for taking the questions. One for Evan, one for Derek. Evan, just wanted to ask about some of the key initiatives to grow the international user base, especially in Rest of World. Clearly, the Android app rebuild a while back was significant, but what are you most focused on now, as you look to make snap a more global product that has both local and cultural relevancy and then Derek, you’re on obviously, a good path in terms of EBITDA profitability and hitting that last 4Q, can you talk about kind of how that could resume here going forward? And then also, how do you get everything under control, you commented on that in your prepared remarks as well. Thanks.

Thanks for your question. We're definitely excited about the momentum we're seeing in rest of world and the investments we've made in Android are definitely paying off. There's still work to do, improving performance of the service, minimizing data consumption, working on partnerships to help make that data more affordable around the world. Of course, we're continuing to localize the product and onboard local content, local creators and building local AR experiences which we've seen increased engagement. So definitely lots of investment there, but really excited that the fundamentals are in place. And they're showing up in the growth.

Hey Derek here, I'll take your next two questions there. In terms of the path to profitability, we've not historically provided full-year guidance, however, we did share the beginning of this year that we had set a goal to achieve adjusted EBITDA profitability for the full year in 2020. Obviously a lot has changed in the operating environment since we set that internal goal and our revenue growth rates are currently below our expectations entering the year. Much of our cost structure doesn't vary directly with revenue, so lower revenue growth rates have a fairly direct impact on this path to profitability in the near-term. We've carefully prioritized our investments, so given these changes in the operating environment, but we remain focused on investing in the long-term growth of our business in order to emerge stronger and better position to deliver sustained profitability over the longer term. We've given fairly clear guidance on our intended level of investment heading into Q3 and that level of investment won't vary much with revenue in the quarter. So, absent significant improvement in the operating environment and resulting sustained improvement in revenue growth rates, we don't expect to achieve that internal goal for fiscal 2020. We will continue to prioritize building towards the same profitability and positive free cash flow over the long-term though, so that we can emerge stronger. And then to further expand on your question about SBC and managing that, we think stock-based compensation is amongst our largest expense buckets and has also been a contributor obviously to the growth in fully diluted shares over time. So we view careful management of our stock-based compensation program so it is a really key input to efficiently managing our fully diluted shares over time. So while we have continued to grow our team, we've seen stock-based compensation decline year-over-year by approximately 5% in total on the most recent quarter. And by just over 20% on a per capita basis, this decline comes as our team continues to migrate towards sustainable and competitive compensation structures that we've put in place in the years following our IPO, including additional investments in cash compensation programs. And we'll continue to optimize these programs over time to ensure our programs are both sustainable and competitive. Due in part to this careful management of these programs, we've begun to see the rate of growth in fully diluted shares diminish in addition to the stock-based compensation coming down. So we've actually seen the rate of growth in fully diluted shares declined to between 3% and 4% in the last couple of quarters versus 5% to 6% in the prior year. So we're paying very close attention to this. We understand that the key input to building shareholder value over the long-term and we're carefully focused on managing it. We also believe that if we can continue to scale the top line and manage our investments carefully, that we'll be able to make additional investment and progress towards positive free cash flow over time. And of course this will also open up additional avenues in the long-term to manage these factors over time. So hopefully that gives you a little bit more context on both the path of the profitability as well as how we're managing really a key portion of our cost base.

Our next question will come from Justin Post of Bank of America. Please go ahead.

Great. A couple of questions, obviously a lot of interest in the acceleration in July. Just wondering we know first half of June was rough for the industry. Did you see a big improvement from the second half of June into July? I wonder if you could help us at all with that. And then secondly, just wondering about how you see the discover content and gaming content pipeline in the second half, a lot of interesting stuff going on there. Just do you expect more shows and more content in the second half then what you were able to put out in the first half? Thanks a lot.

Hey, Justin, it's Derek speaking. I can take the first part just in terms of what we saw on a revenue growth rate. Obviously we saw the full-year – the full quarter growth rate at 17% was above where we started. But as we mentioned, there were some interruptions within the quarter as we saw some pauses to swap out creative and so on. So we've obviously seen some improvement more recently and as we noted the quarter-to-date result is obviously much better early in July here. So it's been uneven in terms of the trajectory to get to this point. But obviously things have improved more recently for all of the reasons that we've noted earlier and I’ll turn it over to take the second part of your question there.

Thanks for the question. Yes, we're super excited about the content and gaming pipeline, and also our new Minis product, which has just released more widely. We're really excited about all the experiences that developers are creating to bring friends together to do stuff in Snapchat. So that is super exciting and will make more fun back half of the year.

Our last question will come from Eric Sheridan of UBS. Please go ahead.

Thanks so much for taking the question, maybe two quick ones if I can. Evan, there has been some talk out of the U.S. government about exploring the role of TikTok in the U.S. market. You've commented on some of the social media landscape and some of the regulatory landscape, I wanted to know if you had to take on that potential action by the U.S. government. What it might mean broadly for the landscape, not only just in the U.S. but globally, when you think out over the next couple of years? That would be question number one. Question number two, maybe you should look out into Q3 and Q4 and the recovery takes maybe a firmer footing, is there a dynamic out there that there should be this wide divergence in performance in the business on a region-by-region basis or at tough comps? Do you guys see a reason why the business should much more become aligned over time in terms of overall growth rates? Just wanting to get the bigger picture question in there. Thanks so much.

Sure. Thanks for the question. Yes, I think it's been really interesting to watch the United States government grapple with huge success of consumer technology company that is headquartered in China. I think that really brings us to more of like a free markets question, as these businesses are able to leverage the massive billion plus consumer base and obviously second largest economy in the world and China and leverage their success there to enter the United States market, which is a smaller market in terms of people. So it's been really fascinating to see the government grapple with this obviously the national security concerns notwithstanding. So I'm not totally sure what the path looks like from here, but you're right to note that the – I think the ecosystem has shifted a little bit with the success of consumer technologies from China. I think the really fascinating question that a lot of people are asking about, people really assume that the next big consumer tech hit would be a startup. And in this case actually the next consumer tech hit here in the United States seems to be a very large Chinese conglomerate that offers many services around the world. So I think that has maybe reformulated people's conceptions of the tech landscape here in the United States. And we're definitely interested in seeing how this all develops.

Hey, Eric, it's Derek speaking, I can take the second part of that question there. I think in terms of forward looking on growth rate by region, what I would say there is obviously the conditions that we're operating here in terms of the operating environment are really uncertain, I think for the – at least the coming quarter, and that's why we've not chosen to provide formal guidance this quarter. So I don't think we're really in a position until we better understand how the operating environment is going to recover to really give specific commentary on what we can expect on a growth rate basis by quarter. Obviously, we're hopeful that we'll see the trends that we've seen more recently persist, and therefore, see demand build, but we also understand that the operating environment has been particularly uncertain recently, and there is always the possibility that the macro environment could deteriorate. So we want to be prepared for shifting environment as we go forward and obviously hopeful that things would continue to improve, but it'll depend on the operating environment in large part. So hopefully that gives you a little better sense of how we're thinking about it, at least in the coming quarter.

This concludes our question-and-answer session, as well as Snap Inc’s second quarter 2020 earnings conference call. Thank you for attending today's session. And you may now disconnect.