Good afternoon, everyone, and welcome to Snap Inc.'s First Quarter 2021 Earnings Conference Call. At this time, participants are in a listen-only mode. After the prepared remarks, there will be a question-and-answer session. [Operator Instructions] This call will be recorded. Thank you very much. Betsy Frank, Senior Director of Investor Relations, you may begin.

Thank you, and good afternoon, everyone. Welcome to Snap's first quarter 2021 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 first quarter 2021, 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 first quarter 2021 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 and Form 10-K for the year ended December 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 non-recurring 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.

Hi, everyone, and thank you for joining us. We began 2021 by achieving our highest year-over-year revenue and daily active user growth rates in over three years during the quarter, and delivering positive free cash flow for the first time as a public company. We grew revenue 66 % year-over-year to $770 million, grew daily active users 22% year-over-year to 280 million, and generated $126 million in free cash flow. The strength of our business underscores our relentless focus on product innovation and our team's ability to execute well together over the long term. This momentum has also enabled us to increase our investments in product innovation and the longer-term future of our business. In addition to expanding our global community and growing our advertising business, we are also focused on improving our augmented reality capabilities and building on the early momentum we are seeing with Spotlight. We are thrilled with the progress we are seeing in these areas, and look forward to accelerating our efforts going forward. We added 15 million daily active users in Q1. A lot of this growth has been unlocked through our ongoing investments in improving the performance and stability of our products across a wide variety of regions and devices. The vast majority of smartphones in the world are powered by Android, and our Android user base is now larger than our iOS user base, a critical milestone that reflects the long-term value of the investment we made to rebuild our Android application. Furthermore, as our user base continues to grow outside the United States, we are evolving our team and operations to be able to more nimbly and effectively support our global community. These efforts range from region-specific performance improvements of our underlying service to the localization of content, creative tools, and language…

Thanks, Evan. We were pleased with our results this quarter and we continue to make progress against the many opportunities we have to support our community and our advertising partners globally. In Q1, we generated total revenue of $770 million, growing 66% year-over-year. More advertisers were active on our platform than ever as our active advertiser base approximately doubled year-over-year in Q1. We have a large opportunity to gain share of the global digital ad market, which is $340 billion and growing. To capture this opportunity, we remain focused on 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. We believe firmly in performance-driven advertising, and continue to scale our measurement tools and goal-based bidding capabilities that allow advertisers to optimize for the objectives they are trying to achieve. We continue to see over half our revenue come from direct response campaigns. Revenue from our Pixel Purchase GBB was up over three times year-over-year. Revenue from our subscription GBB was also up over three times year-over-year, and revenue from our Pixel Signup GBB nearly doubled year-over-year. We are seeing more and more advertisers leverage our tools to drive measurable returns, and as a result increase spend incrementally. For example, we saw TechStyle leverage Pixel Purchase optimization to drive purchases for its portfolio of direct-to-consumer brands, resulting in an efficient cost per purchase up to 25% below goal in Q1. After seeing these results, they plan to invest more with Snap…

Thanks, Jeremi. Our Q1 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 280 million daily active users in Q1, an increase of 51 million or 22% year-over-year. The growth in our community continues to be broad based, with year-over-year and sequential growth on both iOS and Android platforms. In North America, DAU grew by 5 million or 5% year-over-year to reach 93 million. In Europe, DAU grew by 7 million or 9% year-over-year to reach 77 million. In Rest of World, DAU grew by 40 million or 57% year-over-year to reach 111 million. We believe Snapchat is a complement to real friendships, and the easing of COVID-19 related restrictions in many communities was a modest tailwind to engagement, as we moved through Q1 that contributed in part to the growth in our Snapchatter community. The continued robust growth in Rest of World reflects the benefit of our ongoing investments to better serve our community, including investments in local content, local language support, marketing partnerships, and the popularity of augmented reality Lenses created by our community. Total revenue for Q1 was $770 million, an increase of 66% year-over-year, representing a 4 percentage point acceleration over the prior quarter. We benefited from continued improvement in the operating environment in Q1 and strong momentum with our advertising products and partners. In addition, the iOS platform policy changes that we expected could cause interruptions to demand in Q1 did not occur in the quarter, and thus were not a headwind in the period. In North America, revenue grew 75% year-over-year in Q1, while ARPU grew 66% year-over-year, as we continue…

That concludes the prepared remarks for today's earnings call. And we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Richard Greenfield with LightShed. Please go ahead.

Hi. Thanks for taking the question. First one for Jeremi. Monetization overseas is still at a much earlier stage when you look at your ARPU, yet the past couple of quarters, North America grew far faster than both Europe and Rest of World. You talk about investments, but I guess, what is holding back overseas monetization, just given where the starting point is of ARPU, like what is going to be the trigger for international to grow at a much faster rate year-over-year than - or Europe and Rest of World than North America? Like what do you need to do to make that change? And then just a quick follow-up or a quick question for Evan. There's a lot of kind of noise or chatter about sort of the device side of what Snapchat may or may not be working on. Could you just maybe give us from a very high level, like why is devices something you should be doing given just how successful you've been on the software side of building sort of the app and monetization? Like why is hardware part of what you need to do longer term?

Hey, Rich. Thanks for the question. You are definitely right that our North America business has been both our largest and our fastest-growing revenue base. I think one of the most exciting things about that is that we have doubled down on the investments in sales and sales support in North America over the past 18 months since verticalization actually, and we've observed higher growth in this region as a result in these recent quarters. We did verticalize our international sales teams. But generally speaking, the sales and sales support teams in our international regions are smaller. So it was more difficult to kind of perfectly execute this verticalization and specialist in terms of different vertical, measurement specialists or marketing specialists or communication specialists by vertical. But I think what's so exciting about the opportunity is that we now know the playbook. You're seeing it show up in our strong results in North America. And so we are going to replicate it in Europe and the rest of the world and those investments we were talking about to accelerate our growth internationally. We talked about this at our recent Investor Day that I know a lot of you are listening to, but we do have so much room to grow in one of the world's - in some of the world's most established advertising markets outside of North America, where we have really strong smartphone penetration. In countries that comprise over half the world's digital ad spend, Snapchat reaches 70% of 13 to 34 year-olds. So, we're already there with deep penetration of critical demographics that our advertising partners are eager to reach. So in 2021, to answer your question, we're going to be making these investments in sales and sales support teams to capture the opportunity, the way that we have in North America in the coming quarters and going to grow those teams to grow top line growth in the years ahead.

Hey, Rich. Thanks for the question on hardware. I think as we think about the future of augmented reality, really the promise of augmented reality is that you can interact with computing in a way that's similar to how do you interact with the physical world around you. And so I think, ultimately, over a longer period of time, hardware will be a constraint on our ability to fulfill that vision. So today, with your smartphone, you can enjoy augmented reality, but you're limited to this really tiny screen. You have to use the touchscreen. And I think as we think longer term about the future of hardware, there's an opportunity to overlay computing on the world around you in a way that's much more immersive. It allows you to interact with it in terms of using both your hands, having a much - a larger display size in front of you. And I think, as we think about the future of our platform overall, experimenting with hardware informs that software roadmap and helps us think about what we need to be building over the next several years as we work towards this vision, really for a new hardware platform that brings AR to life in a totally different way.

Our next question comes from Justin Post with Bank of America. Please go ahead.

Great. Thank you for taking my questions. Maybe one for Evan and one for Derek. Evan, you made some interesting comments on reopening on the call, and we have a survey that says people may use Snap more upon reopening. So maybe you could expand a little bit on what you're seeing in countries or states that are reopening? And what areas of Snap might benefit and maybe where could you see a little less usage? And Derek, the entire DR advertising sector has tougher second half comps. I don't think Snap's alone in that. How would you think about modeling the second half? And could platforms like Spotlight and Maps help on a sequential or a year-over-year basis, if you could turn those on? Thank you.

Thanks for the question and great to hear about your survey. I guess that lines up definitely with what I've experienced personally during the pandemic. A lot of folks sort of shrunk their social graph. They started talking more to their family members or really close friends. And what we're seeing now in the United States, which is really exciting is that people are going out more and they're seeing more friends or they're returning to school or work. And so their social graph and the people they're interacting with on a regular basis is starting to expand. And that sort of communication with that wider social graph drives a lot of the frequency of use of Snapchat. And then, of course, the conversion then to our other platforms and products that we offer. So, we're super excited that people are out and about and they're taking Snaps with our camera. We mentioned story posting has increased. And we've been investing a ton in the Snap Map. And sadly, over the last year, there hasn't been a lot of reasons to use the Snap Map as everyone's been staying at home. So, we're really excited to see people engaging more with that product and there's a really exciting roadmap there looking forward. So great to see that adoption.

Hey, Justin. It's Derek. I'll take the other part of your question there. First, I'd say we're really pleased with the momentum we're seeing in the business overall. The year-over-year growth rate accelerated sequentially. It's the third quarter in a row that we've grown the top line more than 50% year-over-year. And obviously, the guide going into Q2 is to accelerate that further. You're right. The comps in the Q2, for sure, are a little bit easier. But if you get into the second half, those comps are going to look a little bit more like what we saw in Q1. So obviously, they're a little tougher. We feel good about the results we put up in Q1 on relatively tougher comps. Right now, what we're really focused on is making the investments in our sales and sales support to build on the momentum. We like what we're seeing on the active advertiser growth. We're liking what we see on the upfront commitments and we're focused on delivering the return on ad spend, investing in our optimization capabilities so that we can deliver return on ad spend for those advertising partners just to continue to build on the momentum we're seeing. Look, while we're excited about the momentum that we're seeing there on the Spotlight side, it's early there. We're really excited about the product and the momentum. In terms of the need to open that up to advertising, I think we continue to be more demand constrained than supply constrained. So, we're going to continue to focus on improving the experience for our Snapchatter community and for creators in the near term, and we've got lots of room to grow the top line in the areas that we're already monetizing today over the near term. Thanks for the question.

Our next question comes from Brian Nowak with Morgan Stanley. Please go ahead.

Thanks for taking my questions. I guess the first one, I want to go back to the recent Analyst Day where you talked about potential low 50s revenue growth for the next few years without any contribution from Spotlight or Maps. Maybe just talk to us a little more about what are you seeing or assuming from an advertiser growth, multi-quarter advertiser spend adoption cycle or even sort of the use cases that give you confidence to be able to grow faster the next three years than the last three? And then the second one. You mentioned the upfront commitments up 50% year-on-year. I think that's after doubling last year. Maybe talk to us about what types of advertiser verticals you're seeing join the platform and grow their spend now that you weren't seeing a year ago? Thanks.

Sure. Hey, Brain. It's Derek speaking. I'll take the first half and then kick it to Jeremi to talk a little bit about what we're seeing with advertisers. Yeah, I think one of the things that we do see is we're excited about the potential to grow the business at elevated rates for an extended period of time. And we see a lot of opportunity just looking at the screens that we're monetizing today in particular. So if I think about the various screens in the app, first, I would zero in on the content business. We're really pleased with what we've been able to do in terms of growing the commercials product over time. And obviously, we are starting to see some improvement in eCPMs and a lot of that driven around us getting much better at optimization and helping get the right ad in front of the right Snapchatter at the right moment, which allows us to use our inventory more efficiently, deliver the actions that advertisers are looking for with fewer impressions. And that continues to, therefore, expand our ARPU opportunity and the screens that we are optimizing. So that's the most mature part of the business, but still very early. If I move over to camera, we're really excited about some of the momentum that we're seeing around our AR products and our ability to deliver unique advertising experiences there. And obviously, with over 280 million DAU, opening the app 30 times a day, the inventory potential of the map is already immense. So, we're excited about the momentum that we're seeing with our advertising partners and with the inventory potential of those screens. We continue to execute well. And I think if you look at what's happened with the business, as you said, maybe three…

And then I can take the part about upfront. So in specific around the upfront commitments that are up over 50% year-over-year, even after doubling in 2020, so we're very excited about that. Obviously, I think one of the most compelling reasons to do upfront is to really understand what part of a media plan you make up for a large advertiser. And these are incredible signals to say that we have definitely moved out of the experimental budget and into the fabric of their always-on media plans. And that comes from a lot of the hard work that's been done over the last several years and ensuring that we're focusing on ROI and optimization and measurement. We know that retaining advertisers really comes down to ROI. So, retaining them and then growing them at this rate are all really good signals for us. In terms of verticals, specifically, we've had a lot of success in e-commerce, CPG, tech, streaming, online education, telco, a lot of these verticals over the last 18 months, 12 months or thereabout. And we're really excited to see the return of some of the categories in which we are historically strong. Theatrical movies would be a really good example of that. They are incredible advertisers when it comes to AR. It's a perfect use case for that. So, we're really excited about that. And then in addition, we've been spending a lot of this time working on the ad tech stack, working with large partners to be very ready for categories in which we aren't historically strong. Travel and leisure being a really good example. Something that will come back, we believe, with a fury and then we have been really preparing for that on the ad tech side as well as on the sales side. So, we're really excited about that. And then, of course, we continue to be very bullish on the e-commerce opportunity. Derek just mentioned that our ad tech is at parity with the largest players, table stake with goal-based bidding, with pixel-based conversion, et cetera, and we're going to continue to invest there. And then when I think of e-commerce and the kinds of things where we can double down, there is no doubt that we think of augmented reality as a huge opportunity in e-commerce and we are excited to bring more of that innovation to our partners at SPS.

Our next question comes from Ross Sandler with Barclays. Please go ahead.

Hey, guys. Thanks for letting me ask the question. I just want to ask one on what Jeremi just talked about the shopping experience. So, you've got a lot of e-commerce advertisers buying ads. Some of those are click out and some of those are these new AR lenses and these new kind of in-app experiences. So the question is, what do you see is the future of Snaps' in-app shopping experience? Can you help us size how big this category or this opportunity could be? And then you recently acquired Fit Analytics and Ariel AI. How do those two acquisitions fit into the strategy? Thanks a lot.

Thanks, Ross, for the question. Certainly, a lot of stuff that's super exciting in commerce, especially with the big acceleration we saw through COVID. So, I think I can talk about a couple of things that we're working on. Maybe I can start with augmented reality because it's such an interesting opportunity to really differentiate the shopping experience and make it more engaging for consumers. But what we're seeing that's really compelling for retailers is that AR try-on can dramatically improve conversion. And as you mentioned, we acquired Fit Analytics to try to take that a step further to help people find the right styles and fit for what they're purchasing, which we believe can also help reduce returns overall, which should improve margins for retailers. So, we believe that AR can really help retailers on the top and bottom line and also provide a really compelling shopping experience for consumers as well. We're experimenting in many other areas, though. I can highlight Minis as an example or native checkout where we're really trying to remove friction from the checkout process overall, so that brands who want to host their own store on Snap can make it really easy for folks who want to buy their products to essentially tap and buy in one click with safe credit card data and things like that. So, our investments are really across the board. We're trying to remove friction from the shopping experience and reflect the fact that consumer behavior has shifted. I think there will certainly be folks who go to a destination to shop, but more and more what we're seeing is that content and things like augmented reality experiences can drive new types of behavior and then shopping actually happens downstream of that. So people are discovering products and interacting with them in new ways through content and through augmented reality, and then we're going to work really hard to make the conversion as seamless as possible.

I can talk a little bit about that from the advertiser perspective, from augmented reality and the Lenses is that really during the lockdowns, during the pandemic, advertisers accelerated their adoption of AR products out of necessity. They had to. They had to ensure that they could get the products into the proverbial hands of their customers when things like malls and showrooms were closed, and that really accelerated a trend that we think is really important. And the best part about it is that our Snapchat community was already there. They're already using augmented reality quite a bit every day. We have over 5 billion videos and pictures taken in the camera every day. And so the shoppers are already there and the advertisers are meeting them where they were. It's very rare to be in a position where marketing opportunity is such wide open spaces. So, we're really excited to see the acceleration of that. And I think most importantly, what we're seeing, as Evan talked about, is that AR is driving real business results. So, this isn't just a stunt. This isn't just a brand campaign. Our goal-based bidding products work with augmented reality and the performance is there. We've seen it with Dior. We saw it with Zenni. We saw it with a number of others. And we've learned, of course, that when we deliver this ROI, we will continue to grow. And so we are very optimistic about this space.

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

Thanks. One, I guess, for Jeremi and one for Evan. Jeremi, what are you seeing in terms of just advertiser adoption and budget scaling, specifically since pushing the AR Lens ads into the self-service platform and allowing advertisers to buy those across more objectives? And then, Evan, maybe you can talk about the expansion of the Snap Camera functionalities to Samsung devices. What is the ultimate kind of business implication for that? Is that driving activity back to the core app? Is that sponsored lenses and filters getting distribution more broadly, kind of help us understand that kind of strategically and how it impacts the business? Thanks.

Sure. Thank you so much for the question. As far as AR Lens is scaling, it's still early, but we're expanding the range of use cases that AR can solve for businesses. We've talked a little bit about the e-commerce opportunity, the retail opportunity. There's a big beauty opportunity. We've had a lot of advertisers with makeup try-on, with nail polish try-on, et cetera. But we're continuing to expand that range of use cases and ensure that it is performance along the way. So, this includes the addition of new goal-based bidding options for augmented reality products. But really as the shopping - online shopping continues to accelerate, we just believe there is a massive untapped opportunity for AR-driven product innovation in e-commerce, but we're seeing it with automotive as well, really just getting across the board. Travel is a really exciting one when we start to think about how we can have our Snapchat community experience places or what does the new travel experience look like on a plane and a hotel, et cetera. All of those things can be experimented within augmented reality and experienced, which is great. But really, what we are focused on is tailoring our solutions for apparel and accessories since it's the largest shopping category by far amongst US teenagers.

Thanks, Lloyd, for the question about Camera Kit. It's certainly something we're really excited about. And even beyond Samsung, we're now expanding Camera Kit into many partner applications, including, as I mentioned, Moj in India, which is integrated into their application. I think what's really exciting for us that because augmented reality is so new, there are still so many people in the world who haven't actually experienced it or played with it. And so more than we can expand augmented reality into different cameras and other services that people use, the more they can try it, find out how fun it is, realize the power of augmented reality and then, ultimately, hopefully come to Snapchat for a much bigger selection of our Lenses and to really engage with our entire lens creator community. So, we're really excited to get that out there. And hopefully, we've got some more interesting partnerships along the way. We've got our Snap Partner Summit on May 20, that we're really looking forward to. And hopefully, you can join us there.

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

Yeah. Thanks for - Jeremi and Derek, you mentioned the user behavior really started picking up as things started to open up again. I'm curious, did you see a subsequent advertiser behavior pickup and anything to point out in terms of linearity throughout the quarter or the start of Q2?

Hey. It's Derek speaking. Yeah, I think, one, really pleased with the momentum. And Jeremi mentioned in our prepared remarks a little earlier just about how we're seeing some positive momentum with some categories as we see reopening and how we're excited to serve some of the categories that maybe had a little tougher go through some of the restrictions that you'd expect to return. And so, obviously, we've made a lot of progress with our platforms over the last year, too. So optimistic about the reopening and the momentum that we're seeing in the business. And I spoke a little bit earlier about the trajectory in terms of comps and obviously, our guide reflects the facts that comps get a little bit easier as we go into Q2, and that's why we've guided to a pretty significant acceleration there. So hopefully, that gives you a little bit of a sense of how we're feeling about the reopening and the momentum we've got with our partners and then also sort of the topography of things as we move into Q2.

Our next question comes from Michael Morris with Guggenheim. Please go ahead.

Thank you. Good afternoon, guys. A couple of questions. First, you referenced the successful implementation of the SKAdNetwork for certain Snap campaigns with your partners. I'm curious what defined success of that implementation? And does this mean similar feedback to what you saw previously? Do you expect this to mitigate some of the IDFA headwinds that have been a source of investor concern? And then second, I just want to ask you a little maybe more tactically about the AR opportunity. You've spoken about a lot. And I'm curious if you - how you see the adoption curve by your advertiser partners. Are there certain sort of milestones that you think you can accomplish this year on the sort of education or implementation front for your partners that can accelerate that curve? Do you think it's sort of a steady growth trajectory? Just curious how you see that playing out. Thank you.

Sure. Thank you so much for the question. I can take the part about SKAdNetwork. We are really focused on helping our advertisers make the transition to the best possible measurement and optimization tools smoothly. The change happened later than we expected, which gave us a lot of time to prepare and SKAdNetwork is one part of that. So, we're really pleased to see that advertisers that represent the majority of our direct response revenue have implemented it so far. But we know that there's a lot of work to be done to transition smoothly. We're working closely with Apple to understand the rules of the road and we're prepared to follow them. And I think importantly, we really support Apple's approach because we've always believed that great advertising and customer privacy are not mutually exclusive. And it's a huge core value of Snap privacy. And so we're excited to be implementing this alongside our partners that's been a huge cross-functional effort between products, engineering, the sales teams, the marketing teams to work with our customers to ensure that this transition goes as smoothly as possible.

I guess I can speak a little bit to the AR opportunity. I think what's really interesting is despite the fact that 200 million people are using augmented reality every single day, it's still very, very early for augmented reality advertising and for businesses as a whole to understand how it can really drive results for them. So, I think one of the most important things is to continue to really inspire businesses with the creative execution and the AR interaction. And one of the ways that we're doing that is helping to connect them with creators. There are now thousands and thousands of people around the world making incredible AR experiences, and they can work very closely with brands to bring their ideas to life. And then, I think the other important thing that we've spent a lot of time on is making sure that when brands do experiment with AR, that they have a positive experience that measurement is really easy, and they can see the results very quickly for their campaigns. And of course, then showcase those augmented reality experiences on their brand profile. So I'd say overall, it's really early, but the results for advertisers that are experimenting with AR are extremely promising, and the engagement we see from our community is truly staggering. So, I think that bodes well for the long term. But given it's such a new technology despite the tremendous level of engagement, it's just going to take time to really work to educate advertisers and remove friction from the creation process.

Our last question comes from Doug Anmuth with J.P. Morgan. Please go ahead.

Great. Thanks for taking the question. Derek, just wanted to ask you about infra costs. They were down on a per DAU basis, about 13% year-over-year. I know you talked about the biggest part of that, perhaps coming from the messaging efficiency improvements. But as you look out over a multi-year period, do you still see room for meaningful further improvement in infra cost per DAU? And where do you think those could come from? Or do we run into a kind of flattening out more there? Thanks.

Hey, Doug. Thanks for the question. Yeah, we're really pleased with what we saw in infrastructure costs here. We've been able to keep them relatively flat on a per DAU basis for a few years now. And now a pretty good step down in Q1 with the drop to $0.62 per DAU from $0.69. So a really nice improvement there. As you noted, we're making a lot of progress on efficiency here. And I would say that there's no one single improvement that tends to move the needle in a big way. This is a long game of really good work by the engineering and product teams to continue to find efficiency. And one of the really important flywheels that we're experiencing there is that when we make the product work better and faster and more efficiently for our Snapchatter community, that tends to also make it more efficient for us on an infrastructure utilization perspective. And of course, that helps to drive engagement and lower our costs. And when we have engagement grow, that gives us more volume. And of course, that gives us more scale with our partners, which gives us more ability to negotiate and drive down our rates. And so what you're really seeing is that flywheel demonstrated in Q1 really well, where we've had a number of efficiency improvements that were engineered by our teams, compounded by some negotiated rate improvements, all delivering together to give us a really nice result. Over the long term, there's going to be a battle here. We've got really a healthy engagement with our community. And so that puts upward pressure on the infrastructure cost per DAU in a good way, but of course, contributes to the ARPU opportunity at the same time. But our teams continue to grind at our unit metrics and our rates with our partners. And so to the extent that you see infra go up in any period, that's a great sign for engagement. And to the extent that you see it go down is because we're doing a good job managing our unit costs and our partners. So hopefully, that helps explain what we're seeing there and really pleased with the results from our team. So thanks for noticing.

This concludes our question-and-answer session, as well as Snap Inc.'s first quarter 2021 earnings conference call. Thank you for attending today's session. You may now disconnect.