SNAP earnings call transcript, November 4, 2026

With that, I'd like to turn the call over to Evan.

hearing teams more than doubled the number of merged pull requests year over year, while the defect rate per merged pull request declined over 71%. For advertisers, AI Search now resolves over 92% of Help Center sessions. While support cases declined 35% year over year. While advertising revenue growth remains below our ambitions, advertisers are seeing the benefits of our performance improvements. Our focus now is to turn these improvements into broader adoption. More meaningful share of advertiser budgets and more durable growth. Other revenue grew 84% year over year and we surpassed 30 million paid subscribers across Snapchat Plus, Memory Storage and Lens Plus. Innovative AI-powered features have helped Lens Plus exceed our expectations, demonstrating how new creative experiences can drive demand for our paid products. Paid subscribers still represent a small share of our monthly community, giving us room to grow through broader adoption and new premium experiences. We delivered substantial operating leverage, with approximately 93% of incremental revenue flowing through to adjusted EBITDA. As revenue grew faster than our cost base, we expanded margins and generated stronger cash flow. This strengthens our ability to invest in our business, offset dilution, and create long-term value on a per share basis. Specs represent our ambition to bring computing into the world around us. By combining see-through augmented reality with artificial intelligence, we see an opportunity for computers to understand more of what we are experiencing and provide useful information and assistance in the moment. Specs can help people

look at it. Learn, create, and get things done while staying present with those around them. Our years of investment in augmented reality and our developer ecosystem give us a strong foundation to lead this transition. Specs bring those capabilities together across hardware. Software and AI to make computing a more natural part of everyday life. A golfer can receive personalized guidance on their swing through a lens developed with input from PGA professionals, while someone working on the go can edit documents on a virtual display. Through our enter. With enterprise partnerships, we are also exploring how technicians can receive visual guidance from remote experts directly in their field of view while keeping their hands free. We are excited by the positive feedback we have already received as people experience specs firsthand. Our specs first look pop-up is now open at Westfield Century City in Los Angeles, where visitors are trying specs, meeting our team, and learning more about augmented reality. The pop-up gives us an opportunity to learn directly from our community as we refine. Find the experience and bring a more natural human way of computing to life. I'll now turn the call over to Ronan Harris, our Chief Commercial Officer.

Snapchat is woven through our community lives throughout their day. People use the camera to share what's happening, use chat to talk with close friends, they explore the map, and discover content about where to go, what to do, and what to buy. They come to Snapchat as themselves, with the people who matter to us. That is what makes Snapchat different. It's the real you in the real world. Real relationships, real-world context, and authentic self-expression give us a distinctive foundation for advertising. AI can help us build on that. Understanding while protecting privacy, making recommendations more useful, and advertising more effective. Our ambition is to help businesses to create demand before people start searching and turn discovery into purchases. Our priorities are improving advertiser performance. Making results easier to measure, and expanding the ways businesses can reach our community. Across these priorities, our focus is on turning stronger outcomes into greater advertiser demand, larger budgets, and sustained revenue growth. In Q3, direct response advertising grew strongly, supported by improved purchase outcomes. However, upper funnel brand advertising declined year-over-year, weighing on our overall growth. In Q3, purchase volume for campaigns, optimized for app purchases, more than doubled year-over-year, while average cost per purchase declined approximately 24%, and revenue grew over 54%. For web purchase campaigns, purchases increased over 31% year-over-year.

Average cost per purchase declined 15%, and revenue grew 11%. For example, skincare brand Dermatology used Workmagic to measure Snapchat's incremental impact on sales. It failed its Snapchat investment 6.2 times, while improving incremental return on ad spend by 45%, driving nine times incremental revenue. New customers accounted for 73% of incremental orders, up from 54%, highlighting Snapchat. Chat's role in efficient customer acquisition. AI is helping us extend that progress through innovations like dynamic product ads, generative retrieval, and agentic recommendations. These capabilities help connect products and an advertiser's content. Catalogue with a Snapchatter's interests and activity to identify products they may value. Together with improvements that recognize people's multiple interests, these innovations have already contributed to an over two and a half percent increase in pixel purchase conversions. Ahead of the... holiday shopping season, we introduced commerce power pack to help advertisers turn discovery into purchases and optimize for business value. Dynamic product ads for sponsored snaps brings personalized catalog ads into chat and is available. But globally, third party web optimization now an open beta combines snap signals with third party measurement signals to optimize towards advertisers preferred sources of measurement. For example, after switching to third party web optimized.

For its Snapchat campaigns in France, Foot Locker recorded a 53% higher return on ad spend and a 38% lower cost per acquisition measured through its third party measurement platform. For app advertisers, unified attribution became generally available. Across apps flyer and adjust in August, extending support to measurement partners representing over 75% of advertising revenue. It helps align campaign optimization with purchase outcomes reported by advertisers mobile. Our third priority is expanding the ways businesses can reach our community. Advertising within chat, spotlight and the map connects businesses with the conversations, content and places that matter to Snapchatters. These experiences give advertisers more ways to build awareness, create demand and drive purchases. Sponsored snaps revenue grew 56% sequentially, with chat share of total revenue increasing approximately eight percentage points year over year. Our launch of auction-based sponsored snaps in Europe is an exciting step in bringing this format to more advertisers. Adding personalized product ads through Commerce Powerpack further expands its potential to turn conversations and discovery into action. Spotlight's growing. Audience creates more opportunities for brands to reach our community through full screen vertical video. Average spotlight ECPN increased 22% year over year and we continue to strengthen the creative buying and measurement capabilities that help advertisers.

Achieve their goals. Promoted places brings this opportunity into the real world, helping businesses connect with people exploring where to go and what to do on SNAP map. Revenue and advertiser adoption each more than double sequentially. And we expanded the product to 14 countries. This early momentum demonstrates advertiser interest in reaching our community at moments of discovery with opportunities spanning restaurants, retailers and other local businesses. Across these priorities. Success means helping more advertisers achieve their goals, return to Snapchat and grow their investment. By delivering results they can trust and build upon, we believe we can earn lasting relationships, a larger share of their budgets and sustained advertising revenue. growth. I'll now turn the call over to Doug to discuss our financial results. Thank you, Ronan. In Q3, revenue increased 14% year over year to 1.72 billion.

cash equivalents and marketable securities. An increase of approximately $111 million from the end of Q2. Now turning to our outlook. As we move into Q4, we remain focused on accelerating top-line growth, growing our community. Deepening engagement and improving financial efficiency. Our guidance range for Q4 revenue is $1.950 billion to $1.985 billion. We expect infrastructure costs to grow modestly year-over-year in Q4 and now anticipate full year. Infrastructure costs of $1.65 billion to $1.66 billion compared with our prior guidance of $1.65 billion to $1.70 billion as we have been able to increase our investments in AI and ML without increasing our overall infrastructure costs. We continue to expect all other costs of revenue, excluding infrastructure costs, to represent 16% to 17% of revenue for the full year. Our guidance range for adjusted EBITDA is $490 million to $1.6 billion. $525 million in Q4. Our outlook includes our planned investments and specs, which we continue to pace against product, ecosystem, and economic milestones. Following the expected completion of our current repurchase program in Q4, we intend to pursue a multi-year approach to dilution management with the goal of offsetting future dilution and supporting a stable, fully diluted share count in 2027. Beginning with our Q1 2027 results, global monthly active users, MAU will become our primary audience metric. Snapchat is approaching 1 billion people each month, and we believe MAU provides the most complete view of the community we serve and our revenue opportunity over time. MAU represents the scale of our

community, while engagement and monetization metrics reflect the depth and value of our service. Daily engagement has historically been stable as a percentage of monthly engagement, but we do not intend to optimize Snapchat around daily use at the expense of long-term value for our community. A longer-term horizon, better aligns our reported metrics with the product and safety decisions that strengthen relationships, create lasting utility, and support broader, more durable audience growth. Alongside Global MAU, we are introducing Global MAU. based average revenue per user, ARPU, as our primary monetization metric. Together, Global MAU, ARPU, and free cash flow per share, provide a clear scorecard for SNAP. The scale of our community, our progress monetizing. and our ability to translate that progress into long-term shareholder value. As discussed last quarter, we continue to monitor the evolving legal and regulatory landscape in the United States internationally that could materially impact our business and financial resources. including increased regulatory scrutiny on youth related issues. While outcomes remain uncertain, they may result in significant changes to our products and business practices, increased compliance requirements and legal costs, increased payments for legal judgment.

Eric, your line is open. Please go ahead.

Please go ahead.

Justin, your line is open. Please go ahead.

of Dan Salmon with New Street Research. Dan, your line is open. Please go ahead.

Thank you for attending today's session. You may now disconnect.