Michael Morris

Michael Morris from Guggenheim Securities asked about the direct response advertising growth, specifically how much the 8% Q3 growth accelerated from Q2's core trend after removing the execution error impact. He also asked if Snap could return to double-digit DR growth, identifying the top two or three contributors, and sought an update on the stability and confidence in bidding and optimization tools post-error.

Answer

CFO Derek Andersen stated that direct response revenue grew 8% year-over-year, a 3 percentage point acceleration from the prior quarter, driven by pixel purchase and app purchase optimizations, and SMB segment strength. He noted strong ad revenue growth in Europe (12% YOY, 6 ppt acceleration) and Rest of World (13% YOY, 10 ppt acceleration), while North America's large client segment (LCS) lagged with a small decline, though North America SMB grew over 25%. He expressed confidence in the ad platform and units, with targeted adjustments in North America LCS to build momentum for future growth.

Michael Morris asked why price increases in the U.K. were smaller on a percentage basis compared to Australia, given both are bundled service markets, and whether future price increases would resemble Australia's or the U.K.'s.

Answer

Alex Norström, Co-President and Chief Business Officer, explained that price adjustments consider various factors like household income, market maturity, and specific value-to-price ratios in each market. He stated that Spotify acts when the timing and magnitude are right for each market.