Snap - Q4 2022

Transcript

Operator (participant)

Good afternoon, everyone, and welcome to Snap Inc.'s fourth quarter 2022 earnings conference call. At this time, participants are in a listen-only mode. I would now like to turn the call over to David Ometer, Head of Investor Relations.

David Ometer (Head of Investor Relations)

Thank you. Good afternoon, everyone. Welcome to Snap's fourth quarter 2022 earnings conference call. With us today are Evan Spiegel, Chief Executive Officer and Co-founder, Jerry Hunter, Chief Operating Officer, and Derek Andersen, Chief Financial Officer. Please refer to our investor relations website at investor.snap.com to find today's press release, slides, investor letter, and investor presentation.

This conference call includes forward-looking statements which are based on our assumptions as of 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 most recent Form 10-Q, particularly in the section titled Risk Factors. Today's call will include both GAAP and non-GAAP measures.

Reconciliations between the two can be found in today's press release. 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 in non-recurring charges. Please refer to our filings with the SEC to understand how we calculate any of the metrics discussed on today's call. With that, I'd like to turn the call over to Evan.

Evan Spiegel (CEO and Co-Founder)

Hi, everyone. Thank you all for joining us. 2022 was a challenging year for our business as we continued to be impacted by macroeconomic headwinds, platform policy changes, and increased competition. We've taken action to refocus our investments to support our three strategic priorities of growing our community and deepening their engagement with our products, accelerating and diversifying our revenue growth, and investing in the future of augmented reality.

We are focused on the most important inputs that we can control, delivering engaging experiences to Snapchatters and improving business outcomes for our advertising partners. We continue to drive strong growth in our community, ending the year at 375 million daily active users in Q4, an increase of 17% year-over-year. Our team continues to innovate rapidly in ways that support the growth of our community.

For example, in Q4, we released Communities to expand our content offering, onboarded several new media partners, doubled down on our progress with Spotlight, and launched new Snapchat+ features, each of which helped drive engagement across our service. For the full year, we generated $4.6 billion of revenue, up 12% year-over-year, and generated $1.3 billion in the quarter, or flat year-over-year, reflecting the rapid deceleration in digital advertising growth.

Direct response advertising is a critical way that many companies grow their businesses, as it is one of the most performant and measurable forms of advertising. We have made progress updating and improving our ad platform over the past year across three key areas: investing in observability and measurement, improving engagement and conversion quality, and increasing the volume of high-quality engagements and conversions.

In the very near term, it will take time for these improvements to translate into improved top-line growth. Over the long term, we believe that delivering higher return on advertising spend and utilizing our inventory more efficiently are critical inputs to gaining share of wallet, accelerating revenue growth, and realizing the full ARPU potential of our business. We believe that the camera represents our greatest opportunity to improve the way people live and communicate.

Over the last decade, we have made significant advances to our AR software and hardware that have enabled the growth of the sophisticated AR platform that we have today. Over 250 million Snapchatters engage with augmented reality every day on average, and we are investing rapidly and thoughtfully in the future of AR to further expand our leadership position.

We continued our path to sustainable profitability by generating $378 million of Adjusted EBITDA in 2022, achieving our third consecutive year of positive Adjusted EBITDA. We also generated $55 million of free cash flow in 2022, achieving our second consecutive year of positive free cash flow.

2022 brought significant challenges for our business, and we have emerged with a highly engaged and growing community, a more focused team and cost structure, a clear path to delivering sustained Adjusted EBITDA profitability and positive free cash flow, and a strong balance sheet with $3.9 billion in cash and marketable securities. We begin 2023 focused on executing against our three strategic priorities of growing our community and deepening their engagement with our products, accelerating and diversifying our revenue growth, and investing in the future of augmented reality.

We look forward to sharing more about our progress and plans at our upcoming Investor Day on February 16th at our offices in Santa Monica. Thank you. With that, we will begin our Q&A session.

Operator (participant)

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. In the interest of time, we ask that you please limit yourself to one question. After your initial question is asked, your line will be muted. At this time, we will pause momentarily to assemble our roster. The first question comes from Justin Post with Bank of America.

Justin Post (Managing Director)

Great. Thank you for taking my question. Clearly, it's a tough environment for the digital economy overall. Can you talk about some of the bigger first quarter revenue headwinds from Snap from a macro perspective? Can you go into the monetization changes that you are making in the quarter that could have a positive longer impact on the model? Thank you.

Evan Spiegel (CEO and Co-Founder)

Thanks, Justin. Hey, it's Evan. you know, from our recent conversations with our partners, you know, it seems like advertising demand hasn't really improved, but it hasn't gotten significantly worse either. I mean, obviously, the brand spend is significantly reduced, like we saw in the quarter.

Our direct response business, you know, continued to grow in Q4. In general, it seems like our partners are just managing their spend very cautiously so that they can react quickly to any changes, you know, in the environment. I think as we look at Q1, the most significant impact thus far have really been the changes we're making to our ad platform. Maybe just, like, taking a step back here, we've really been on a journey rearchitecting our ad platform.

You know, we shared a lot over the last year about our improvements to observability and measurability of conversions. You know, things like our Conversions API, our Data Clean Rooms and multiparty computation, of course, our Pixel implementation for e-commerce advertisers.

I think we have made good progress there. You know, Conversions API adoption continues to grow nicely, and the majority of our revenue is now measured using signals from Conversions API, Pixel integration scan, or MMPs. A lot of what we've been doing is taking this improved measurability and using it to improve the value of those conversions.

You know, some of the things we've shipped recently in Q1 at the beginning of the quarter are, you know, big changes to our in-app UI, which we believe will help improve consideration because it aligns the ad UI with the more organic content experience. We've done a lot of work to improve our in-app WebView performance, which we believe can help contribute to improved conversions on the platform.

We've updated our user ID graph, which helps improve attribution as well. You know, some of the early results are promising. You know, for example, pixel advertisers utilizing one-zero attribution. You know, for them, clicks are 40% more likely to result in a conversion. We're also seeing stuff like higher dwell times, higher non-bounce rates, and higher third-party match rates.

Overall, you know, obviously, the results are early, but we're excited about these changes we're making. What we're doing is we're taking our machine learning models, and we're training them on these higher value conversions, which will hopefully help us scale the overall number of those conversions over time.

The net-net, you know, the impact in the short term is really that advertisers are experiencing these higher value conversions, but there are fewer of them as our models retrain. You know, and hopefully, as we progress through the quarter, we can improve and increase that volume overall. Obviously, you know, in addition to larger advertisers, these changes really benefit smaller advertisers who are much more reliant on last click conversions for measurement.

You know, maybe 'cause they haven't implemented our Conversions API, you know, or don't have a Data Clean Room, for example. You know, this, I think, of course, is a near-term headwind to the business, but we're very excited for, you know, about the long-term potential of these changes, and we're working really hard on it.

Operator (participant)

Thank you. The next question comes from Mark Shmulik with AllianceBernstein.

Mark Shmulik (Managing Director and Senior Analyst)

Yes. Hi, thanks for taking the question. It looks like time spent on content globally was up, I think.

Operator (participant)

My apologies. Mark has dropped. The next question comes from Ross Sandler with Barclays. Please proceed.

Ross Sandler (Managing Director)

Hey, Evan, I've got a high-level technology question. You guys have been stating forever that you're a camera company. We've seen an explosion in these new generative AI tools. How do you see those impacting your business? We have examples of Midjourney inside of Discord driving up engagement for them. Do you see the same kind of opportunity inside of Snap, or do you view this as possibly a risk if people are going to the camera less? How do you see this impacting Snap over the next, like, five years? Thanks a lot.

Evan Spiegel (CEO and Co-Founder)

Thanks, Ross. Yeah. We're so excited about the opportunity around generative AI. It's a huge opportunity for us, and we're already investing a ton. You know, a lot of our most sophisticated AR lenses use generative AI technology, and we also see a lot of opportunities just to make our camera more powerful with generative AI.

I mean, some simple examples are, like, improving the resolution and clarity of a Snap after you capture it or, you know, even much more extreme transformations or editing images or Snaps based on a text input. You know, if we think longer term, you know, five years, as you mentioned, this is gonna be critical to the growth of augmented reality.

You know, today, if you look at AR, there's just a real limitation on what you can build in AR because there's a limited number of three-D models that have been created by artists. We can use generative AI to help build more of these three-D models very quickly, which can really unlock the full potential of AR and help people, you know, make their imagination real in the world.

You can imagine playing around with your kids wearing AR glasses and pointing, "Oh my gosh, you know, there's a pirate ship and a big monster," and we can bring those to life using generative art, which I think is really exciting. Then, of course, we're also thinking about how to integrate those tools into Lens Studio.

We saw a lot of success, integrating SnapML tools into Lens Studio and, you know, it's really enabled creators to build some incredible things. We now have 300,000, you know, creators who've built more than 3 million Lenses in Lens Studio. The democratization of these tools, I think, will also be very powerful.

Operator (participant)

Thank you. The next question is from Richard Greenfield with LightShed Partners.

Richard Greenfield (Partner and Media Futurist)

Hi. Thanks for taking the questions. One, I guess I wanna just follow back on the initial topic of this. DR was up 4% in Q4, which is actually a pretty encouraging number. It sounds like you're talking about in Q1, based on your guidance, the changes you're making are gonna drive that DR to go from, you know, up four to down something. Could you just help us better understand?

You know, as a DR flywheel and your investments start to kick in, why is it not driving sort of accelerated spend? Why is it actually hurting? I know you wrote a little bit about it in the letter, but I think there's a lot of confusion of sort of why that inflection to the negative in DR as you're sort of investing to improve it.

Just on engagement, you made a comment that global time spent was up on content. Was that true in the U.S. or was that more of a global comment? On Friend Stories, you said it was down in Q4. Is that TikTok, Reels, Shorts? Just any color on what's driving sort of the pressure on Friend Stories in Q4 would be great.

Evan Spiegel (CEO and Co-Founder)

Thanks, Rich. There was a lot in there. Let me see if I can get to all of it. I think, you know, at a high level on the DR business, as I mentioned, the key here is that we're really improving the overall value of those conversions.

You know, as a result, the volume of those conversions has decreased as our models relearn on the conversions that we're driving, and hopefully obviously can expand that volume over time. It's also requiring advertisers to adapt, for example. They need to see that increased volume show up, you know. Excuse me. That increased value show up in their third-party measurement tools, for example, and then go in and increase their bids to reflect that increased value.

Overall, that sort of disruption and, again, when you layer in, of course, the changes to the app UI and, you know, even things like our sales org, sales reorg, channel redesign this quarter, it's a lot all at once. Frankly, we'd rather rip the Band-Aid.

You know, we waited to release a lot of these changes in Q1. I know Jerry's been eager to make a lot of these changes, but we know that Q4 is critically important for our advertising partners. It's just, you know, vital to their businesses, and so we held a lot of those changes to Q1 and, we're making them all at once.

They're, they're disruptive, but I think the really exciting thing is that, you know, it is having the intended impact in terms of value to advertisers and, you know, frankly, the expected impact in terms of the disruption to our business. You know, we're gonna continue to work through it.

Again, the improvements we're seeing, you know, in terms of third-party match rates, dwell time, you know, non-bounce rates, that's all really exciting. I think an overall an input to improving return on advertising spend for our advertising partners. Then, you know, you, I think asked about content time spent. I'd say overall, you know, content viewers continue to grow content products, you know, including Spotlight, Friend Stories, Creator Stories, Partner Content.

That's true in the U.S. as well, where content viewership is growing. Globally, overall time spent watching content on the platforms continues to grow. Time spent watching Friend Stories does continue to be a headwind to total time spent.

If you think about our investments here and what we're doing to reaccelerate time spent with content, the most important thing is really increasing Spotlight viewership and engagement. We think we've got a lot of headroom here. We're excited about the 100% year-over-year growth on time spent and 30% year-over-year growth in Spotlight MAU. We're also continuing to invest in new creator tools and growing our creator ecosystem to increase, you know, creator content supply and diversity.

That was definitely a bright spot in the U.S. where, you know, time spent watching Creator Stories grew 10% year-over-year in Q4. We're making a lot of product improvements and innovations around, you know, Friend Stories, including things like Community Stories, which we think are really valuable to our community.

Lastly, you know, obviously onboarding new media partners who are driving significant viewership and time spend as we shared, you know, in the letter. I do think, you know, short video competition is gonna continue to be very intense. You know, our community loves watching entertaining short videos. What we're really trying to do here is just play to our strengths around our camera and messaging.

You know, we benefit from the enormous amount of video creation happening on our platform, you know, over 5 billion snaps created every day, and this network of close friends who really enjoy sharing videos across our platform. I think we'll continue to play to our strengths there. It's part of what's contributing to the great growth we're seeing, you know, in Spotlight.

Richard Greenfield (Partner and Media Futurist)

Thank you. The next question is from Brian Nowak with Morgan Stanley.

Brian Nowak (Managing Director)

Thanks for taking my questions. Just to kind of go back to the ad disruption in the near term, kind of laid out on page nine. I guess one of the questions I have, maybe I'm just not really understanding it. Is the way to think about this, the value of the advertisers is going up because in the near term, you're sort of increasing the effective ad load?

We should think about platform-wide pricing going down in the near term. Is that right, or am I sort of off there is the first one. The second thing, you know, one of the important aspects of driving a direct response business is sort of data capture and being able to build cohorts of users.

Can you just talk to us about some of the data capture that you already have and how you think about the potential to sort of cohort these users to drive a large DR business? Thanks.

Derek Andersen (CFO)

Hey, Brian, it's Derek Andersen speaking. I'll take the first one. Just in terms of what we're seeing in terms of, you know, inventory and the experience there. What you're effectively seeing is we've had some growth in impressions just as we've invested in the Creator Stories product in particular.

That's been very popular, both from a posting and from an engagement perspective. You've seen that contribute. It's not necessarily an ad load. It's driven by, you know, positive engagement with that product. In terms of, you know, what we're seeing in sort of the overall ecosystem of the auction, what we're doing here is using our inventory significantly more efficiently.

That has the effect of actually returning impressions back into the auction, which happen to be absorbed across other GDBs and, you know, sort of puts downward pressure, all else being equal, on the contestation in the auction. You know, obviously that increases the opportunity for ROAS and return for advertisers.

All else being equal, what you're seeing that do is translate into lower eCPMs in the short term. The improvements that we're making to the DR platform, you know, in translating into longer dwell times, lower bounce rates, and some of the metrics that Evan shared with you earlier really are improving the value of the actions we're driving. That is more performative for the advertisers.

In the very near term, this disruption comes through with, you know, the pressure on the supply and the disruption to the volumes that are being driven. The value is clearly higher, and we can see that already coming through. Hopefully that gives you a little bit more context on what's happening in the sort of supply-demand environment there. I'll turn it over to Jerry for the second part of your question.

Jerry Hunter (COO)

Thanks, Derek. Brian, thanks for the question. Let me just give you a little about how we think about this data. We have a bunch of ways that we're collecting data. Conversions API, Snap Pixel, Data Clean Rooms. It's like Evan talked about earlier, multiparty computation, SKAN, MMPs. All of these signals feed into our system and give us a better view of what's happening with customers and conversions.

Add to that the changes that we made to the WebView and to the ad format so we get better signal about how our customers are interacting with our product. These all come together to train our ML, and that gives us better targeting over time. The way we think about this is sort of a circle where there's constantly information that's coming in.

We make changes in each of these products as well as making changes to customers make changes to their campaigns, and then we make changes to the ad format. We feed it into the ML, and this sort of circle gives us better and better targeting over time, which we think still leads to better CPMs across the board and better our ROAS for our customers.

Operator (participant)

Thank you. The next question comes from Mark Mahaney with Evercore.

Mark Mahaney (Senior Managing Director)

Okay, thanks. I think I'll just ask one question on the monetization of Spotlight. It's something that's we've gone back and forth on for, you know, for a while now. I don't wanna say what's the hold up in monetizing Spotlight, but I do kinda wanna ask that. What are the factors that you're looking for that allow you to be a little bit more aggressive in monetizing what's clearly a really strong, you know, growth asset for you? I know you don't wanna undermine the user experience, but, you know, when do you make that on/off decision or that full on decision? Thank you.

Derek Andersen (CFO)

Hey, Mark, it's Derek speaking. can take that question for you. I think, you know, for context, just to start, you know, I hinted at this a little earlier in the prior question, we definitely believe that we are demand constrained and not supply constrained at the moment. You know, to sort of put a finer point on that, we saw 8% impression growth in the most recent quarter, and that translated into a 9% decline in eCPM.

Clearly, you know, demand is the sort of lacking portion of things there. Obviously, that's why so much focus is on improvement in the DR business so that we can utilize our inventory and monetize it to take share. you know, I think we're pleased with what we're seeing also in the growth and supply already.

You know, the investments that we made in Creator Stories in the most recent quarter translated into, you know, really solid volumes on posting, and that translated into really good engagement. That's, that's driven some impression growth in the most recent quarter that we're, you know, really pleased about.

In terms of Spotlight, though, to answer your question specifically, we did share last quarter that we would be expanding the testing of Spotlight monetization, and we did do that in Q4, and we're pleased with what we saw. It remains really early in that testing, but in the testing we've seen thus far, the yield we're getting on ads served in Spotlight is equal to, and in some cases higher than the yield we're realizing currently for similar ads elsewhere in the app.

Again, this is really early, but that's very encouraging data in terms of what it means for our optimism about the potential for Spotlight to become a really meaningful portion of our overall content business in the future. We're gonna continue to advance our testing on Spotlight in the months ahead and continue to optimize the ad experience for both our community and advertising partners.

As I said earlier, you know, given we're demand constrained, the urgency to ramp up monetization there is limited, and focusing on the advertiser and the customer experience is the most important thing in the very near term.

Operator (participant)

Thank you. The next question is from Eric Sheridan with Goldman Sachs.

Eric Sheridan (Managing Director)

Thanks so much for taking the question. maybe if I could pivot to the cost side of the equation and just try to tie a few loose ends together. It sounds like Evan earlier said there's obviously some key areas to invest in that will act as a headwind to margins even as you exit 2022 and go into 2023. You've obviously done a cost-cutting initiative coming out of 2022, and then there's elements of the business would improve on the back of the DR initiatives as we move through 2023.

Can we get a little more granular on some of the headwinds versus the tailwinds and the cost structure and tying it back to how we should be thinking about leverage in the business when you think about your investment cadence versus sort of implementation of the cost-cutting initiative and then an improved revenue profile as we move through 2023? Thanks so much.

Derek Andersen (CFO)

Hey there. It's Derek speaking. I can take that one. You know, I think to start off, when we approached the reprioritization that we announced near the end of Q3, where we shared that we were going to be removing $500 million from the cash cost structure, I think it's important to just, you know, understand that we were very thoughtful in our approach about that because we really wanted to achieve two goals. One is we wanted to make sure that we were clearly building a path to Adjusted EBITDA profitability and positive free cash flow even at lower growth rates.

We also wanted to make sure that each of our three strategic priorities were fully funded. So that we were fully funding the efforts to continue to grow our community and deepen engagement, the work that we're doing to improve our DR platform in order to accelerate revenue growth, as well as the efforts around diversifying our revenue growth that you see with Snapchat+.

Also, of course, being able to continue to invest in the long-term AR business. What you can see is we've been able to make sure that we have a cost structure that fully funds those three priorities, and we're still on track to deliver all of the $500 million in cost reduction.

The first $50 million there is coming out of fixed content reductions, and you should see that fully reflected in the fixed component of the content costs in Q1. Similarly, on the cash operating cost structure, the objective there was to remove $450 million, and, you know, we were continuing to wind down various operations through the course of Q4. You'll see the full benefit of that cost reduction again in Q1, just as we anticipated. You know, for example, our actual headcount numbers are, you know, at the end of the current quarter are down 20% from the peak in Q2. It gives you a sense of the progress we've made in managing down the cost structure and getting ourselves to the prioritized cost structure.

Going forward, you know, first, you know, I'd say, like, we remain long-term oriented when we're thinking about the investments in the business. There are going to be things that are incredibly compelling for us to invest in in the business. You know, for example, we just made the investment in Creator Stories. Obviously, a very compelling investment immediately resulting in an 8% increase in inventory. You know, there are going to be investments like that along the way that are incredibly compelling.

What we have to do is remain, one, very disciplined on the aggregate cost structure and very focused on prioritizing our investments to make sure that we maintain that path to Adjusted EBITDA profitability and consistent free cash flow generation. It's now our third consecutive year of Adjusted EBITDA profitability, second consecutive year of positive free cash flow.

That's important to controlling, you know, our financial destiny going forward, making sure that we can fund the investments in the future of our business, and also making sure that we have the cash and cash flow to manage any dilution that we experience in the business, which you see we've been active in doing. Hopefully that gives you a sense of, like, where we are on the reprioritization of the cost structure and funding our priorities, but also how we're thinking about balancing that discipline going forward.

Operator (participant)

Thank you. Our next question is from Lloyd Walmsley with UBS.

Lloyd Walmsley (Analyst)

Thanks. Two, if I can. First, you've talked a lot about the headwinds to time spent in Friend Stories. Can you just talk about what you're seeing in the core chat experiences? Are you seeing growth in whether it's time per user or visits per day per user in that core kind of anchor engagement that feeds the whole business? The second one was just, in the letter you mentioned Discover content moving into more places. Curious if you expect this to be more of a driver of engagement or monetization or both. You know, have you started doing anything that you can kind of share early learnings with us here? Thanks.

Derek Andersen (CFO)

Thanks, Lloyd, for the question. Yeah, we're incredibly excited about the momentum we're seeing, you know, around our messaging service. Visual messaging is really core to the Snapchat experience and what helps people connect with their friends and family, and of course enhances their relationships.

We're really excited about that momentum there and of course, you know, the work that we're doing in our camera, around augmented reality and helping our community express themselves with AR Lenses and try and get new utility out of augmented reality with things like Try On as well. Those core experiences around, you know, the camera and messaging are obviously really exciting and driving a lot of growth for us. You know, also things like the Map, for example.

You know, as we mentioned, I believe in the letter, in Q4, Snapchatters opened places on the Map more than twice as often as they did in Q4 2021. Definitely a lot of strong growth and engagement around the core product value of messaging. You know, and we're really optimistic about some of the new products we have coming around that as well.

Operator (participant)

Thank you. Our last question comes from Doug Anmuth with JPMorgan.

Doug Anmuth (Managing Director and Internet Analyst)

Thanks for taking the questions. I have two. First, just to circle back on Friend Stories and the strategy there. It sounds like, part of the goal here is to get people to shift and to use Spotlight more. Is the idea to shift them into that tab in particular, or to put Spotlight videos within Friend Stories? Can you also just talk about how revenue sharing with creators will work on Spotlight? Thanks.

Derek Andersen (CFO)

Yeah, sure. At a high level, what we're seeing with Friend Stories is that people still really wanna watch stories from their close friends and their family. It's more the, you know, the longer tail of their friends where they'd prefer to watch a really entertaining video than, you know, maybe a story about somebody's day-to-day life.

That's really where we're trying to understand where that sort of break point is for different members of our community and help them discover Spotlight content sort of at that moment as they start to become less engaged with Friend Stories. Some of that, for example, is creating entry points even in Discover, right? That people can tap directly into Spotlight content from that fourth tab content experience.

In addition, we're also helping drive folks to the Spotlight tab itself, especially, for example, if one of the creators they're following has posted a new Spotlight video, we can let folks know and bring them into Spotlight that way. That's, I think kinda how we're thinking about driving more top of funnel to Spotlight, at least in the near term. You know, as it pertains to revenue share with creators, we do a small amount of, you know, sort of content seeding, for example, with sort of contests and things like that around Spotlight. We have not yet rolled out sort of a large scale revenue share.

In fact, what we're seeing a lot of creators do is use Spotlight to get distribution for their stories. To become discovered in Spotlight, drive people to subscribe to their Creator Stories where we then do revenue share with them.

That is actually, I think, quite beneficial both to our business and creators because that subscription model, it provides much more stable revenue for the creators, and I think that's something that they really value compared to Spotlight, which is a bit more hit-driven. If they've got a great hit video, they can use that to drive people to their story and then, you know, monetize that more durably over time and build that relationship with their audience.

Mark Shmulik (Managing Director and Senior Analyst)

Thank you.

Derek Andersen (CFO)

Thank you.

Operator (participant)

This concludes our question and answer session, as well as Snap Inc.'s fourth quarter 2022 earnings conference call. Thank you for attending today's session. You may now disconnect.