SNAP INC – A (SNAP) Q3 2022 Earnings Call Transcript

SNAP INC – A  ( ?????? : SNAP) Q3 2022 earnings call dated Oct. 20, 2022

Corporate Participants:

David Ometer — Head of Investor Relations

Evan Spiegel — Chief Executive Officer and Co-Founder

Jerry Hunter — Chief Operating Officer

Analysts:

Eric Sheridan — Goldman Sachs — Analyst

Brian Nowak — Morgan Stanley — Analyst

Rich Greenfield — LightShed Partners — Analyst

Mark Shmulik — AllianceBernstein — Analyst

Ross Sandler — Barclay — Analyst

Derek Andersen — Chief Financial Officer

Lloyd Walmsley — UBS. — Analyst

Mark Mahaney — Evercore — Analyst

Brent Thill — Jefferies — Analyst

Presentation:

Operator

Good afternoon, everyone, and welcome to Snap Inc’s Third 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. And good afternoon, everyone. Welcome to Snap’s Third 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 a 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 and nonrecurring 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 — Chief Executive Officer and Co-Founder

Hi, everyone. And thank you all for joining us. While our business continue to face significant headwinds this quarter, we took action to further focus our business on our three strategic priorities of growing our community and deepening their engagement with our products, reaccelerating and diversifying our revenue growth and investing in augmented reality.

We believe that we can be successful in this new operating environment but we must rigorously prioritize our investments. We continue to delight our community with our products while driving success for our advertising partners. Growing our community and engagement is one of our most important inputs to long-term success because it increases our overall revenue opportunity and strengthens our network effects.

Our team remains focused on expanding our product offering and deepening engagement with our global community, which increased 19% year-over-year to reach 363 million daily active users. Our revenue grew 6% year-over-year to $1.13 billion and we generated adjusted EBITDA of $73 million and free-cash flow of $18 million.

We were focused on increasing our share of wallet, as growth in the overall digital advertising segment slows ph] by working to increase the return on advertising spend delivered by our direct response advertising platform as we believe these are the most defensible advertising budgets in a challenged economic environment.

To achieve this, we are investing in driving scalable, lower funnel performance for our advertising partners and making improvements to our ad platform and auction dynamics so that we can continue to deliver strong returns on advertising spend.

Our camera has evolved into a leading platform for augmented reality. Our AR products and services are already driving a major impacted scale today that Snapchatters use our services to shop, play, learn, explore and entertain themselves. This quarter, we announced several new valuable partnerships, innovative AR experiences and new AR features and capabilities in Lens Studio.

Over 250 million people engage with augmented reality on Snapchat every day. Accelerating our lead in augmented reality helps us build a durable competitive advantage that comes from investing over the long-term building sophisticated technical tools and capabilities and growing a platform that is increasingly differentiated and difficult to replicate.

This momentum and the creative energy of the Snapchat community makes us incredibly excited about the future of augmented reality. As part of our reprioritization efforts, we have reorganized our teams and better meet the challenges of the current environment and to make as much progress as possible — as quickly as possible in the areas of our business that we are able to control. In particular, there was a significant opportunity to improve coordination and prioritization across our engineering, sales and product teams. In an effort to realize this opportunity, we promoted Jerry Hunter to Chief Operating Officer. Jerry leads our monetization efforts across our three operating regions; EMEA, APAC and Americas as well as our engineering growth, partnerships and content, AR Enterprise and SMB teams.

Jerry has repeatedly demonstrated operational rigor and scale leading our business through several challenging transitions including the build-out of our advertising platform, the rebuild of our Android products, our infrastructure optimization and most recently significant investments in our platform integrity team. With that, I’m excited to introduce Jerry.

Jerry Hunter — Chief Operating Officer

Thanks Evan. And thank you everybody for joining our call. I see significant opportunities for our business in the years ahead. As a business, our primary focus is on driving lower funnel performance and improving yield of our inventory for advertising partners. We’re working to improve optimization against lower funnel objectives to drive more conversions and innovating on our advertising formats in order to make them more native and engaging.

Improving our product and technical performance of our advertising platform requires tight collaboration and teamwork across sales, product and engineering. Our renewed focus will be on creating alignment across our teams to ensure that feedback from clients helps inform our product roadmap and that each of our teams is more directly accountable for advertiser success. After years of rapid growth and size of our team, we’re focused on driving productivity in our sales organization and improving our go-to-market with more clarity about the role that Snapchat plays in the lives of our community and how we can help businesses grow.

We will listen to our clients, clearly understand their challenges and opportunities and demonstrate how Snapchat can play a meaningful role in driving their success. We’re also working hard to deliver new revenue-generating opportunities including Spotlight, augmented reality advertising and our Snapchat plus subscription service.

We’re expanding our advertising test within Spotlight in Q4 especially as we see many opportunities to introduce advertising formats that align well with this new content viewing experience. With hundreds of millions of people using AR everyday, we have a huge opportunity to help businesses reach their customers with immersive and engaging augmented reality experiences.

Snapchat Plus represents an exciting opportunity to diversify our revenue streams outside of advertising and we have a direct ability to increase subscribers with new product features and by driving awareness of our subscription offering. I couldn’t be more excited to be here at Snap and I look-forward to sharing more about our plans for 2022 and beyond.

Thank you and with that we can begin our Q&A.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session (Operator Instructions)

The first question comes from the line of Eric Sheridan with Goldman Sachs.

Eric Sheridan — Goldman Sachs — Analyst

Thanks so much for taking the question, maybe I’ll do a two-parter if I can. I think first, Evan would people still want to hear is sort of looking back over the last four or five quarters as Apple made the policy changes, they did and the industry has been in this sort of transformative mode over the last 12 plus months.

What have been some of the key learnings of where you found the infrastructure and the ad product, maybe a less well-positioned in terms of what’s happened from an industry shift standpoint? And turning to the forward timetable, you’ve obviously laid out an investment plan to sort of reposition the ad product for the long-term. Can we get a better sense of like where you are in the process of repositioning the ad platform for the medium-to-long term and how we should we be thinking about what the pathway is in terms of headwinds versus tailwinds from a monetization standpoint? Thanks.

Evan Spiegel — Chief Executive Officer and Co-Founder

Thanks, Eric. Yes so, at a high-level we’re focused on building our business for the long-term and, that means that we really put our community at the center of everything that we do and we innovate to offer products that add value to people’s lives by empowering them to express themselves within the moment, learn about the world and have fun together and that long-term perspective is really what informs our strategy, as we think about navigating this difficult macro-environment that has impacted our advertising business over the past few quarters. So we made the decision to re-prioritize and focus our investments on our three strategic priorities; growing our community and their engagement, reaccelerating and diversifying our revenue and investing in augmented reality and these changes should allow us to drive continued growth in our community while delivering free-cash flow even with low levels of revenue growth and that gives us a lot more flexibility to focus on the long-term in an environment where the cost-of-capital has increased quite dramatically.

There’s a lot of opportunity to generate incremental revenue across our platform, whether that’s our AR platform, Spotlight or the Map. We’ve also been growing our Snapchat Plus subscription service, which is another way that we deliver value to our community and allows us to monetize the high levels of engagement that we have across our service. Operationally, our advertising business has become a lot more technically complex over the past few years as advertisers are working to better measure and optimize their campaigns. That means that we need to drive increased coordination across our sales, engineering and product teams, which is one of the reasons I’m so excited to have Jerry leading these teams as our COO. I’ve already observed a significant change in the way that our teams are working together and, I’m really pleased to see the focus on our advertising customers driving everything that they do. I mean, tactically really that means working to make conversions on our platform more absorbable and easier to measure whether that’s more on platform or click-through conversions, improvements to our first-party tooling, third-party tooling and partnerships, ad format improvements, ML and optimization improvements and, of course, continuing to grow our inventory.

We saw about an 8% increase in impressions year-over-year in the quarter, which is really a function of daily active users and engagement. And then as we are looking to the future, we really try to make sure that all of our investments are lined-up against those three strategic priorities that I mentioned; community growth, revenue growth and AR and, that’s really, how we’re going to be working through this challenging environment.

Operator

The next question comes from the line of Brian Nowak with Morgan Stanley.

Brian Nowak — Morgan Stanley — Analyst

Great. Thanks for taking my questions. I have two maybe Jerry, let me ask you a couple, so just, could you give us some examples of one or two of the most important steps that you see yourself focusing on to really improve the performance-driven business and how quickly that business can ramp within the overall mix some blocking and tackling. Then the second one with US time spent down 5% and really the core Snap story seemed to be weathering [ph] decline, how do you think about sort of differentiating the pitch to advertisers and even users as your engagement is increasingly driven by short-form video and long-form video. Thanks.

Jerry Hunter — Chief Operating Officer

Thanks for the question, Brian. I’m excited about the opportunities we have for our business. Advertising has become more technical as signals and measurement continue to evolve. Actually, I have three things, I want to tell you about. First, is building up the connective tissue between sales, engineering and product that includes feedback mechanisms into product from sales and customers and better go-to-market planning that ensures customer success in our platform.

Two is continuing to strengthen our DR business which we know is more defensible, both in good and challenging times. We’ll do this by continuing to drive our first-party measurement and we’re seeing strong adoption by our top advertisers, making our systems work better with third-party measurement systems like Google Analytics and continuing to improve personalization, optimization. And the third thing is bringing top talent to our three President roles for the Americas, APAC and EMEA, one of whom is Ronan Harris who’s going to join us next week. This will ensure that we’re improving our focus on customers in every region and getting closer to the customers’ needs. I think, these priorities will set Snap up to be successful in this incurred environment.

Evan Spiegel — Chief Executive Officer and Co-Founder

Thanks. Yeah I can speak a little bit to that content trends that we’re seeing in the US and more broadly. So at a very-high level, both in the US and globally viewership is up and so that means that our overall opportunity is expanding if we can continue to increase focus [ph], depth of engagement and that’s really important, of course for advertisers, who really value the reach that we provide.

Looking more specifically at Stories, what we’re finding is that while people continue to engage at really high levels with Stories from their close friends or private Stories. Especially from people that are really important to them that depth of story engagement, you get to your 200th friend or something like that, at some point content on Spotlight or Discover isn’t maybe more engaging or more interesting and so what we’re trying to do is help people transition from that friend story content that really drives that healthy top of funnel and viewership to content in Spotlight and Discover and both of those are growing nicely.

Spotlight, of course, is growing very — very rapidly year-over-year and we’re excited about that. I think as it pertains to advertisers, as I mentioned, they’re really looking for reach, but they’re also looking for performance especially in this period of time, which is why we focus so heavily on evolving our direct response business. And making sure that we’re really delivering return on ad spend for our partners. I think, there are going to be some unique opportunities with things like Spotlight for example where smaller advertisers can experiment with content — submitting content to Spotlight, seeing how it performs and then if they get some traction there and get feedback from our community then they may want to turn into a direct response advertising unit and manage that through our ad platform. So I do think some of the content investments we’re making provide new and unique opportunities for advertisers, but really especially in this environment, the focus is going to be on reach and performance.

Operator

Your next question is from the line of Rich Greenfield with LightShed Partners. (technical difficulty)

Rich Greenfield — LightShed Partners — Analyst

Hi, thanks for taking the question. I want this one specifically for, Evan. I guess, it’s pretty obvious that your sticky [ph] utility for photo base messaging especially among sort of your core demos, but you’re clearly losing engagement and spend to TikTok and maybe even other camera apps that have come on to the scene like BeReal impacting sort of overall time spent per user, per day and then in-turn monetization. Curious on the — I guess the most important question for you especially on the product side is how — like how do you get people to spend more time on Snapchat and especially more monetizable time spent on Snapchat and like what is the plan for that in ’23? So I think, that’s what investors are going to really be anchored on as they think about your stock over the next year?

Evan Spiegel — Chief Executive Officer and Co-Founder

Thanks, Rich. Yeah, so at a high-level, as you pointed out, Snapchat provides an extremely valuable utility in terms of visual messaging, but also across our service with things like the Map or our AR platform and of course content as you also mentioned and so we’ve really worked hard to diversify engagement across our products.

And our application opens the Camera, so we’ve got a real strength in digital communication and augmented reality that remains under-monetized, which is why we really focus on accelerating our revenue growth in augmented reality so that it’s more commensurate with the engagement that we’re seeing there. And we believe that the differentiated nature of our services is what’s contributing to the daily active user growth which grew 19% year-over-year to 363 million daily active users.

In terms of the content specifically, I think there is a lot of headroom, of course, to continue to grow content engagement. As I mentioned, viewership has expanded and we’re continuing to see a lot of demand for content and Spotlight which is growing nicely and on our Discover platform.

I think, we can do a better job, helping people transition from friend stories or private stories into those types of content and relative to other services where people are spending a lot of time watching content, we believe we have a lot of headroom to increase content engagement. So working to improve content diversity and personalization to realize that opportunity. Overall, of course impressions grew 8% year-over-year, so we are seeing some progress there.

Operator

Your next question is from the line of Mark Shmulik with AllianceBernstein, please proceed.

Mark Shmulik — AllianceBernstein — Analyst

Yes, hi thanks for taking the questions. A couple if I may. First for Evan. I know with the leaked memo, there was kind of the numbers out there on internal expectations for 2023, any color you can share just how that’s changed given this is a fast evolving macro market and a lot of changes with kind of new executives like Jerry on-boarding kind of the plans in-place there.

And then secondly, Jerry, I just kind of think about kind of new levers of monetization. And I know, we’re talking about kind of Spotlight ad coming on-board here in the fourth-quarter. Any color you can share and just kind of the roadmap of what else is there to kind of really reaccelerate revenue growth? I kind of look at stats like Samsung phone 2.5 billion Snaps and so, just how do we think about like Camera Kit and AR kit being monetized as well? Thanks.

Evan Spiegel — Chief Executive Officer and Co-Founder

Thanks, Mark, yes so that was an internal memo that we weren’t intending to share publicly and as such had a number of aspirational goals really designed to rally the team especially at a time when we are restructuring and refocusing our business. It’s really important for our team to see the enormous opportunity that we have in front of us whether that’s re-accelerating our revenue growth by improving our direct response business, better monetizing the enormous amount of AR engagement that we see obviously in our camera and continuing to grow and build-on Snapchat Plus, so we certainly see a lot of opportunity there.

And the goal is really as we look to 2023 and inspiring our team. I remember some really challenging times in the past when expectations were really-really low and internally we try to really inspire our team and that’s what helped us deliver our 50% year-over-year revenue growth on average last five years or so. So I think, especially in really challenging times when we’ve taken the necessary steps to make sure our business can be successful over the long-term, inspiring the team is critically important, but those goals are internal and aspirational.

Jerry Hunter — Chief Operating Officer

I’ll take the second part of that question. In addition to the work on AR and accelerating the AR business that Evan touched on, I just want to have — give you a sense of how we’re refocusing and realigning sales engineering and product teams around the customers. Let me give you an example of a program we started a couple of months back called the reference customer program. The idea is to find customers that we want to ensure getting the most from our platform.

We brought several SWAT teams together, a SWAT team that include folks from the account team, the engineering team and product teams to review every aspect of how the advertiser was using the platform. And we found that through this, we were able to help improve their implementation, better utilize features that are already in the platform and in couple of cases, did a little bit of feature integration work.

In all those cases, the customers had higher ROI than expected and they were happy with the results. Now we’re in the process of rolling these successes out to other customers who might have similar opportunities and I think, that that’s just a product of this — of bringing the teams together. So I think, there’s a lot of opportunity for us to just bring teams together and take advantage of what we’ve already got out there and have it implemented in a better way.

Operator

Your next question comes from Ross Sandler with Barclays.

Ross Sandler — Barclay — Analyst

Hey guys, just wanted to throw the macro question out. So it sounds like it’s mostly brand advertising that was weak in 3Q and it seems like that’s the area that’s forecasted to really drop-off as we kind of go-forward here in 4Q, so could you just maybe elaborate a little bit on what you’re seeing, what’s — we can obviously see what’s going on with the macro broadly, but specifically to like rest of this quarter, what commitments you’re looking at it would cause those growth rates to kind of dip into the negative?

And then related to one of the prior questions, you’re growing your DAUs almost 20% and Impression 8% so to — it seems like we’ve just got a demand problem here, not a supply problem. Can you just talk to that a little bit. Thank you.

Derek Andersen — Chief Financial Officer

Hey there, it’s Derek speaking. Thanks for the question. One, yeah in Q3 the deceleration in revenue growth was really observed across both our direct response and brand advertising business with the direct response advertising growing modestly faster than the overall business while the brand-oriented advertising business declined slightly over year-over-year in the quarter. And then in Q4 as we look-forward, we expect the brand business to play a bigger role and the decel we anticipate to occur as we move through the quarter. And that being due to the fact that number-one, the growth rates were very-high in the prior year, but also it’s a bigger portion of the business in Q4. I think stepping back, we’ve seen revenue growth move around over the last several months, but within a relatively tight range, so we grew about 13% in Q2 but we started decelerate as we move through the quarter.

And this led us to the sharing we reported last quarter that the growth was approximately flat in the early portion of that quarter. By the end of August, we — when we shared the 8K about the restructuring, the quarter-to-date revenue had improved to about eight [ph] and so that implied things accelerated a bit.

With a full-quarter number at six this quarter, obviously, things slowed down into about the low-single digits in September, so and then we’ve seen things move-up a bit in Q — in the beginning of this quarter with the early weeks being at about 9%. And so if you sort of take that together, what we’re seeing is the growth rate has moved around month-to month and accelerated or decelerated a couple of times. We’ve largely been range-bound here between flat in the low-teens as we continue to navigate this really difficult operating environment.

And I think, the thing I’d share here that’s really important is something we’ve talked about several times in recent quarters which is that, it’s incredibly fast and easy for advertisers to turn digital performance advertising on and off. As they seek to calibrate their investments and their own growth and their business and that’s part of what we’re seeing here with the start-stop on the growth rates and the accel and decel that we’ve experienced. So as we’re navigating this, it’s incredibly important that we stay focused on the inputs that we control. And you heard a lot about that from Evan and Jerry earlier around the investments that we’re making to grow the community, the investments to improve the DR business and, of course, things like Snapchat Plus, which are helping to diversify the topline growth and of course the future of AR.

And then to your other question in terms of supply versus demand. We continue to believe we have a significant room to grow our advertising business. And so I do believe that as you’ve seen the macro challenges compound on some of the platform changes we saw last year, certainly where we’ve been demand challenged and we continue to see a lot of opportunity to grow — grow our business with eCP [ph] with Impressions as you’ve seen in the most recent quarter with those Impressions growing, but also through eCPMs as we can continue to get better at our direct response business including optimization, personalization and ranking, which Jerry talked about a lot earlier. So I agree with you on that point, and hopefully all of that provides a little bit of context for your question.

Operator

The next question is from the line of Lloyd Walmsley with UBS.

Lloyd Walmsley — UBS. — Analyst

Thanks. And first one is just, you talked about expanding Spotlight test this quarter, you just talked about being kind of just demand constrained, so curious, how you guys think it plays out if we think about adding inventory from Spotlight reducing eCPM?

How responsive is the ad community just moving budget over as that ad load ramps and CPMs come down, how easy is it for advertisers to shift that creative and see ROI in the Spotlight format? And then second one if I can, you talked about taking $450 million out-of-the cost base. I think, it was kind of an exit 2Q [ph] annualized number, can you just talk about what kind of growth we should expect on that new cost base in terms of either head count inflation or other cost growth on this new base heading into ’23? Thanks.

Derek Andersen — Chief Financial Officer

Hey it’s Derek speaking, thanks for the question, so in terms of the first one around monetizing Spotlight. As we look into Q4, we will expand our advertising tests within Spotlight but in addition businesses already have several mechanisms to test and learn directly within Spotlight, so businesses are able to submit content of Spotlight, see how it performs within our community, receive direct feedback from our user base and then use those learnings to inform their campaigns. We believe that this is a good example of how Spotlight offers an exciting new way for brands to experiment with their video creative and learn how to make content and inspires the community. We’re also working on new tools that will enable businesses to easily promote their most engaging Spotlight content, drive conversations and then measure their success with ad manager, so at a high-level, we’re really excited about the potential for Spotlight. But we also have a lot of room as I just mentioned to grow our advertising business regardless of how and when we ramp Spotlight ad light — ad load, sorry, so we’re ramping our testing judiciously there to make sure that we maximize the long-term value.

Operator

The next question is from the line of Mark Mahaney with Evercore.

Mark Mahaney — Evercore — Analyst

Okay, thanks, two questions please. First is as you tried to — thoughts on Scan 4.0, when that comes out sometime this quarter, do you think your thoughts on whether that will help you or not and at the same time, I think you’ve been trying to recover signal, you’ve been doing a series of things to try to improve ad attribution, ad targeting, just where are you on that? And then you talked about ROI in the shareholder letter. Can you just quantify like for people running campaigns, consistently running campaigns, how impaired is the ROI versus where it was kind of a year-ago and the path to getting that back to levels that you had at that time? Thanks a lot.

Jerry Hunter — Chief Operating Officer

Hi, this is Jerry, let me talk about that first one on Scan 4.0. To take a step-back here, we think it’s critical, measurement is critical, and it’s why we’ve invested so heavily in first and third-party measurement and Scan 4.0 is important. The coming changes are definitely need improvements to help advertisers achieve their business goals and better campaign attribution and more granular reporting should give us even more headroom for the — for improvement.

For the ROI part of the question, we are constantly evolving the best way we serve our advertisers. We’re continuing to update and improve our first-party measurement solutions, which we are seeing continued adoption of our top advertisers and they’re seeing success on our platform as a result. We’re also continuing to prove the way that third-party measurement systems like Google Analytics are reflecting conversions in our systems and we’re seeing positive results there too. We’re also driving our direct response ad to better convert right on our platform. That improvement is happening through more experimentation within ML and integrating data from our privacy protecting first-party measurement solutions so that ranking and personalization are more effective. And I just, I want to come back to the fact that this ad space is more technical and it’s just as important as the rest of these to talk about an integration between sales, engineering and product teams and the processes that ensure that our advertising partners are achieving success by cross-functional process, tighter lines of communication and faster responsiveness to their opportunities and challenges.

Operator

Our last question comes from the line of Brent Thill with Jefferies.

Brent Thill — Jefferies — Analyst

Thanks. Just on the brand side. I think, many are curious kind of why brand will suffer so hard going into a seasonally strong period? Is this more macro-related? Is it given some of the restructuring, is that having some impact? And I guess, Even if you can also follow-up on that. I know you’ve — there’s been a lot of change. When do you expect that to kind of stabilize and that to flow-through the system and you feel that you are on the right foundation from this restructuring activity?

Derek Andersen — Chief Financial Officer

It’s Derek, speaking. I’ll take the first part of that and then hand it off to Evan. I think first just stepping back for context on Q4. Even flattish year-over-year revenue growth of about a 15% step-up on a quarter-over quarter basis, so we are expecting revenue to grow seasonally at a pretty good clip. So the issue that we’re seeing here is that if you look-back to a year-ago, we grew at over 40% year-over-year in the prior year and many of the really significant macro impacts that we’ve seen over the course of this year weren’t impacting the business nearly as much as they were a year-ago. So for example the persistent inflation we’ve seen this year but the ramp in the Fed rate cycle, as well as the onset of the war in Ukraine that really, it had an impact on growth rates as we moved into Q2. And so while we’re still expecting really pretty robust 15% approximately year-over — quarter-over quarter growth in Q4, the comp to the prior year and the fact that the macro impacts have built-up and compounded on each other over the course of this year is really making the back-half of this quarter, number-one, a little bit more difficult from the visibility point-of-view and certainly with the performance that we saw from the brand portion of the advertising business in Q3 gives the — sort of informs our expectation of the decels from [ph] the rest of the quarter, so hopefully that gives you a little more context on that side of things. I’ll turn it over to Evan for the second portion there.

Evan Spiegel — Chief Executive Officer and Co-Founder

Hey thanks Brian for the question. I mean, these sorts of changes in restructurings are always challenging and I’m really just grateful to the team and really proud of how quickly they work to adapt and really make sure we’re focused on our key priorities.

I think, it’s going to take a little bit of time. We certainly have regained some momentum and focus but the process is still concluding in certain countries, where regulations require that those processes take a little bit longer. So I wouldn’t say that we’re complete there. I think, one thing I’m watching specifically is on the sales side, we’ve got these President roles, Ronan Harris, who is joining a bit later this month as our President of EMEA, we will also have an APAC President and an Americas President and we’ll be putting folks into those roles as soon as we can. And in addition to that, we’re also thinking about how to better organize our sales teams to go-to-market in a way that they best serves our customers and we’re sort of thinking about Q1 is the timeline for that. So we’re certainly not done with this process because we see more opportunity to streamline and improve the way we serve our advertising partners. I know, that’s something Jerry is thinking a lot about. But overall, if you just look at how the team has managed this period of time, I’m really proud of the work they’re doing and the progress we’re making.

Operator

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