15 Years at Snap Inc.

Dear Team,

I’ve never been more excited about our business and I believe it is so much stronger than some people may think. That might be a surprise at our current share price, so let me tell you why I feel that way.

First, we’ve built something truly unique. Snapchat was created to bring people closer together and we’ve succeeded in doing that beyond our wildest dreams. In Q2, 971 million people used Snapchat monthly and 493 million people used it every day.

It hasn’t been easy. We’re up against some of the world’s most well capitalized and ruthless competitors who have ripped us off and tried to crush us. We beat the odds by innovating and inventing countless new ways for people to express themselves, live in the moment, learn about the world, and have fun together.

We’ve stayed ahead and continued to grow because we are different. Being different sometimes means being misunderstood or underappreciated. But for our community it means using technology to connect with the people that really matter to them. It’s why we open to the camera instead of a feed, focus on friends instead of followers, and bring people together through private communication.

That distinction is demonstrated by independent research. Studies in the United States, the Netherlands, and Australia have found positive associations between Snapchat use and friendship closeness, friend support, and wellbeing. These studies do not prove causation, but you can be proud that unlike social media, the service we’ve built is associated with a measurably positive impact on the world.

We know that some people misuse technology to cause harm, which is why the safety of our community comes first. From our first Parent Guide in 2013 to the profound advancements in AI-driven detection and prevention today, we are committed to staying on the cutting edge of safety and pushing to get better each and every day.

That’s because it is the right thing to do, and also because we are nothing without the trust of our community. With a 15-year-old at home, I am acutely aware of the particular importance of safeguards and limits for teens, and this will continue to be a focus of ours.

We’ve built something unique, battle tested by massive competitors, that makes a positive impact in the world. That’s our foundation. We’ve grown our business on that foundation, starting with ads, but increasingly with direct revenue in the form of in-app purchases and subscriptions, and eventually with SPECS.

As we’ve aggressively invested to grow our community, innovate on our service, and build the future of personal computing with SPECS, there has been a lot of pressure on our profitability. In fact, we’ve never turned a full year GAAP net income profit. But that’s starting to change, and we’re at a turning point: analysts estimate that we will be full year GAAP net income profitable in 2027 for the first time as our revenues outgrow our cost base. 

Looking forward over the next 3-5 years, the rate of growth of our advertising business is what will primarily determine our level of profitability. Most of our incremental advertising revenue flows to the bottom line, and as the largest source of revenue for Snapchat, the growth rate really matters. If we are able to compound ads revenue growth at 15% instead of 5% we will generate a lot more net income. After helping to keep our community safe, ads revenue growth will be our #1 business priority across Snap.

We’ve made a lot of progress growing and diversifying our ads business since the Apple platform policy changes in 2022. Impressions and conversions have grown meaningfully and CPMs have declined. Small and medium customers now represent more than 30% of our advertising revenue. That’s a much stronger foundation than we’ve ever had in the past.

While the foundation is stronger, our advertising revenue growth was just 9% year-over-year in the most recent quarter, slower than many of our competitors. I believe that is because we haven’t sufficiently leveraged the things that make Snapchat different and unique to grow our ads business.

TikTok has trends, Meta has scale, and Snapchat knows the real you.

That’s because when something matters in our lives we take a photo, tell a friend, or show up in person. Those are the core behaviors on Snapchat, and part of what makes our service unique. People use our camera, share with friends, and explore on the Map. They ask for advice on where to go, what to do, and what to buy.

Historically, it has been hard to transform disparate real-world actions into user intent and understanding. Multimodal models are changing that, because they can combine a sequence of user actions with vast learned relationships to make new connections and generate recommendations for what a person might want to do or buy next, all while preserving privacy.

This has profound implications for the future of advertising and for our service. Today, digital advertising relies heavily on explicit intent signals, like searching for a product or visiting a website and adding something to your cart. It is difficult for advertisers to generate incremental demand instead of competing to convert intent that already exists.

I believe Snapchat can change that with generative advertising by starting with our community, understanding what matters to them, generating recommendations for what they might want next, and then finding the businesses that are the best match. Instead of starting with the advertiser and finding the user most likely to purchase in that moment, we can start with the Snapchatter and help them find what they might want before they even start looking for it.

This is a big shift, and it won’t be easy, but I believe it plays to the unique strengths of Snapchat, is better for our community, and will drive strong incremental growth for advertisers.

There are other important things we need to do to grow our advertising business faster. Creators play an incredibly important role on Snapchat, and our community often finds creators to be more relatable than brands. In a recent study, creator ads were played 25% longer and drove 16% more active attention than standard branding ads. With more than 300,000 creators eligible to work with brands on Snapchat, continuing to build out our tools to make it seamless for creators and brands to collaborate will be incredibly important.

By the end of 2027, I want businesses to view Snapchat as a sales channel and not just an advertising platform. We’re going to do that by making it easier than ever to find and share products on Snapchat, and we will organically boost content about products when it is relevant to our community. Shopping can become a core behavior on Snapchat because it is increasingly driven by creators making authentic visual content.

While we have sufficient inventory and engagement to grow our ads business at much faster rates, we are also going to focus on growing new high-value inventory that we can sell over time. That means continuing to grow Spotlight and closing the gaps in monetization rate between Spotlight and Stories. Content plays an important role in sparking conversations on Snapchat and supporting communication on our service because it gives people something to talk about.

Messaging is the strongest predictor of next-day retention and our primary focus for growing our community. It also aligns our interests with what is best for our community. We know communicating with friends and family is important for wellbeing, and it is also what drives the growth and usage of our service.

We are at the beginning of a profound shift in how user intent is understood and how ads are served, and we are incredibly well positioned for this change because we actually understand the real you on Snapchat. This helps us make better predictions about what you really want. When we grow our advertising business faster it will strengthen our business, and improve our ability to innovate on behalf of our community. 

A stronger business also helps us fund our investment in SPECS to make computing more human. 

It’s a big deal that we are finally launching SPECS this year after twelve years of consistent focus and development. We’ve always thought that computing needed to be a part of the world instead of stuck on a screen, but now AI is making that work even more meaningful. It’s clear that the future of personal computing is in a pair of glasses that understands you, and the world around you, and provides real-world assistance.

After decades of personal computers transforming desk jobs and driving meaningful productivity growth, I’m so excited for SPECS to transform real-world jobs (the vast majority of all jobs happen away from a desk) so that people can keep their eyes up and hands free while benefitting from computing. My favorite part of SPECS is that you can share your experience together with friends, family, and coworkers, all anchored in the real world. The liberation from screens is at hand.

Our strategy is simple: continue to strengthen the core Snapchat business by investing the majority of our time, attention, and resources there, then use that strength to make computing more human through SPECS. If we are successful in creating the next personal computer, the rewards are significant. That’s the sort of asymmetric bet we should make if we want to win over the long term.

I’ve laid out why I’m so excited and hopefully now you can see it too. We’ve built something unique, profitability is improving, and our focus is on the safety of our community and the growth of our ads business. Growing our ads business faster will make us stronger and increase the odds of our asymmetric bet on SPECS paying off.

All of this is enabled by big shifts in AI that are creating more opportunities for us to use our unique strengths, accelerate our execution, and solve problems in new ways. And simultaneously, it is making our bet on the real world and real relationships even more valuable. As the online world is increasingly overrun with slop, the value of real moments, real relationships, and real recommendations has never been so meaningful.

That brings me to my last point. AI is an amazing tool, but just because you can write a 50 page memo in 5 seconds doesn’t mean you should. The time it takes to generate something has fallen to nearly zero, but the time and attention it takes to consume it has stayed the same. Your judgement and brilliance matter more than ever, as does the discipline involved in creating something new. 

My belief in our business is the result of my belief in all of you, and I can’t wait to see what we will create next.

Evan