Live notes from Snap’s Q2 earnings call

Snap disappointed Wall Street. Again.

For the second straight quarter, the messaging startup delivered less revenue than investors were expecting, and this time it also delivered fewer new users, too. The company’s stock is down more than 12 percent in early after-hours trading.

So what the heck is going on with Snap, a once high-flying teen phenomenon that was supposed to give Mark Zuckerberg nightmares? The company’s top executives will try and explain things to investors on a call at 2 pm PT / 5 pm ET. We are listening in; you can follow along live below.

1:57 pm PT: Greetings! We are just a few minutes away from Snap’s Q2 earnings call where I am hoping the company’s top execs will shed some light on why its business isn’t growing as quickly as everyone expects. Is it a user growth thing? Is their ads API still not getting the adoption they want? I don’t know. Maybe we’ll find out.

Also: This.

2:02 pm PT: Snap CEO Evan Spiegel, Chief Strategy Officer Imran Khan and CFO Drew Vollero are all on the call.

2:04 pm PT: Spiegel is now welcoming everyone to the call and saying a bunch of prepared stuff. Spiegel says DAU growth “remained solid” (it was lower than expected). He’s talking about ads and how Snap’s ad business is growing. This might be new: Each user creates over 20 snaps per day, on average. I did not hear anything about time spent, which is the metric Instagram just updated to prove its more popular than Snap.

2:08 pm PT: Spiegel is now talking about Snap Shows. He says there were twice as many shows on Snap in Q2 as Q1. (This should keep growing.) One show, “Phone Swap,” gets more than 10 million viewers per episode, he says. Spiegel says this show is so popular that it’s coming to regular TV, which is interesting.

2:11 pm PT: Here it is: With all the hubbub around Snap’s employee lock-up period coming to an end, Spiegel tries to soothe investors by promising he and co-founder Bobby Murphy won’t sell. “Bobby and I will not sell any of our shares this year,” Spiegel said. “We believe deeply in the longterm success of Snap.” This is not a surprise, but it can’t hurt to say out loud.

2:14 pm PT: Khan is now talking about Snap’s business, and I missed some of it because I was #tweeting. But this sounds like the part of the call Facebook’s Sheryl Sandberg usually handles — he’s giving examples of Snap’s ad campaigns with big partners like Time Warner. Summary: They’re great!

2:19 pm PT: Guys, this part is taking a really long time.

2:21 pm PT: Khan is still giving kudos to Snap’s advertising business. So I will take this moment to point out an important stat that looked like a miss on Snap’s earnings report: ARPU, which was $1.05 per user. If Snap had grown ARPU at the same year-over-year rate as it did in Q1 and Q4, that number would have been closer to $1.50 ...

2:23 pm PT: Drew Vollero now speaking. He says that more than half of Snap’s ads were served by an auction, which is double what it was last quarter. (Khan said this earlier, too, but I missed it.) This number should theoretically keep climbing. Automated ad buys are the bread and butter for Facebook and Google.

2:27 pm PT: These prepared remarks are taking up a very large portion of the call — much larger that the calls I sit through for Facebook and Twitter. Kinda wonder if this is so they don’t have to take as many analyst questions ...

2:29 pm PT: Vollero says that Snap’s acquisition of ad attribution startup Placed, which took place in July, will be reflected on its Q3 earnings report.

2:31 pm PT: Vollero says that Snap users spent much more time with the app in Q2 thanks to its new Maps feature. But I am not hearing a new “time spent” metric. Makes me think it hasn’t increased much since it was last reported, which was in its S-1. At that time, Snap said users under 25 spent “over 30 minutes on Snapchat every day” while users 25 and older spent “approximately 20 minutes on Snapchat every day.”

2:32 pm PT: FINALLY QUESTION TIME.

2:33 pm PT: I actually missed the question (doh!), but Khan says 60 percent of Snap ad impressions are delivered through its API platform, which means ads bought through its automated ad sales technology. Spiegel then says he’s “super excited” about the company’s new Maps feature, but isn’t sharing any metrics around it. He thinks it could be used for discovery — I imagine eventually that will mean discovering more than just your friends and their posts, but maybe restaurants or retail stores? Just a guess.

2:35 pm PT: Side note: Snapchat’s execs has adopted Silicon Valley’s most overused cliche — “It’s early days.”

2:37 pm PT: What does Snap need to do to improve its ads business? Bring more advertisers onto the platform, says Khan, which includes “working on the education process” with advertisers so they know why the heck they should spend money with Snap. Spiegel is now talking about Snap’s improvements on its Android app, which the company has blamed in the past for its slow user growth. He didn’t say much, just that it’s improving.

2:39 pm PT: Hey Evan — Is Maps changing the way people are posting content? Also, how do you feel about the product pipeline for the rest of the year? Spiegel says there has been an increase in submissions to “Our Story” as a result of Maps, so people are submitting more posts to Snap’s public Stories. On the pipeline question, he said that building products is “what we do here” and that he’s excited. So no insight.

2:42 pm PT: Here are a few questions about revenue seasonality and ad load (the number of ads Snap can put into the app before ruining the experience for users). Vollero said there was a little bump in ad sales last year because of the Olympics and the election, which won’t happen this year. In other words: You can’t really compare last year’s Q3 to this year’s Q3. He did not share any revenue guidance.

2:45 pm PT: The next question is also about seasonality. Khan says seasonality will eventually be more “muted” for the business, but that “will take some time.” Which I am taking to mean that things won’t be very predictable for a while.

2:46 pm PT: Does Snap’s ad auction impact your direct ad sales efforts? Also, what is coming in Q4? NFL and other holiday stuff? Evan jumps in to say that the auction means ad pricing is lower in the short term, but eventually Snap will have more advertisers using these auctions to buy ads and prices will probably go up. Vollero says that “you’re thinking of the right key drivers” for Q4 in regard to the mention of football and holidays. He specifically mentioned a strong partnership with the NFL and college football. He also mentioned Christmas. “We’ll look forward to the fourth quarter.”

2:50 pm PT: Khan just said that Snap doesn’t do “growth hacking” to drive engagement or user growth, which the company has said before. But I also saw this on Twitter today, so not sure what “growth hacking” means to them at the moment.

2:54 pm PT: How much of the friction on the advertiser side is that they wanna run display ads versus video ads (which you prefer)? Or are they looking for better measurement that you don’t offer? Spiegel says the creative is not a barrier for big brands at all. The barrier is definitely more of an issue for small businesses, though, which is why Snap rolled out some creative tools to make it easier for small advertisers to make video ads.

2:57 pm PT: Rich Greenfield just pointed out the push notifications I mentioned above and asked for clarification (thanks, Rich!). He also asked for more info on Snap’s “time spent” metric. Spiegel says Snapchat has been sending push notifications for Stories since 2014, so it’s unclear why people are just noticing them. Greenfield followed up by essentially asking, “what is considered growth hacking then if these push notifications don’t count?” Spiegel said he could find examples online but didn’t provide any. On the time spent question, Spiegel says users under 25 spend more than 40 minutes per day on the app. Users over 25 spend more than 20 minutes per day. These were the stats I was looking for and mentioned up above.

3:00 pm PT: Spiegel just talked a bit about Snap’s expansion into markets that are considered “rest of the world,” not top ad markets like North America or Europe. He says he’s comfortable being “last to market” because he’s done it before. He pointed out that companies like Facebook and Google had already saturated markets Snap entered in the past and Snapchat was been able to grow just fine. He believes the same will apply when Snap enters emerging markets. We’ll have to see if that actually works. Facebook is already trying to copy Snap’s app in emerging markets.

3:02 pm PT: That’s a wrap. If you made it this far, we should get beers sometime because that means you must really enjoy talking about Snap. (I do too!) Thanks for joining!

3:05 pm PT: Sorry, last thing: Stock update. Snap stock is down 16.6 percent in after-hours trading. Woof.

Google

This article originally appeared on Recode.net.

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