CNBC News Releases

CNBC Transcript: Snap CEO Evan Spiegel Speaks with CNBC's Julia Boorstin Today

WHEN: Today, Wednesday, April 22, 2020

WHERE: CNBC's "Squawk Alley"

The following is the unofficial transcript of a CNBC interview Snap CEO Evan Spiegel and CNBC's Julia Boorstin on CNBC's "Squawk Alley" (M-F 11AM – 12PM) today, Wednesday, April 22nd. The following is a link to video of the interview on

All references must be sourced to CNBC.

CARL QUINTANILLA: Shares of Snap are one of the stars of the morning and now our Julia has a very special guest. Good morning, Julia.

JULIA BOORSTIN: Good morning, to you Carl. Thank you so much. We're joined now by Evan Spiegel, the CEO of Snap. Evan, thanks so much for talking to us this morning on the better than expected results.

EVAN SPIEGEL: Morning, Julia. Thank so much for having me and thanks for all the great coverage during this time. I've been watching every morning. So, thank you.

JULIA BOORSTIN: Great. Glad to hear it. Now, this quarter you showed growth around new user additions, as well as growth of engagement. Now, how much of that growth is due to people having time on their hands because they're stuck at home during these coronavirus lockdowns and how long do you think that kind of growth will continue?

EVAN SPIEGEL: Well, our user growth is calculated as an average over the quarter. So, a lot of what you're seeing is really momentum starting from the beginning of the quarter. Then obviously a lot of engagement growth around some of the stay-at-home orders and things like that. So, you know, huge growth in gaming, content consumption. But ultimately, Snapchat is really just for helping people stay close with their friends and family and that's never been more important than during this time. So, certainly, the stay-at-home orders catalyze engagement growth. But that user growth is, you know, really momentum carrying over from the beginning of the quarter before we saw that engagement growth impact.

JULIA BOORSTIN: Now, just yesterday, Netflix CEO Reed Hastings warned that he thinks that once people get back to work, once people start leaving their homes again, that they'll see their user engagement and subscription growth really drop off. Do you fear you'll see the same thing in the second half of the year?

EVAN SPIEGEL: We believe that, you know, staying close to friends and family is important no matter where you are, whether you're at home or out in the world. So, we're really optimistic that user growth can continue. There certainly may be changes in engagement growth, that people are watching less content because they're staying home less. So, we'll see how that evolves. But in terms of user growth, people want to be connected to their friends and family we feel. And I actually think this period of time is a bit of a reset, where people are reprioritizing what's important to them.

JULIA BOORSTIN: Your revenue grew faster than expected as well. But you are reporting revenue growth declines, 15% revenue growth beginning of April, down to 11% this week. How much more do you expect the revenue numbers to fall? What's your outlook for that going forward?

EVAN SPIEGEL: There's so much uncertainty, so it's really hard to say looking forward. But we are pleased we're continuing to grow and a lot of that is driven by direct-response advertisers who are seeing a lot of success and leaning into the down funnel optimization that we provide. So, there are many businesses who can be really successful serving their community while they're at home. So, for example, at-home exercise or even some of the beauty folks, gaming, and they're leaning into these downfall optimizations, seeing a lot of success, and increasing their spend. So, we're seeing success with direct-response advertisers, we're optimistic it could improve, especially as some of the stay-at-home orders are lifted. But there's just too much volatility. We don't want to guide into the future yet.

JULIA BOORSTIN: I want to ask you more about these direct-response ads. And just to clarify for our users who are not as familiar with this world, this is different than a brand ad where you're just promoting a brand. This is being able to show someone something they can click to buy or click to go somewhere else. A lot of these, I understand, are direct-to-consumer brands. Is there a risk these advertisers could fall off as well if the economy continues its downturn?

EVAN SPIEGEL: Certainly, there's some direct-to-consumer brands on the e-commerce side. They actually may be better positioned, given that they don't have a retail presence. And so therefore, they can redirect money they would have to spent on their retail presence into advertising and really, you know, positioning their brand where people are hanging out. So, rather than hanging out at a mall right now, people are spending time at home with their friends online. And so, I do think some of those brands, the supply-chain issues aside, are actually well-positioned to accelerate in this environment.

JON FORTT: Hi Evan, it's Jon Fortt. Thanks again for being with us. I want to ask you something that you pointed out along the same lines on the earnings call. You talked about bright spots among those direct-response advertisers, you pointed out exercising with beauty and gaming that are potentially strong. But who's holding steady, if anyone, not maybe particularly strong and what are you seeing that's especially weak? Because you're giving us one of the first looks we see at the health of the digital ad market overall.

EVAN SPIEGEL: Well, I think there's a good opportunity here for CPG brands, mostly because a lot of consumers are changing their consumption patterns during this point in time. And brands really want to be there for that transition and journey. We're seeing a great campaign from Dove about courage, they're running commercials across Snap. And I think that's been a really powerful way for them to show how they're making a difference and sharing that with our community. So, I definitely see an opportunity for CPG as consumer behavior shifts. The obvious ones, the travel folks are struggling right now, people can't travel. So, they're pulling back spend. But that's an opportunity for us to go really deep and build technical integrations with those folks so that when people do start traveling again, that we'll provide the same down tunnel optimization that we were able to provide e-commerce folks and app advertisers.

MORGAN BRENNAN: Evan, Morgan Brennan here. Great to have you on "Squawk Alley." I think historically this is -- Snap has always been a company that's been associated with Gen Z and Millennials. But looking at the user numbers you reported yesterday, how are the demographics of that base expanding and why? What products specifically within the Snap universe are driving it?

EVAN SPIEGEL: Demographics continue to expand for us, mostly because everyone enjoys talking with their friends and family. And doing that visually with our camera is just a lot of fun. So, you know, we see it here in our house. Our 2-year-old is video calling with his great grandmother and they're using lenses and having a blast together. So, I think Snapchat crosses all generation and we're seeing growth across our demographics.

CARL QUINTANILLA: It's Carl. I have two questions. One, just on expense control. How much of a focus is that going to be for you guys going into the second half? And, secondly, are you interested at all in using your technology to help a broader sort of nationwide testing facility, tracing facility, if, in fact, we get that far as a country?

EVAN SPIEGEL: Yeah, so, I think at a high-level Apple and Google seem to be well positioned to work on tracing. And that's something they're investing in right now. So, we'd be happy to support those efforts if at all possible. And it seems the way they're thinking about that is protecting user privacy. And, sorry, your first question?

CARL QUINTANILLA: Just on expense control this year. Obviously, the guidance, if it's cloudy for all of the companies that are reporting, but I wonder how much safety you're building into expenses for the second half?

EVAN SPIEGEL: Yeah, we're really lucky that we focused on expenses and building more efficiencies in our business the last two years. So, that's positioned us really well going into this situation. We definitely see a path to full year adjust to break even around 25% year over year revenue growth. So, again, too early to say what will happen but we definitely see that path. The balance we're trying to strike, because we're seeing so much momentum in our business, lots of usage and engagement growth, we want to lean into that and continue to investing. So, we're hiring, and working on building a lot of really cool new products. So, we're trying to strike the right balance. We definitely still see a path to full year adjust profitability, that's something we're working towards. But we have to be thoughtful about the balance because we think we can emerge from this a lot stronger.

JULIA BOORSTIN: Evan, it's Julia again here. I want to get a sense of what you think your business is going to look like moving forward. I know we've shown a lot of images of your lenses on the screen next to this conversation. But how do you see augmented reality becoming more of a revenue driver, especially in your work with advertisers?

EVAN SPIEGEL: Well, I think the most important step here is for augmented reality to become more of a utility. So, today, I think it's still considered entertainment for a lot of our community but increasingly we're seeing these utility cases evolve. So, one example might be beauty testing and sampling. That's something that's happened with physical products but increasingly, and especially because of the risk of transmission, beauty brands are looking at investing and doing that trialing and sampling virtually using augmented reality. We're also seeing a lot of cases with try on. Things like trying on a new pair of shoes using augmented reality that we think can enhance e-commerce experience. So, a lot of this will be helping brands build the 3D assets necessary to power AR experiences, but what we're seeing is there's a lot more interest in using augmented reality as a utility to drive businesses. And that's what we think is going to increase monetization down the road. So, we're really on this path from entertainment to utility and then to increase monetization. But, you know, all the engagement increases we're seeing on augmented reality right now are spilling over and lifting sponsored augmented reality experiences as well. So, we're seeing 18% increase in play time with sponsored AR experiences, and so that bodes very well, I think, for the future of AR.

JULIA BOORSTIN: And what about your discover content section? You've been investing a lot in originals, how will the shutdown of most productions impact your content and all the engagement around it?

EVAN SPIEGEL: There will be some impact certainly to some of our shows. We've been extremely excited and grateful that our partners have been really creative and continue to produce daily shows from home. So I think that's been really great for the communities to be able to stay in touch with those brands on a daily basis. Some of our shows, production we believe could restart in July and if it does, the rest of the shows will release towards the end of the summer. But then we'll probably see more releases in the fall.

JON FORTT: It's Jon Fortt again. I want to ask you a question that really looks at you as a business leader, as well as the leader specifically of Snap. The LA.startup ecosystem, like every startup ecosystem, has to be really feeling this in a really difficult way. What are you seeing? What are you advising other entrepreneurs during this time? Is Snap doing anything to offer assistance to other companies in the startup ecosystem? Are you looking at acquisitions or other sorts of support?

EVAN SPIEGEL: It's certainly a really challenging time for everyone. We're currently running our yellow accelerator program virtually. That supports local startups. And actually, we're talking as a team right now about how we can expand that. We're also talking to all of our partners and other startups in the ecosystem to see if we can offer support whether it's through investment or other forms of partnership. We've been able to rev-share with many of our content partners, and that's supporting them through this time. So, we think there's a lot of ways to support our partners. Another really important piece of this is trying to work together across the business community to envision what reopening looks like. So, we're trying to help our community that way as well by sharing our planning, sharing how we're thinking about it. So, there's a team effort across Los Angeles, obviously in conjunction with the government, to try to have a safe, thoughtful plan for reopening, and in the meantime, supporting businesses that are really struggling.

MORGAN BRENNAN: Evan, Morgan here. Misinformation has been a big issue across social media and other types of communication platforms in recent weeks where coronavirus is concerned. What are you seeing in terms of that activity and those types of misinformation campaign and how are you responding to it?

EVAN SPIEGEL: Well, our platform is very different because we work with a list of publishers that we that choose. So, we curate the publishing partners that show up on our platform. And that's been a huge asset for us at this time, when receiving accurate information is really a matter of life and death. So, our publishing partners have really risen to the occasion. They put out great information. We did a campaign across augmented reality as well as our filters to reach hundreds of millions of people, so we're trying to make a positive impact here by providing timely and accurate information to our community. But our business model really lends itself to that.

CARL QUINTANILLA: Hey, Evan. I hope you won't mind one non-Snap related question. I know you're a key watcher of media trends and we're seeing such a rapid evolution of the theatrical window, the way movies are distributed around the country as a result of the pandemic. How much of those changes do you think stick, once people are allowed to go back to work? And are you seeing any lessons from countries like Italy, Austria, Denmark, and Germany, where they are well past the peak?

EVAN SPIEGEL: It's hard to say what will happen. I think fundamentally consumers are going to be fearful returning to confined spaces around other people, at least for a little while. And so I do think what we need to do together as a business community is to show how deliberate and thoughtful we're going to be about reopening to protect the health and safety of everyone around the world. And I think if we can execute on that as a business community, people will feel more comfortable over time returning to things they really love, including going to movies with friends and family, which I think has been something people have really enjoyed. There's nothing like that big screen experience. So, we need to work together as a business community to create a safe path towards reopening.

JULIA BOORSTIN: Evan, Julia, here again. You talked about how you're working with various local authorities to figure out paths to getting your employees back to the office. Our last interview was in your very large office with lots of open space. When do you plan to get your thousands employees back to your headquarters and what will that look like?

EVAN SPIEGEL: Fundamentally, it's going to be a slow process for us and based on each individual's comfort level. We're really blessed and fortunate, frankly, that our team can execute and build on the momentum in our business from home. So, we're really excited about the progress we're making right now while everyone is working from home, taking care of little kids or dealing with the loneliness of working by themselves. But we what we want to do is provide the option to return to our offices when it's safe. We're working with the governments. We're understanding how they're thinking about the timeline for reopening. Obviously, it's very different around the world. We have 20-some offices around the world, so we have to work across many different governments, around many different places. But our team has really risen to the challenge. We're making changes to our floor plan. We're thinking about how we're going to be testing folks maybe for their temperature or other – you know, through a survey, through, you know, other health conditions. We're thinking about our micro kitchens, right, which provide snacks to our employees. What snacks can we provide? We have to get rid of ice dispensers. There are so many little edge cases here to think about. And our team has really been trying to get ahead of the curve and execute on those changes, so we that, at a minimum, we can provide that as an option for people that would like to return to our offices. But this is going to take time and we don't want to force it.

JULIA BOORSTIN: And Evan, I know you're almost out of time here. But I want to ask with the Olympics because you had a partnership with the Olympics and with NBCUniversal and wondering what the impact you'll feel from impact shifting out of this year, what will that mean to you?

EVAN SPIEGEL: It's been a great partnership for us and we're certainly excited about the Olympics next year. It seems like that will be a really exciting moment for the world. So, grateful for that partnership. As it actually contains to our business and content consumption this year and our advertiser mix, you know, we're much less reliant on large events, even though they do drive some incremental revenue for us, than we were in the past, largely because of the shift to direct-response that now makes up more than half of our revenue and has in for some quarters. So, you know, the Olympics, in particular, aren't going to make an outsize impact. But, you know, for the world it's a bummer that we're going to miss out on bringing everyone together. But we're looking forward to that next year.

JULIA BOORSTIN: Great. Evan Spiegel, thank you for joining us this morning on those better than expected results. We hope to have you back for an interview in person in not too long. Jon back over to you. 

For more information contact: 

Jennifer Dauble
t: 201.735.4721
m: 201.615.2787

Emma Martin 
t: 201.735.4713
m: 551.275.6221