Good morning, everyone. Please welcome to the stage Head of Investor Relations, David Ometer.
Good morning, everyone. Welcome to Snap's 2023 Investor Day. I'm David Ometer, Head of Investor Relations, and on behalf of the entire team here at Snap, thank you all so much for joining us today. We've got a lot in store for you over the next few hours, so I'd love to first quickly provide an overview of the day. You'll hear from several senior leaders here at Snap, starting with our Co-founder and Chief Executive Officer, Evan Spiegel. Next, Jacob Andreou, our Senior Vice President of Growth, will share our plans to further grow our global community. Jack Brody, our Vice President of Product, will share how visual communication is at the heart of everything that we create and build. Kenny Mitchell, our Chief Marketing Officer, will then share from an advertiser's perspective why brands and marketers are so drawn to Snapchat.
We'll take a quick 10-minute break, and after that, Jerry Hunter, our Chief Operating Officer, will provide a detailed overview of our strategy and progress with our advertising platform, including how we're driving measurable results for our advertising partners. Bobby Murphy, our co-founder and Chief Technology Officer, will then join us to discuss how our augmented reality products and services are driving a major impact at scale today, and why we are so excited about the future of AR. Last but not least, Derek Andersen, our Chief Financial Officer, will share our financial progress, how we intend to scale the business moving forward, and our approach to investing over the long term. Once the presentation has concluded, Julie Henderson, our Chief Communications Officer, will then join a few of our Snap senior leaders here on stage for our question and answer session.
We truly appreciate all of you being here today to learn a little bit more about Snap, and I personally look forward to following up with many of you afterward. The presentation, including the slides and transcripts, will be posted to our investor relations website shortly after the conclusion of today's event. Before we start, I must let you know that we'll be making forward-looking statements in today's presentation, so do please very quickly take the time to read the disclaimer on the screen. Any statement that refers to expectations, projections, guidance, or other characterizations of future events is a forward-looking statement based on our assumptions 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 those in these forward-looking statements, please refer to our filings with the SEC. As a quick reminder, if you're an analyst or an investor here in person with us, and you'd like to submit a question for our question and answer session at the end of today's presentation, please do feel free to scan the QR code that you all received on the badges from this morning. Thank you so much. We're really excited to have everybody here today. Let's begin.
Please welcome to the stage co-founder and Chief Executive Officer, Evan Spiegel.
All right. Welcome, everyone, to our Second ever Investor Day. It's great to see so many familiar faces, of course, and a lot has happened since we held our first one two years ago. We're very grateful that you're here, and we're excited to share more about our vision for Snap. Our long-term opportunity is enormous, but we're tackling a few significant challenges at the moment: the volatile macroeconomic environment, platform policy changes, and increasing competition. Our goal today is to give you confidence in our ability to address those challenges by providing our plans and our progress to date. We're also looking forward to sharing why we're so excited about the longer term potential for our business. While Snap is still a small business compared to many large technology companies, we've made a lot of progress growing revenues to $4.6 billion in 2022.
Our large, hard-to-reach audience, brand safe environment, and innovative advertising platform have made us a valuable partner for businesses that want to reach the next generation. Today, we're pleased to share that our community has now grown to over 750 million monthly active users. We reach more than 75% of 13-34-year-olds in over 20 countries, with these countries representing over 50% of the advertising market. Over 100 million daily active users have joined Snapchat since our last Investor Day, with our community now totaling more than 375 million daily active users. After five years of more than 50% year-over-year revenue growth on average, our revenue growth decelerated to 12% in 2022, largely due to the combination of factors that I mentioned earlier.
While the macroeconomic environment has shown signs of stabilizing this year, it remains a significant challenge. We're focused on the things we can control, including improving our performance advertising business, diversifying our revenue with augmented reality and our new subscription product, Snapchat+, and growing engagement with our video content to generate more monetizable inventory. In response to the platform policy changes, we've been working hard to innovate on our advertising platform, helping partners transition to new ways of measuring and optimizing their advertising spend and by delivering custom privacy safe integrations. Short-form video has exploded in popularity over the past few years. Spotlight, our new entertainment platform for showcasing the best of Snapchat, benefits from the enormous amount of content created by Snapchatters every day. On average, over 5 billion Snaps are created every day, the best of which our community submits to Spotlight.
We're pleased with the rapid growth we're seeing in time spent per Spotlight viewer, which now meaningfully exceeds the time spent watching friend Stories per Story viewer. Our goal is to grow the number of people watching Spotlight and continue to increase content diversity and time spent per viewer. In August of last year, we promoted Jerry Hunter to the role of chief operating officer and made changes to our team structure, unifying our engineering, sales, and revenue product teams in one organization. Jerry is a fantastic partner to me and a committed, passionate leader. His decades of experience running technical operations and large engineering teams are already making a significant impact on how we are navigating today's advertising landscape.
Later, you'll hear a lot of detail from Jerry Hunter about how we are evolving our ad platform, and he'll share more about some of the early progress we are making with our advertising partners. Last summer, we also reprioritized our efforts and substantially reduced or eliminated investments not directly connected to our three strategic priorities: growing our community and deepening their engagement, accelerating and diversifying our revenue growth, and leading in augmented reality. Adjusted gross margins expanded to reach 62% in 2022, ahead of our medium-term target of 60% set at our last Investor Day. We generated our third consecutive year of positive Adjusted EBITDA and our second consecutive year of positive free cash flow.
Given our strong cash position, we deployed $1 billion last year to repurchase 6.7% of our common shares outstanding as of December 31st, 2022, substantially offsetting dilution for the entire year. We entered this year with $3.9 billion in cash and marketable securities on our balance sheet. All of this was achieved as a result of the changes we made to our business and despite the significant deceleration in our revenue growth. When Bobby and I first started building Snapchat, we wanted to make communication better. We started by making it visual and ephemeral, using disappearing images to bring life into digital conversations. Since then, we've grown our business by identifying everyday human behaviors and working to make them better through design, innovation, and technology.
We build Stories to help people share their day with friends, the Map so people can see who their friends are with and what they're up to, and augmented reality for self-expression and enhancing the world around us. In nearly 12 years of building Snap, we've never worked on anything as profound and meaningful as augmented reality. Augmented reality brings the benefits of computing into the real world in three dimensions. It enables us to learn and interact with computing in a natural way, freeing us to move around and fully experience our surroundings. Of course, augmented reality has become extremely popular today on smartphones, with more than 250 million people engaging with AR on Snapchat every day on average.
In the future, we believe people will prefer to use AR through wearables, which has informed nearly eight years of investment in Spectacles, our augmented reality glasses. Spectacles connect directly to Lens Studio, our augmented reality authoring tool, and allow developers to quickly and easily deploy their creations. Over 300,000 developers have built 3 million augmented reality Lenses, which can be distributed through Snapchat, Spectacles, and Camera Kit, our developer SDK that allows developers to distribute augmented reality in their own applications and websites. Augmented reality has the potential to make nearly everything in our daily lives better, whether discovering the storied history of your neighborhood, learning to play piano, redecorating your living room, or practicing your football spiral, AR enhances our every day, and the only limit is our imagination. We have everything we need to build a successful business over the long term.
A large and growing community, an innovative and engaging product that continues to evolve, a strong balance sheet with a track record of positive free cash flow, and a long-term vision for what we believe will be the most meaningful advancement in computing that the world has ever seen: augmented reality. I'm so excited for you to meet a few of the folks who are driving our progress here at Snap. With that, I'd like to welcome Jacob to talk more about our strategy for growing our community. Jacob?
Thanks, Evan. Hey, my name is Jacob and I lead growth here at Snap. I'm really excited to share our approach to growing our community. We're gonna break it down into three pieces. First, adding new Snapchatters. Second, growing their engagement. Third, how we retain them over time. Growing our community and deepening engagement is important to the future of our business as it strengthens our network effects and grows our overall revenue opportunity. As Evan shared, the power of visual communication has driven our growth to over 750 million monthly active users and 375 million daily active users globally. As we continue to expand our reach in highly monetizable markets such as North America, where we have grown to over 150 million monthly active users.
Today, Snapchat reaches over 90% of 13-24-year-olds and 75% of 13-34-year-olds in over 20 countries. This includes the U.S., U.K., Australia, Canada, France, the Netherlands, and Saudi Arabia. This means we reach over 75% of 13-34-year-olds in countries representing more than half of the world's digital ad spend. Our community continues to grow with 13 consecutive quarters of over 15% year-over-year daily active user growth. We have grown into one of the largest digital platforms in the world, more than doubling our daily active users since our IPO. We've also grown daily active users by over 40% or 110 million since our last Investor Day alone. Despite our significant and growing reach, we actually still believe we have a massive opportunity ahead to continue to grow our community.
In North America, Snapchat daily active users represent approximately 25% of the 400 million smartphone market. In Europe, our DAU represents only 16% of the 560 million smartphone market. In the rest of the world or outside of North America and Europe, our DAU represents only 7% of the 2.5 billion smartphones. At our current rate, we see a path for Snapchat to reach over 1 billion people in the next two to three years. Our service provides a sticky and compelling use case: fast, easy, fun, visual communication with friends and family. We have a proven track record of growing our Snapchat community. Let's talk more about that approach to growth.
Like I mentioned, we think about growth in terms of three key inputs: adding new Snapchatters, growing their engagement, and then retaining them over the long term. Let's start by talking about how we're adding new Snapchatters in our more established markets. In our more established markets like the U.S., U.K., France, Canada, and Australia, where we already have significant reach among 13-34-year-olds, our priority is to continue to attract the young audiences when they receive their first smartphone and download their favorite apps for the first time. Onboarding new Snapchatters at this critical moment in their lives supports the long-term health of our community. We have found that when Snapchatters discover our service early on in their smartphone usage and start snapping with their close friends, they're far more likely to remain daily active users on Snapchat long term.
I'll get into more detail on that flywheel a little bit later. To sustain our momentum with this critical young demographic, we often start with a simple question: Why does any Snapchatter join our service? We know Snapchat fosters real-life friends and relationships and helps drive conversations. We've seen that when a Snapchatter adds their friends on Snapchat, it's one of the strongest indicators of long-term retention on our service. We know that visual messaging is a deeply compelling use case that drives the flywheel for our entire ecosystem because it attracts people into our service and then helps them discover other platforms and products we offer, such as Snap Map, Stories, and Spotlight. We know that Snapchat's unique architecture by opening directly to the camera, not a news feed, drives not only visual messaging, but also our community's engagement with augmented reality.
As we continue to focus on this key demographic, you'll see us continue to double down on improving and innovating on these engagement drivers for our service. We also have a huge opportunity to onboard Snapchatters above the age of 35 who are completely new to Snapchat. Today, Snapchatters over 35 are connecting with Snapchat more than ever before, with both DAU and content time spent for this cohort outpacing overall DAU and content time spent growth. This supplements our strong retention of Snapchatters as they naturally age with us, growing our reach in older demographics faster. Norway is an amazing example of an established market we have successfully onboarded and engaged an older demographic, all while maintaining our reach with the younger demographic. Over 50% of Norwegian DAUs are 35-plus or older.
We have over 45% of the 35+ population, while maintaining 90% in 13 - 24-year-olds. Older users in Norway love Snapchat. Over 60% of 35+ Norwegian DAUs communicate on a daily basis through snapping and chatting, and over 60% view Stories. Growing our community in new markets is where we're gonna have our largest growth opportunity looking forward. Fast and easy communication with friends and family truly transcends borders, and the need to develop and maintain close friendships is really universal. We have found that our core product value of visual communication resonates globally, which creates a massive growth opportunity to reach Snapchatters in international markets. At our last Investor Day, I shared our early progress in India. Since then, we've continued that momentum with both DAU and MAU more than doubling in the region.
We've also observed strong growth in our creator program in India, and over the past year, we now reach 1,000 Snap Stars in India. On the publisher side, local channels in India grew premium content over 170% in 2022. Our strong traction with Indian content creators and partners is helping fuel growth in time spent on content in India. With time spent on Spotlight more than tripling and time spent watching shows increasing by over 55% in 2022. India has also been home to some of our most viral AR lenses, including Pleasant and Smoke Flare, which each generated over 10 billion impressions. While there still remains work to be done in India, and in particular an opportunity to grow in key cities, we're excited about applying our international expansion strategy from this region to markets around the world.
The key to our strategy in India and other growth markets is ensuring that Snapchat is highly localized and relevant for our community in each region. For example, when we began our efforts in India, we hired local designers who understood local culture and nuances to build the AR experiences for our service and partner with local content producers and Spotlight creators. We launched local AR education programs at high schools. We conducted tons of in-market research to better understand the needs of our community. We also worked really hard to improve the performance of Snapchat on regional telecom networks and on popular devices, and we added deep in-app localization to make Snapchat truly feel made for me, no matter where in the world you are.
While our approach has always been to make the platform feel personalized for Snapchatters in a particular region, it's important to note that this does not necessarily mean creating new features or new products specific to a market. This is a really important distinction because as we double down on new markets, our focus is on enhancing the existing value of our core use cases and five platforms in ways that are relevant and specific to each region. Having a universal set of values around how we design the platform for Snapchatters everywhere creates a clear path to making it accessible to new cohorts and markets and ensures that our growth internationally is both scalable and repeatable. Since the fourth quarter of 2020, our community outside of North America and Europe has grown by more than 80%.
In regions where our reach is currently low, like Japan, Mexico, and Italy, we're taking the time to educate Snapchatters on the core product value to ensure that they can understand how Snapchat can help them communicate and connect with close friends and family. We continue to partner with major handset OEMs like Samsung and Xiaomi and local telcos like Movistar and Orange to drive awareness through co-marketing and preload deals. We believe there's still significant untapped growth potential, given that our penetration in each of these countries is well below the levels that we see in our more established geographies. As I mentioned earlier, I've talked a lot about visual communication, and it really is the flywheel that drives engagement across the entire service and builds long-term retention. That all starts with friends.
In the most recent quarter, we saw a 95% year-over-year increase in daily new users that have three or more friends. This is really important because Snapchatters who talk to at least three friends over the course of a month retained over 90% the following month on average. Eleven years into our journey, we've developed a number of unique products and platforms that bring value to our community, which include the Camera, Map, Chat, Stories, and Spotlight. We've found that the longer Snapchatters use our platform and the more of our service they interact with, the better their engagement, and more importantly, the better their retention. In fact, Snapchatters who engage with all five platforms come to Snapchat six days the following week. Let's zoom in on two of our specific offerings, Stories and Memories. Both of these services independently are wildly popular.
Snapchatters share Memories with their friends 280 million times a day on average. There are more Snapchatters watching Friend Stories than ever before. Together, we see extremely high retention. As Snapchatters communicate and use Stories and Memories, they retain it over 95% over the next month. We also benefit from strong long-term retention. For the five years after a Snapchatter's first year on our service, their annualized retention is approximately 90% on average. During critical moments in life, like starting at a new school, moving out on your own, or getting a new job, Snapchat offers a fun and fast way to connect with friends and deepen existing relationships, leading to strong engagement and retention across our service over time. Our core product value of visual communication brings Snapchatters to our service every day.
It drives engagement. Over time, as our community experiences more parts of our product, that increased engagement becomes durable retention. This flywheel of engagement and retention is why over 375 million people come to Snapchat every day. While our total audience has grown to over 750 million monthly active users. We've built a large, growing, and engaged community in many of the most valuable geographies in the world with a demographic that is really difficult to reach elsewhere. We've done this by delivering durable value to our community and retaining them at high levels. We saw the significant opportunity to continue to grow our community in both core demographics and markets and in newer ones. Next, I'd like to welcome Jack to talk a bit more about why Snapchat plays such an important role in so many people's lives. Thank you.
Thanks, Jacob. Hi, everyone. It's great to be here with you today. I'm Jack Brody, VP of Product. I serve our product and design teams across Snap. Jacob just spoke to our growth strategy. I'm excited to dig a little bit deeper into the product itself. I've been at Snap for almost nine years, and I'm so grateful to work on a product that hundreds of millions of people use to communicate with their closest friends and family. For an entire generation and more, Snapchat enhances relationships with friends, family, and the world. Snapchatters tell us they feel comfortable, connected, and happy when using our service, which makes us happy. By focusing on meaningful communication between friends, we set ourselves apart from other platforms that center almost entirely on content consumption. This unique approach leads to high frequency usage, deep engagement, and resilient retention.
For example, here in the U.S., Snapchatters open Snapchat nearly 40 times per day on average, and each time they open the app, they're met with our camera, which is the home screen on Snapchat. This puts creation and augmented reality at the forefront of the Snapchat experience, leading to a much higher proportion of Snapchatters creating content each day than you'll find across other platforms. In fact, over 60% of Snapchatters who open Snapchat each day create Snaps. That's because the moment a Snapchatter opens our app, they're ready to capture and share the world from their perspective. As Jacob discussed, opening to the camera also powers a messaging flywheel. After you capture a moment, you wanna share it with a friend. As simple as this sounds, this is what really makes Snapchat tick, with over 5 billion Snaps created every day on average.
Because our messaging platform is so important to our community, we're always looking to improve it. In 2022, we shipped Chat improvements at a faster velocity than ever before. We made Chat easier to use by making 24-hour Chat the default mode for all conversations. We made Chat more fun with Bitmoji reactions and message threading. We made Chat more useful, enabling Snapchatters to send Snaps to any friend in their contact book, even if that friend hasn't yet signed up to Snapchat. We also made Chat safer for our teenage community. In August, we released a new in-app parental tool that we call Family Center, which empowers parents to see all of the friends their teens are communicating with on Snapchat and report any concerning accounts directly to our teams to investigate.
In September, we released the Snapchat for Web experience globally, bringing our core messaging and video capabilities to your experience. We can't wait to continue to bring more of Snap to this exciting new surface. Messaging has always been an important driver of retention for Snapchat, with constant improvements like these, its value has only increased over the years. Today, 88% of Snapchatters who snap or chat to a friend will use the app every day for the next seven days. In the last year, the number of conversations between unique pairs of friends has grown by over 30%. As Jacob described, because Snapchat fosters such frequent conversations, our visual messaging platform drives engagement across our entire app ecosystem. Over the past 10 years, we've leveraged the success of visual communication as the foundation on which to build more and more value for our community.
To do this, we've taken things people love, want, and need to do daily and work to make them better through design and technology. By continuing to focus on these daily behaviors, we've built a product that has incredibly deep engagement and drives long-term retention. Through this process, we've created a variety of new products and platforms that have vastly extended the value and the use cases of Snapchat. Let's take Stories, for example. In 2013, the norm across digital platforms was permanent public sharing, shown in reverse chronology and rarely with video. We changed this with Stories so that people could post what they're up to ephemerally in the order it happened, and with full screen vertical video. Today, Stories continue to provide immense value for our community.
Let's take the Snap Map, which helps Snapchatters answer the question of, "What are my friends up to?" Something I'm often wondering, and is now increasingly becoming a go-to destination for discovering new places. Snapchatters love our map, and over 300 million use it monthly. Because we offer a social map, not a navigation map, we have a very high frequency of use. Daily Map users open the map six times per day on average to see what their friends are up to and meet up. Through our recent investments in new place discovery features, more and more of their time on the map is spent uncovering new restaurants, date night destinations, or just fun places to go and hang out with their friends. Powering this momentum in place discovery improvements is our new underlying map infrastructure that we call the basemap.
Tailoring the basemap to our needs has improved performance, decreased hosting costs by an order of magnitude, and paved the way for significant product enhancements, which is always my favorite part. Having this full control over our basemap enabled the launch of features like Personalized Places, which shows places that are popular with friends or that the community considers top picks. We also launched Place Stories on the basemap and updated Place Profiles to emphasize videos from Snapchatters. Now, we're excited to introduce 3D to the Map to highlight places and make the Map more personal, more fun, and just a little bit more alive. Over the past year, improvements like these have increased engagement with places on the Map by over 100%. Finally, we saw the joy, delight, and expressiveness that augmented reality added to the conversations our community was having on Snapchat.
For us, AR has always been grounded in reality, perfect for deepening relationships and making the world around us a bit more exciting and easier to navigate. Approximately two of every three Snapchatters engage with AR on our service every day. Today, we offer community millions of AR Lenses that enhance their Snaps and lower the barrier to sharing a feeling, mood, or a message with friends. In the past year, we created several Lenses that were viewed more than a billion times each within their first week alone. AR is a key driver of our community growth, increasingly drawing new users to Snapchat. We see that over 70% of Snapchatters who download Snapchat engage with AR during their very first day in the app.
It's innovations like Stories, the Snap Map, and AR that come together to power a highly engaged community across our broad suite of products. Let's dive into our content strategy. Content is core to the Snapchat experience, and we offer two massively popular destinations, Stories and Spotlight, that attract a diverse set of creators, media brands, and audiences. Our content provides value to our community of hundreds of millions of Snapchatters and monetizable inventory to our advertising business. It also helps drive cultural relevance for our service. From the beginning, our content philosophy has been unique. We built safety for Snapchatters and for brands into the fundamental architecture of our platform. We've long focused on curation and moderation, and we don't allow unmoderated content to reach a large audience, limiting the virality mechanisms that can amplify negativity and misinformation.
As a result, Snapchat is ranked as one of the friendliest social environments among large platforms. Our content offering started with Friend Stories, which was a natural extension of our friend-centric communication platform. Like so many of our innovations, this has deeply resonated with our community, and Friend Stories remain extremely popular. Today in the U.S., there are more Snapchatters viewing Friend Stories than ever before. To continue to improve the value of Friend Stories, we're focused on three primary initiatives. First, we're consistently improving our ranking and recommendation models to surface the most relevant stories for Snapchatters. Second, we're investing in tools to make it easier for Snapchatters to post to their stories in order to increase overall story availability among friends, and it's working. The number of Snapchatters with at least one Friend Story available to view has increased by over 15% year-over-year.
Finally, we're constantly adding new features to provide additional value. We recently launched Communities, a product for private groups in which members can add friends and post to a shared campus story. We started with colleges and high schools and we'll be rolling out to more communities over time. We've now onboarded 1,400 colleges in the US and will continue expanding to more universities around the world. While Snapchatters remain highly engaged with Friend Stories, time spent watching Friend Stories globally continues to be a headwind to total content time spent as Snapchatters' depth of engagement with Friend Stories decreased. Increasingly, though, Snapchatters are watching entertaining content like partnered content and Spotlight. We'll continue making Friend Stories a great place to stay connected with the friends you care about.
Once you finish watching stories from those friends, we'll make it easier for you to watch entertaining creator content. Said differently, Friend Stories from close friends bring people into our content experiences, but creator content represents an additional opportunity for growing overall time spent. This isn't just theoretical. In the U.S., time spent per viewer for both creator stories and for Spotlight have grown by large double-digit % in Q4 compared to the last year. This is why we're doubling down on creators. While Stories started as a broadcast communication product for friends, creators have adopted it at scale. With the explosion in popularity of short-form video content over the past few years, we created Spotlight, a new entertainment platform showcasing the best of Snapchat. Creators tell us they appreciate the breadth that our platform offers.
With Stories, they're able to share their daily lives with their followers in the moment without the need for editing or other creative overhead. While with Spotlight, they have an opportunity to introduce themselves to new Snapchatters, show off their very best snaps, and grow their audience. Both Stories and Spotlight are valuable for creators and highly engaging for our community, and they reinforce one another in important ways. In our early research, we found that Spotlight engagement is incremental and actually has a small but positive impact on Story viewership. The more content a Snapchatter watches, the more likely they are to share that content with their friends. This, in turn, inspires more people to watch content, powering a virtuous flywheel of viewing content, sharing that content with their friends, which then inspires both more communication and more content creation.
We see Snapchatters sharing videos they love with their friends as a unique advantage given the underlying strength of our communication platform. Creators in over 200 countries and territories are generating a wide variety of content experiences across numerous verticals such as sports, comedy, lifestyle, and beauty. We also have a history of strong partnerships with media partners around the world. Today, our content platform features hundreds of media partners from over 20 countries and localized content in over 10 languages. Our partners include leading media companies like NBCU, Disney, ESPN, Channel 4, and NBC, sports leagues like the NFL and the NBA, digital natives like Team Whistle and Jellysmack, and trusted news brands like The Washington Post, Axios, and Axel Springer. This growing community of content partners is another way we provide engaging and entertaining content that's curated for our community and attractive to our advertising partners.
To better convey the opportunity we provide creators, I'd love to tell you a bit about Sarati, a Texas-based creator on Snapchat. Sarati originally focused on fitness and lifestyle content and began shifting her focus to family and parenting after she welcomed her first child. Snapchat is a daily part of Sarati's content creation process. In 2022, she shared to her story 362 days and posted a Spotlight more than 400 times. Her focus on Snapchat yielded serious results. Nearly 29 million Snapchatters watched a story from Sarati in 2022, and 13 million watched her on Spotlight, combining to generate 750 million views. For professional creators like Sarati, Snapchat is the platform where you can reach your most engaged audience while simultaneously growing it.
Sharing your more polished content with our whole community via Spotlight and the more casual, everyday or spontaneous moments to your story. It's a platform that offers the flexibility to be yourself, especially with your existing followers, while providing the opportunity to introduce yourself to new ones. Over the last year, the number of Snapchatters subscribing to new creators via Spotlight increased by 225%. The number of total daily subscriptions increased by 240%. It's also a platform where creators can build their businesses. We provide numerous monetization opportunities for our creators through our Spotlight Rewards Program, Spotlight challenges, the 523 Black Creator Accelerator, our Sounds Creator Fund, and through mid-roll ads opportunities. While creator Stories have been around for a while, Spotlight is relatively new, yet its growth has been astounding.
Spotlight already reaches over 300 million Snapchatters per month. In Q4, total time spent watching Spotlight more than doubled from the year prior. Spotlight submissions are up nearly 20% over the same timeframe. While the last two years have primarily focused on driving depth of engagement and retention for Spotlight, we're now bringing the product to an even broader audience on Snapchat. This year, we'll focus on growing adoption of Spotlight to increase overall viewership and, of course, the potential reach for our creators. We have a lot of headroom here. For example, we've seen that simple changes like badging the Spotlight tab when a creator you follow has posted increased Spotlight DAU by nearly 10%. Of course, a unique advantage of our content platform is that it's seamlessly connected to our massively popular communication platform.
Leaning into this, we've made it easier to continue watching Spotlight from a video a friend shares with you. Because of this, since last May, the number of people watching Spotlight inside a chat with a friend has increased by 89%. We will continue to invest in our creator community, offering them more powerful tools to grow their audiences and to build their businesses. We'll make it easier than ever for Snapchatters to find the most entertaining and engaging video content across Stories and Spotlight. Before we move on, let's take a look at some of the exciting things happening across Stories and Spotlight.
Oh, Snapchat!
We create, people hate. We love you, Snapchat.
To collaboration.
Wow.
That works.
Five things you need to know to get you through the day. My name is Yusuf Omar. I've been a journalist for about 11 years. Today, I'm the co-founder of Feed. We have 10 shows, and we use augmented reality to guide citizens through the storytelling process.
Snapchat, Victoria Island, here we're in Nashville, Tennessee. Can you be back to solid? Bruh.
Snapchat has enabled me to extend my creativity in so many different ways. There's a lot of really cool features and lenses that helps me create the best content possible. I actually just hit a milestone of 1.2 million subscribers today. Whoo.
What's up, guys? It's Bree Berry. I'm with the Snapchat on Mirror Cheer backstage.
How fun is that? These creators have so much energy. I honestly don't know how they do it, but it really gives you a sense why we have so much fun building products for them. This high-frequency communication on Snapchat that we spent so much time talking about today has enabled Stories, the Snap Map, AR, Spotlight, and more to become incredibly engaging and retentive products in their own right. The whole of Snapchat is so much greater than the sum of its parts, and this has helped turn Snapchat into a daily communication tool for our community. It's deeply interwoven into their social fabric. All of this has made us uniquely positioned to build a subscription service that offers new, exclusive, and experimental features directly to this extremely passionate audience.
We've done this with Snapchat+, our $3.99 a month subscription service. Launched last July, we already serve over 2.5 million subscribers. I'm particularly excited about Snapchat+ because it allows our team to rapidly experiment with innovative features, from helping Snapchatters customize the look and feel of their app to giving them special insights into their friendships. Every month or two, we surprise and delight subscribers with drops that bundle exclusive new features. There's always something exciting to anticipate and show off to friends. Let's take our recently launched Chat Wallpapers, which allows subscribers to set their favorite photos as backgrounds for their conversations. Adorable photos of my 10-month-old are plastered across an embarrassing number of my group chats. Yet the intrigue among Snapchatters around how to get this superpower once they see a friend use it drives massive interest in the service.
Chat Wallpapers is one of the most recent Snapchat+ features, but already one of the most impactful in acquiring new subscribers. Snapchat+ also gives us an early chance to test new features at scale, which we then refine over time as we learn how the community is engaging with it. I'm confident we will only continue to uncover and invent features that deliver increasingly sought-after value to Snapchat+. This holiday season, we experimented with gift subscriptions, new pricing models, and encouraged annual subscriptions with deeper discounts. Currently, we're focused on growing subscriptions through contextual and value-driven upsells across the app. Most Snapchat+ features don't have any built-in upsells yet, but those that do drive the majority of subscriptions, so we know that this is a major opportunity. At just over six months old, it's important to recognize that Snapchat+ is still truly in its infancy.
We've really only just begun to scratch the surface, both in value to Snapchatters and, of course, in monetization potential. We can't wait to continue the momentum. What's next for the product team? Well, we're incredibly excited to continue evolving Snapchat to serve the needs of our community and support their closest relationships. In a competitive landscape, focusing on friendships, driving communication frequency, and offering compelling content from friends, creators, and partners makes Snapchat truly one of a kind for our large, growing, highly engaged audience. Speaking of one of a kind, with that, I'd like to turn it over to Kenny, our incredible CMO, who will share how marketers are using our products to connect with our community of more than 750 million people.
Thank you, Jack. Hi, everyone. I am Kenny Mitchell, the Chief Marketing Officer here at Snap. So far, you've heard from Jacob about how we're growing our community and deepening engagement. You've also heard from Jack about our product strategy and the role that communication and friendship play in driving our engagement. I'm excited to talk with you today about why Snapchat is so powerful for marketers. I might just be the only one in this room who thinks about marketing all day, every day. I've done it for more than two decades for powerhouse brands like Gatorade, McDonald's, and now Snap. Because of this, I have a pretty unique perspective on what is keeping my friends and fellow CMOs up at night. First off, it's about establishing and maintaining relevance with their target consumer.
Nearly all marketers aspire for their consumers to see themselves in their brand and for the brand to be salient to them and to their lives. As the media landscape has gotten more complex, finding the right ways to drive that relevance has become more difficult. Today's consumers have endless content and entertainment options, and on top of that, they now expect communication from their friends and family and from brands to be visual, authentic, and personal. To be successful, businesses like ours have to help brands find the right consumers and the right moments through immersive and engaging solutions that help to drive that relevance. That sounds difficult enough, but there's another tension that marketers are thinking about constantly. How do I manage my investment between short-term business results and building the brand for the long term? It's that performance and brand marketing conundrum.
That challenge is particularly acute given the pressure on marketing budgets in this macroeconomic climate. The reality is that for world-class marketers, they have to find a great way to do both, and this plays really well to Snapchat's advantage. We have a sophisticated ad platform with innovative ad formats that can help drive that brand relevance, and we're continuing to invest in our direct response measurement that drives incremental return on ad spend, which is critically important for advertisers. For marketers, this is one of the reasons why Snapchat is positioned so well. What makes it all possible? How about we dive into our community, what drives them here, and what makes them so attractive to brands? Our mission at Snapchat is to enhance real relationships between friends, family, and the world. In short, our platform and technology aims to help make things better.
We're an antidote to traditional social media because we've built a place where we can freely share our perfectly imperfect moments with those that are closest to us. In fact, 75% of people come to Snapchat to interact with their closest circle, and staying connected with friends and family is the number one global reason for using Snapchat. Snapchat's an authentic environment, it's a private environment, and best of all, it's a happy environment. In fact, a staggering 91% of Snapchatters are happy when using the service, and it's the happiest platform when compared to our competitors. Candidly, it's no surprise that our community is so happy. Snapchat really enables you to connect with the people and things that you care most about in a fun and creative way. That makes Snapchatters feel really comfortable being their real selves.
That happy mindset is what's fueling community growth with over 375 million daily active users, and it's all built on the foundation of friends, family, and the real world. Snapchat is about real relationships, but that alone is not what makes it a great platform for our advertising partners. It's the real influence that comes from these relationships. Take a moment and think about the people that are most influential in your life. For me, it's my best friends from high school and college. It's my wife. It's my 16-year-old daughter. It's my brothers and my sisters. My friends and family, they influence the news I read, the music I listen to, the shows and movies I decide to watch, the things I care about. They're also major influences on how I spend my time and my money.
That goes for all of us, and it goes for our Snapchat community as well. Case in point here, my daughter snapped this photo. Isn't she cute? She's trying on lipstick from a brand that actually allows her to try a new shade in AR, guess what she got in her Christmas stocking. Our friends and family are our guides to new cities, who we turn to for restaurant recommendations. They influence the books that we buy and how and where we'll shop. You'll see friends posting Stories with new sneakers on, you're inspired by the friends to go out and buy the same ones. Families will snap each other movie posters go out and buy those tickets together. Their advice and recommendation means more because they know us better than anyone else.
In return, we trust them and their recommendations more than anyone else. That's why when Snap Ads, when they show up in the Stories of your friends and family, or when you're sent a Snap from a friend who has a Starbucks Lens on, you're more receptive to that message, and that recommendation hits just a bit differently. This is why Snap Ads provide increased relevance versus other platforms, resulting in Snapchatters being 45% more likely to recommend brands and 34% more likely to purchase products that are advertised. That's why brands advertise here. Snapchat is where real relationships create an environment where brands have real influence. What about when? There are over 55,000 Snaps that are created on Snapchat every second on average, and the question is: When is the best time for brands to share their Stories on Snapchat?
How do they build for both the long term and deliver that short-term measurable results? It's our job to help align brands' most important moments to our community's realest ones. There are three key moments on Snapchat: launches, tentpoles, and everyday moments. Brand-defining moments like new product launches include campaigns that define the direction of the brand and bring them closer to answering newly identified consumer needs. It could be a new flavor, a new phone, a new pair of shoes. For example, to support their Cactus Plant Flea Market Adult Happy Meal, McDonald's partnered with us to create an AR Lens experience that matches the flavor and cachet of the brand collaboration and allow McDonald's to reconnect with the Snapchat generation and drive demand. In fact, the new menu item sold out in its first few days. There are tentpole moments.
They further build brand equity and brand love. Top tentpole moments on Snapchat include sports and music and entertainment and fashion and beauty. The top holidays celebrated on Snapchat actually center around friends and family. Halloween, back-to-school season, Ramadan, Christmas, and New Year's. Snapchatters flock to the platform to share their Halloween costume, their Super Bowl party food. I'm a Eagles fan, it hurts to say that, on and on and on. Brands who show up authentically in these moments end up resonating with millions of Snapchatters. You have these everyday moments. Snapchat is the number one platform where people enjoy sharing what their daily life is like, moments both big and small. In fact, nearly 40% of our top days on Snapchat in key markets aren't even associated with a major holiday or moment.
This connects really well with brands with an always-on strategy. As our community shares their daily rhythms, brands too can bring joy to their potential consumers in small but impactful ways. The question becomes how? How do you make your moments break through? Put simply, brands advertise in two ways on Snapchat: with full-screen video formats and immersive augmented reality. These are attention-driving formats that also drive performance, and they're always high quality and engaging. Take Snapchat's vertical videos. They earn five times more attention compared to the social media norms. That's because Snapchat enables brands to tell their story in brand-safe, curated, trustworthy environment where, as we noted, Snapchatters are happy and more receptive to messages. You heard me mention earlier that one of the goals of most marketers is to allow people to see themselves in a brand, and we can uniquely deliver that.
Our AR Lenses literally allow you to do that in a way that no other medium or technology can. It allows consumers to put themselves in the center of the brand's experience by doing things like trying on a massive range of products from the comfort of your home, which ultimately improves shopping confidence and reduces returns. By layering a brand's store right in the world in front of you. That redefines what it means to engage, and brands are finding real success. For example, Snapchat's augmented reality Lenses garner four times more attention than the Dentsu benchmark. If you're gonna take away three key points from the last few minutes, they are, number one, why Snapchat? Because real relationships mean real influence. Snapchat has a huge and happy community.
They're on Snapchat to connect with the people who matter most, those who influence their lives and their spending. Number two, when should brands be on Snapchat? When they need to connect to life's realest moments. Whether they are brands' everyday moments or their biggest ones, we can make sure they are reaching the right audience at the right time. Last but not least, number three, how do brands reach their audience on Snapchat? With full-screen formats and immersive AR experiences that bring brands into the moment in conversation. As a longtime advertiser, I've always believed that video and AR on Snapchat provides the most compelling creative canvas to tell brand stories, and it's really only limited by your creative ambitions. That is truer now than ever. Snapchat is uniquely positioned to help brands deliver on their long-term goals while delivering those short-term results.
We connect them to the right audience through a powerful and creative suite of advertising solutions, all of that, my friends, help CMOs like me sleep better at night. After a quick break, our Chief Operating Officer, Jerry Hunter, will talk about our strategy to support advertising partners and the progress that we've made. First, I just wanna tee up how enormous our opportunity is. The digital ad market is valued at $550 billion and is growing. The ad budgets are shifting rapidly from traditional to digital marketing and towards mobile in particular, we're incredibly well-positioned there. There's so much more to go. Thank you so much.
Programming will resume after a 10-minute break. Please welcome back to the stage David Ometer.
All right. Welcome back, everybody. Hope you all were able to grab a cup of coffee. I'll keep this really short and sweet. As a quick reminder, again, if you're an analyst or an investor here in person and you'd like to submit a question for our Q&A session, please scan the QR codes on the back of the badges that you received this morning. Without further ado, I'd like to welcome our Chief Operating Officer, Jerry Hunter.
Thanks, David. Hi, everybody. I'm Jerry Hunter. I am Snap's Chief Operating Officer, overseeing our global monetization efforts, including sales, ad product, and engineering. In addition, leading growth, content partnerships in our ad business. I am really excited to be here with you today. Since we began building our advertising business, our primary focus has been on delivering performance for advertisers. The underlying goal has remained the same, even though the business continues to be impacted by a number of factors we've witnessed throughout the past year. Today, I'm going to focus on the areas that we can control. Discussing in detail in this new operating environment how we've evolved to drive performance for advertisers. We're really gonna go under the hood here, deep into our ad tech stack. Get ready to dive in.
Slow growth in marketing budgets, new norms around delivering and measuring impact, and increased competition for every advertising dollar requires a deep technical and operational go-to-market approach with leaders that have that expertise. As Kenny just mentioned, we have an enormous opportunity at Snap. Since I took this role nearly six months ago, I've seen just how much room there is to continue to evolve both engineering and sales to increase our focus on driving performance for our advertisers. Our priority for accelerating revenue growth is simple. Deliver measurable value and positive business outcomes for our advertising partners with a greater emphasis on direct response performance in the near term. Well, that's, of course, easier said than done, especially in this current environment. I have confidence that our plan and the team that we have will deliver this.
We'll continue to serve our larger brand-oriented advertisers through innovative video and augmented reality solutions to connect our community and our ad partners to measurable and value-added ways. We're also innovating to diversify revenue sources through Snapchat+, with a goal of expanding our ARPU opportunity over time. To gain share of this very large and growing digital ad pie of dollars, we're going to focus on a few things. 1, provide advertisers with a large engaged audience that's difficult to reach elsewhere. 2, offer compelling performant ad formats in a brand safe environment. 3, provide an ad platform that's capable of optimizing campaigns to deliver an attractive return on ad spend for our advertising partners. We offer advertisers all these key inputs, and we're improving each of them every day. Let's touch briefly on each.
More than 750 Snapchatters use our platform every month, and that's over 375 million daily active users. Mostly 13-34-year-old, and they're deeply engaged with their service. If you wanna reach Gen Z and millennial audiences in many of the most attractive ad markets in the world, Snapchat provides unparalleled reach. Brands advertise on Snapchat with an engaging and performant ad format using full-screen video and immersive AR. When brands use both full-funnel approach to both video and AR formats, they're able to drive higher returns on investment and lower cost per outcome. While engagement with Snapchat has been growing steadily over a decade and is at scale among Gen Z and millennial audiences in our key markets, our monetization ad platform is still in its early days.
We believe the work that we're doing to improve our direct response offering will improve return on ad spend for our ad partners and help us to continue to take our growing digital ad market. I'd like to talk in more detail about the opportunity ahead and our plans to realize that opportunity. Let's start with our ARPU opportunity. Today, our annual revenue per user globally is about $13. That compares to Facebook's ARPU of $59. In North America, our annual ARPU is approximately $33 compared to Facebook's North American ARPU of $277. Growing our advertising ARPU is ultimately a function of the number of people we reach, the number of ad impressions we serve per person, and the price we charge for ad impressions.
We believe we're significantly under-monetized today relative to our opportunity across these areas, so let's dive into them. First is inventory. Given their engagement, we have plenty of available inventory on our platform today, with plenty of room to grow in the future. In Q4 of 2022, total impressions grew 8% year-over-year. As Jack discussed earlier, to grow our available inventory even further, we're executing against plans to improve our ranking models to surface the most relevant content for Snapchatters and provide new tools to incentivize Snapchatters and creators to post to Stories and Spotlight. We believe this will improve time spent viewing content on our service, which will expand available inventory and our content business over time.
We believe that this content strategy, combined with our longer-term plans to expand monetization across our Camera, Snap Map, and Spotlight, will deliver the depth of engagement necessary to achieve our long-term iPRU opportunity. Next is our plan for pricing. Our prices are based on auction dynamics. Given that we have available inventory, we expect ECPMs to continue to be primarily driven by advertiser demand, and we believe an advertiser's willingness to bid is determined by measurable return on investment or ROI. When advertisers are less willing to spend for an incremental bid, auction density drops and our pricing or ECPMs decline as a result. For example, in Q4 of 2022, global ECPMs declined 9% year-over-year. We're focused on improving ROI for our ad partners, which we believe will increase their willingness to bid at higher levels and drive their desired outcomes.
We're investing aggressively in optimization, measurement, and ad ranking in particular to drive measurable advertiser outcomes more efficiently. In this way, we believe that we can increase CPM and ROI simultaneously. Our focus on ranking and optimization is intended to kick off a flywheel, increasing the likelihood that our ads are more relevant, which makes Snapchatters more likely to engage with them, which in turn drives higher ROI and makes us more efficient with our inventory, which will then drive the advertiser demand and improve the diversity of ads that we can show to the community, ultimately increasing the likelihood that we can show the right ad to the right person while simultaneously increasing our CPMs over time. We have enormous headroom to grow our ARPU as we expand our monetization across Snapchat. Other initiatives like Snapchat +, which Jack just shared with you, only further expand our ARPU potential.
Let's talk about our plans to make our ad platform highly performant and deliver return on ad spend for our clients. Our primary focus in the near term is direct response advertising or DR. Today, DR represents approximately two-thirds of our business and has continued to grow at a faster rate than our brand-oriented business. We believe DR is resilient because it provides the most measurable ROI for advertisers who need a high degree of confidence in their spend. In the five year period ending 2021, our DR platform was the primary driver of our ad revenue compound annual growth rate of over 50%. The return on ad spend we delivered for our clients has allowed us to gain share of wallet and grow our business. The recent platform policy changes have had a significant impact on DR advertising ecosystem.
Prior to these changes, we were able to more precisely attribute off-platform actions to advertising campaigns that were on Snapchat. This was possible because pixel coverage across the advertiser's website would return and match events based on the website's activities, where MMPs would return exact actions taken by the Snapchatters because it was matched to their unique identifier or their IDFA. As a result, we could more accurately attribute and report conversions and target and optimize advertising campaigns. DR advertisers have been most impacted by the recent changes because they benefit significantly from immediate and precise feedback loops. These changes have resulted in an increased cost per conversion and a reduction in the total number of conversions, leading to lower ROI for advertisers. For example, gaming apps, which were once able to optimize for potential Snapchatters who could make an in-app purchase.
Now they're limited in understanding which of those users might actually make a purchase in-app. As a result, our models learn from a more limited signal, which ultimately leads to a higher cost per purchase for advertisers. To overcome the limitations imposed on these platform policy changes in a privacy-safe manner, we're updating and improving our ad platform across three key areas. One, investing in observability and measurement. Two, improving engagement and conversion quality. Three, increasing the volume of high-quality engagements and conversions. Let's talk about these. First is observability and measurement. Ultimately, we're investing in tools and solutions that allow advertisers to share conversion data in a privacy-safe manner. We call this our signal strategy, which includes a portfolio of signal vehicles that empower advertisers to easily leverage third-party data with Snap through solutions like Conversions API, data clean rooms, and multi-party computation.
Conversions API or CAPI is the foundation of these solutions. It's a direct server-to-server integration between an advertiser and Snap, either directly or through a third party, which allows advertisers to share their conversion data with Snap in a privacy safe way. CAPI empowers Advanced Conversions and Snap's privacy-centric measurement solution. This methodology employs a range of cryptographic techniques to measure aggregate conversion data without tying off platform activities like installing an app or visiting a website back to specific Snapchatters. Conversions API adoption has been growing nicely, and the majority of our revenue is now measured using signals from Conversions API, pixel integrations, SCAN or MMPs. data clean rooms and multi-party computation allow advertisers to join data in a privacy-protective environment. Each party is using private inputs without revealing their inputs to the other party.
Overall, they provide advertisers with a range of options to measure and optimize their campaigns and enable ad platforms to improve targeting in privacy safe ways. We've deepened scaled integrations with key data partners from broader third-party ecosystem such as Segment, Tealium, Salesforce, and Dynamics 365. We've also been investing in Estimated Conversions, which is a part of our Advanced Conversions product. Estimated Conversions are a form of statistical modeling used in our attribution methodology to provide advertisers with a more complete real-time view of performance in a privacy-centric way. More than 30% of revenue is measured through Estimated Conversions, which encompasses both web-based CR advertisers and app-based CR advertisers via SCAN. These measurement solutions are critical to building long-term trust with our community and larger advertisers such as Uber, Booking.com, PepsiCo and Amazon.
In the fourth quarter of 2022, advertisers like Booking.com and Zalando successfully leveraged CAPI to significantly increase the number of high-quality signals sent to us, which directly correlated with their efficiency of their campaigns to optimize for lower funnel conversions. We also have many other advertisers such as DIK'S Sporting Goods, Gymshark and Kohl's, who have integrated CAPI and seen significant improvements in their ROI. We understand that different advertisers have varying technical capabilities. We're finding ways to simplify CAPI by offering solutions like Pixel and Launchpad. These allow businesses to implement best practices with their data with minimal developer support, eliminating the need for a third-party development contractor or extensive coding.
Snap's Launchpad allows for easy self-configuration of a server instance in a cloud environment such as AWS or Google, so that a business can send marketing events through a privacy-preserving server-to-server connection to Snap that's similar to CAPI. We've also been investing in conversion lift, scalability, and performance to increase measurability for advertisers who have lower spend, but higher potential for lift via our new offerings. We're working to enhance the quality of engagement and conversions as well. The recent platform policy changes have increased advertiser reliance on last click metrics as a proxy for attributed performance. In fact, many advertisers now test their budgets across multiple platforms and allocate spend where they see the most last click conversions at the lowest cost per action. Due to this shift, we've rolled out changes to improve last click performance.
Specifically, we've updated our machine learning models and algorithms to focus on click-through conversions. We enhanced our web view experience and performance within Snapchat for those who click on an ad, making it more likely that Snapchatters open it convert. We've also introduced a new ad format experience for Snapchatters that's consistent with organic content they see on our platform, which has improved ad consideration and post-click engagement. These changes will provide advertisers with the best last click conversion performance and Snapchatters with the best post-click experiences. For example, campaigns optimized toward engagement reach and leads, improved click quality has led to a 40% increase in post-view click time and nearly a 15% rise in Google Analytics session match rate.
Our ML model updates designed to deliver more relevant ads has led to a more than 40% improvement in ad view time and a 25% increase in non-bounce rates. In addition, advertisers who track their campaign performance through Pixel have seen more than a 40% improvement in their purchase rate per click with a 1-day attribution window. For advertisers who optimize campaigns for app install goals, we've improved our click-to-install rate by over 60% using a one day click attribution window. These changes make click more efficient in driving purchases and installation. It's important to note that while these changes have improved conversions and engagement across the funnel, they've also led to an increased cost per action. To address this, we're working to increase the volume of measurable conversions through improved relevance, targeting, and ML optimizations.
We'll be using the signals that we gain from that improved observability and measurement on high-quality conversions to continually improve our ML algorithm, which will enable us to better create relevant experiences for Snapchatters. We believe that these investments in our ad platform will deliver stronger ROAS performance for our advertisers, will allow us to use our inventory more efficiently, and most importantly, deliver relevant ads to our community. In short, these changes have reduced the overall volume of conversions while increasing their value to advertisers. Our models are retraining on these conversions, which we believe will grow conversion volume over time. We believe these improvements will benefit our platform over the longer term, even as we experience short-term disruptions on revenue.
Our goal is to provide advertisers with a more accurate view of the entire customer journey on Snapchat. This will empower them to make better-informed decisions about where to allocate their budgets and drive better outcomes for their business. Let's take a look at how Fabletics, a performance marketing leader, partnered with us to increase lower-funnel results using some of our new performance tools.
Since we were founded in 2013, Fabletics has been on a mission to provide style-centric designs combined with the latest advances in performance technology that takes you through your entire day. Hi, my name is Neera Barjatia. I am the COO of Fabletics and President of our TechStyle OS division. Snapchat has an incredibly influential and highly engaged community, so it made sense for us to work with Snapchat as an advertising partner on an ongoing basis. For example, when we set out to grow our 21 and up subscription base, we used several different video ad solutions to increase new memberships across all of our brands. We were able to be an early beta partner to accelerate lower-funnel performance for Fabletics.
We have seen purchase count improve 100% using both click-through optimization and automatic browser type optimization with a 154% increase in click-through rates. The Fabletics and Snapchat partnership really goes at all levels of the organization, whether it's our executives talking about the future of augmented reality in retail or our growth team providing feedback to the future of the Snapchat ad platform, it's really a full funnel relationship. Snapchat's marketing and direct response advertising innovations will be crucial to reaching our goals. 2023 is already off to a great start, with Snapchat officially part of our OKRs, we look forward to continuing to grow on the platform.
We love working with partners like Fabletics. These are some amazing results and the results that we want all of our customers to experience. I also wanna touch on our premium video business and our AR advertising because both of these offerings are valuable to driving advertiser business goals. On the video side, our commercial format, six second non-skippable full-screen video ads in our curated content are in high demand and advertisers who are looking to buy premium video inventory. Marketers know that by investing early and often in the Snapchat generation across a variety of immersive ad formats, can build long-term relationship with and establish their brand in the life of a Snapchatter. Today, the core of our AR business is our sponsored AR advertising product, which is creating value for a wide variety of brands and is becoming an increasingly central to their campaigns.
The AR opportunity for business on Snapchat falls into three broad categories. First, and perhaps most exciting, is the integration of AR into shopping on Snapchat. We have strong momentum here. Since 2021, more than 250 million Snapchatters have engaged with AR shopping lenses more than five billion times. To understand the scope and potential of this opportunity, consider the apparel and accessories category, which is the largest shopping category among U.S. teenagers. 92% of Gen Z are already interested in using AR for shopping, and we found that with Ipsos that shopping is the number one reason that consumers use AR, with six in 10 saying it makes shopping experience easier, better, and faster.
Snap's AR enables brands to offer a fundamentally different and more exciting option for consumers, not only through our famous AR lenses on the face, but also with more advanced AR and ML technologies that power virtual storefronts, advanced try-on experiences for shoes, glasses, jackets, bags, and more. Dior and Levi's are just some of the brands that we're already working with in this way, and we expect our shopping offering to only get better as we roll out other features to power AR commerce on Snapchat, including dynamic shopping lenses, sponsored AR image try-on, and Live Garment Transfer, which is our live try-on experience for apparel. Already, 80% of shoppers feel more confident in their purchase after incorporating AR into their journeys, and we're still early days on how engaging and personalized this technology will become. Take Walmart, for example.
They look to us to provide their customers with an easy interactive way to try Walmart's products through the power of Snapchat AR ads. The results were remarkable. Leveraging our catalog-powered shopping lenses, the campaign drove more than 161 million product trials by over 35 million Snapchatters. That's 4.5 product trials per user. Throughout the campaign, Walmart used A/B testing to learn and identify best practices for future catalog-powered lens executions. Second is tentpoles. As Kenny mentioned, these are moments that marketers strive for with their campaigns. Big, buzz-worthy activations that need to break through and really grab attention. Those are ideal moments to introduce the excitement and innovation that AR offers. There's simply no equivalent platform on which to do it. Snap's community has no peer in terms of its embrace of AR, as well as the broader cultural influence.
Lastly, we've also heard from our ad partners that they wanna use AR to take part in everyday moments with their audience. We've been working to make sure that AR ads can be targeted contextually, so that, for example, a family picnic could be sponsored by Uber Eats. If you're taking Snaps near the ocean here in Santa Monica, and you post those on a public story, you could receive fun content from Carnival Cruise Line. Ultimately, AR is driving real business results for our partners. FanDuel, the number one sports betting platform in the U.S. market, tapped into our integrated API partnership with Sportradar to develop the dynamic Live Odds AR experience. What started as a customer acquisition tactic through AR provided to be more valuable for FanDuel customers. They saw a doubling of redeposits.
The Live Odds drove 60% lower cost per action of incremental deposits and subsequent place bets versus lenses that did not use this live feature. The ability to place relevant odds in front of the right user in a fun and engaging manner proved extremely valuable to FanDuel. This partnership further enhances our ability to reengage current users and drive down costs for our customers and serve our community. Put simply, we believe that in our industry-leading AR capabilities will become the standard for mobile advertising. We're the leaders in sponsored AR today with a proven track record of powering both dynamic attention-grabbing moments through high ROI everyday engagements from brands at an unmatched pace of innovation, as Bobby will discuss a bit later today.
To fully realize our AR opportunity, we're now identifying ways to grow the ecosystem, partnering with media agencies like WPP, Publicis, and Dentsu to find new scalable ways to integrate AR into brands' go-to-market strategies. We're making it easier than ever to create, manage, and deploy advertising through acquisitions like Vertebrae, which provide a back-end system to create, manage, and deploy 3D and AR assets. Taken together, the bottom line is this. For any brand interested in reaching the 250 million-plus Snapchatters who already engage with our AR every day on average, and in preparation for the hundreds of millions that will adopt AR in the future, our sponsored AR suite offers an indispensable high-impact tool. We believe there's already a significant marginal return available for advertisers who invest holistically in our products.
For advertisers seeking to use machine learning to drive a highly efficient outcome, we also offer Multi-Format Delivery, which automatically uses a combination of Snap Ad formats across video and AR for one campaign objective. We've consistently found that advertisers that use Multi-Format Delivery across our platform experience stronger overall results on ad spend. For example, HBO leveraged this tactic in marketing House of the Dragon, where full-funnel strategies that included AR delivered a 2x increase in engagement relative to lower-funnel media alone. As we think over the medium term about continuing to grow our average revenue per user, we'll be looking at different ways to help advertisers reach Snapchatters across more of our platform, like the Snap Map, and of course, opening up more inventory and monetizing Spotlight, which is already growing very rapidly.
Lastly, I wanna share some observations that I've seen since taking on this role and bringing together the product engineering and sales team to truly become a more customer-focused organization. I deeply believe that in order for our business to be successful, we need to put the value that we're providing for advertisers front and center as a team. While the engineering and product teams have been bringing revenue-generating features to market, we haven't had the tight feedback loop with our customers. These are technical implementations that usually need tuning and modification to ensure that our customers are getting the best results. By investing in processes and teams to make the feedback loop tight, we've been able to improve the product more quickly. We've also realized that it's not always easy to properly implement some of our technology.
We're investing in teams who help our customers ensure that they have the optimal implementation, and we've seen positive results there too. We've also shifted to a two-tier support system for our sales team, so we aren't mixing customer types with sellers. When you have mixed customer types, it's more difficult to consistently serve your customers. We've simplified to large customers and mid to small customer segments. The former is much more white glove and hands-on, and the latter is more self-service. As a part of these structural changes we've made, we've also shifted to a regional president model in EMEA, the Americas, and APAC. I'm thrilled to have Ronan Harris and Ajit Mohan as part of our team leading EMEA and APAC, respectively, and we'll have an announcement soon regarding the new Americas leader.
As we look forward, we're gonna be working hard to continue to develop our customer-first culture, which is integral to our business. I'm really grateful for your time. We've covered a lot of ground here. If there's one thing I want you to take away, it's this: We're evolving our ad platform, and while it's early days, we're already seeing good results. With that, I'll hand this over to Bobby, who'll talk more about our AR platform.
Thanks, Jerry. It's great to be here with all of you today. I'm Bobby Murphy, the co-founder and chief technology officer at Snap. As you have heard throughout our presentation today, we believe augmented reality represents the next major shift in computing. AR allows us to weave digital experiences into the world around us, evolving the way we use computing in our daily lives. This transformation unlocks new opportunities for computing to make the world vastly more interesting, more entertaining, and easier to navigate than ever before. Our AR products and services are driving major impact at scale today. On average, over 250 million people engage with augmented reality every single day on Snapchat. Our community plays with AR lenses billions of times per day on average. Our AR creator community has built over 3 million lenses using our Lens Studio software.
Having a large, enthusiastic AR audience and creator community enables us to innovate incredibly fast. AR creators and developers, including our own internal teams, can instantly deploy new AR experiences with cutting-edge technology to hundreds of millions of people, then quickly iterate based on what we learn. We leverage insights from billions of daily snaps created using our camera to develop and optimize new capabilities and creative concepts. For example, we can quickly assess whether a new face tracking algorithm will improve AR engagement or what level of 3D asset quality delivers the best performance for virtual try-on experience, or iterate through dozens of variations of a creative concept to uncover the one that will ultimately go viral.
This unique position has allowed us to develop a lead in augmented reality over the last decade by leveraging one of the world's most used cameras, developing advanced technology and tools, and growing a vibrant AR creator ecosystem. This innovation flywheel is largely powered by Lens Studio, a tool that allows anyone to create rich and complex AR experiences and deploy them seamlessly to hundreds of millions of Snapchatters around the world or within their own apps and websites through Camera Kit. The response to Lens Studio has been truly inspiring. More than 300,000 creators and developers from nearly every country around the world are using Lens Studio to create millions of unique AR Lenses. We continue to be amazed by the creativity of our community, which reinforces our belief that long-term success in AR requires a vibrant developer ecosystem.
I wanna highlight a few of our latest technical innovations available in Lens Studio, which are enabled by remarkable advances in computer vision and computer graphics that make it possible to understand and transform images and videos in new, sophisticated ways. Let's dive into some important examples: scene understanding, scene interaction, and scene rendering. First, with scene understanding, we develop and continue to improve machine learning models that understand the visual world. These machine learning models are able to perceive the names and shapes of objects in an image and render changes to it in a fraction of a second. Fast, in fact, that we can understand and edit each frame of a video before the next frame appears. Let's take this video as an example. Computer vision detects a face and finds key points like the eyes and mouth.
From this, we build a 3D Face Mesh, creating a custom fit mask so an AR experience can be layered precisely onto any face. We've evolved this technology into our 3D Body Mesh capability, so AR clothing fits just like the real thing over people of all shapes and sizes. Our technology understands the rest of the scene too, like where the floor and the walls are, or the objects and products in view through capabilities like World Mesh and Object Detection. With custom and city-scale Landmarkers , we can even render AR experiences onto an expanding list of locations like Central London, Santa Monica, and many more. Next, Lens Studio scene interaction tools let people engage with AR lenses in ways that mirror how we naturally interact with the world around us.
Gesture recognition and finger tracking understand hand movements in the camera, so people can learn sign language or check out a whole different look with a swipe of their hand. Two-hand tracking brings both of your hands into the scene. Finally, the quality of rendering is improving rapidly, allowing us to place objects and apply effects that look increasingly realistic and feel like a true part of the real world. Ray tracing simulates how light behaves in the real world, reflecting the physical environment onto the digital object surface, or even how light scatters inside a translucent object. For the first time, diamond jewelry, sleek sports cars, metallic spacesuits, and so much more can reach photorealistic quality on mobile devices in real time.
Now that we've covered our progress with the underlying technology, let's walk through some examples of how we are developing augmented reality together with our community and our partners. GoSpooky, a member of our Snap Lens Network, used enhanced scene understanding and Snap ML to build this lens, which replaces motor vehicles with digital gardens. Cityscapes become a canvas for considering our environmental impact. Denis Rossiev, another member of our Snap Lens Network, developed this imaginary friends experience. With this lens, Snapchatters can scan any object and turn it into a cartoon character using real-time AI. Denis won the Lens Fest award in the Moonshot category for this lens in December of 2022. Los Angeles-based Michael French created the Knowledge Bowl lens, transforming the fountain at the Los Angeles Central Library into a series of interactive educational lessons just by scanning your library card.
AR Studio MousePack teamed up with ESPN to build a lens that mimics the legendary Pick of the Week moment on ESPN's College GameDay show. Each week, Snapchatters had 6 matchups to pick from, and fans could share their spirit by wearing the mascot head from their favorite team, celebrate their wins, and have fun with teammates and rivals alike. The experience was powered entirely through Snap Tools, leveraging the Lens Studio face tracking technology with results tracked through Lens Cloud storage. Finally, Beam AI built a fitness lens to recommend exercises based on available gym equipment. They built their own ML classification model to recognize equipment, including barbells, dumbbells, kettlebells, medicine balls, and exercise mats, and added 3D characters to demonstrate selected exercises, compressing them with our recently released Draco tools.
The team also thought about how our voice ML tools would let Snapchatters say what they wanted to work on in the gym. We believe augmented reality can deliver incredible value everywhere, not just on Snapchat. We are bringing AR beyond Snapchat through Camera Kit. Camera Kit enables external partners to bring AR into their own apps and websites, leveraging our technology, tools, and creator ecosystem. We are excited about the growing demand for businesses using Camera Kit, and we're seeing early progress with companies like Samsung delivering AR experiences through their native Galaxy A devices, and the LA Rams SoFi Stadium using AR on their massive in-stadium infinity screen to surprise and delight fans on game day. Each of these partners are providing unique, engaging, value-adding AR to their customers by building on top of our tools and infrastructure.
As we look ahead to the next five years, we'll build upon our early success with Camera Kit and create a business beyond Snapchat by allowing companies, developers, and entrepreneurs to solve their business needs through AR. AR is a massive part of our mobile experience on Snapchat today, and over time, we see even greater opportunities for new hardware to bring it into another dimension. This is what is driving our development of Spectacles, our wearable AR device. Wearables are an important long-term opportunity, and we're seeing incredible early progress with super-engaged early creators, rapidly advancing technology, and an increasingly clear view of how to develop the best, most usable, and most compelling AR device. Over the past two years, hundreds of developers from 30 countries have experimented with our most recent generation of Spectacles.
They're using Lens Studio, the same tool we use for mobile AR development, to create entirely new experiences for a wearable AR device. Experiences that, for example, allow people to learn to read music, identify constellations, and more. We have been working on Spectacles since 2014, and today are leaders in many key areas like optics. We believe this positions us well to stay ahead as we continue to iterate around real-life experiences. Over time, we'll release new versions of Spectacles, giving developers in our ecosystem the unique opportunity to build AR experiences on Snapchat, on other mobile and web apps through Camera Kit, and on new wearable hardware. We'll have much more to share in the coming months.
I hope this gives you a better sense of the many things we're doing as a company to accelerate our lead in augmented reality, how each of our investments in AR fit together, and why we are so excited about the future of augmented reality. Now, I'd like to turn it over to Derek to speak about our financials and how we think about investing in the future of our business. Thank you.
Good morning. Thank you, Bobby. There are so many exciting things happening in our AR business. It's exciting to share that with you today. Thank you for joining us. For those of you who made the trip in in person, thank you for making the journey. Hopefully you've enjoyed the show so far. For those of you who have joined us by streaming from your office or your home, thank you for tuning in. I hope you've enjoyed the show so far. My name is Derek Andersen. I am honored to serve as Snap's Chief Financial Officer. Today, I'm excited to share some of the financial progress we've made since our last Investor Day. How we believe the initiatives that all of my colleagues shared with you earlier today will translate into financial progress for our business in the years ahead.
Let's start with an update on our progress since our last Investor Day. In February of 2021, we discussed our strategy to continue to onboard new smartphone users and retain them over the long term in our established markets, as well as the development of our international growth playbook and our plans to deploy that playbook in more markets over time in order to grow DAU. As you can see, we've executed on those plans as we described them two years ago, and the growth is evident in our community. DAU grew at a CAGR of 19% to reach 375 million DAU in the most recent quarter. On the monetization front, we articulated two years ago that we believed we had the capacity to grow our top-line revenue at 50% or better for several years, assuming a favorable operating environment.
We continue to believe that our business has the potential to grow at elevated rates and to achieve much greater top-line scale over time. That said, the combination of platform policy changes, various macroeconomic headwinds, have combined to make the more than 50% CAGR we achieved over the five years ending 2021 unattainable at present. As you can see, we achieved a CAGR of 35% over the past two years, but our growth has decelerated to the point of being flat in the most recent quarter. While we're incredibly disappointed with the current rate of revenue growth and the challenging operating environment, we're focused on executing against the inputs that we control to accelerate revenue growth going forward.
I'll speak in more detail about our plans to accelerate revenue growth shortly. First, I want to address more of our progress against some of the other financial objectives we set out at our last Investor Day. Two years ago, we laid out a plan to achieve 60% gross margins over the medium term, or within two to three years. I'm proud to share that we exceeded that goal, and we did so ahead of schedule. We did it even while increasing the rate of our user growth and despite the headwinds that we've experienced on revenue. We achieved this through relentless focus on cultivating a cost structure that is lean and efficient while still making key strategic investments to drive long-term growth.
For example, we made significant strategic investments in content to seed the launch of Spotlight in 2021, and more recently, to expand revenue sharing to creator stories. In each instance, we sized those investments thoughtfully to ensure that they could be accretive over time. In addition, we restructured and renewed our cloud agreements to achieve lower pricing and better ongoing leverage in those relationships. This has contributed to lower cloud infrastructure costs for DAU, which is critical given that infrastructure is our second largest cost item after our personnel costs. Finally, we focused intently on efficient unit cost management by engineering our products efficiently and by migrating among cloud services and products to drive down our unit costs.
The sum total of these efforts is that adjusted gross margins have expanded by eight percentage points over the last two years, reaching 62% for full year 2022, and 64% in the most recent quarter. In addition, when we discussed our intentions for investment in the business two years ago, we were clear that we intended to invest aggressively to support our top-line growth expectations, but also that we would be careful to balance our level of investment with realized growth over time. As a result, we invested heavily in 2021 as growth in our top line remained elevated. As growth slowed in 2022, we moved quickly to reprioritize our cost structure to reduce our expected future annual operating costs by $450 million and our total cash cost structure by $500 million.
We've executed on this reprioritization over the last six months, and we expect to realize the full benefit of these cost reductions in Q1 of 2023. Importantly, while we've substantially reduced our cost structure, we've pivoted our investments to ensure that our primary strategic priorities, including many of the things you heard about today, are fully funded. As a result, we believe we have created a path to deliver meaningful Adjusted EBITDA and profitability at free cash flow, even at low revenue growth rates. Lastly, at our prior Investor Day, we promised to maintain a conservative balance sheet to ensure that we were prepared for the unexpected. We've delivered on that commitment by increasing our cash balance by more than $2.5 billion through capital raises on attractive terms when interest rates were very low, and by generating positive free cash flow for two consecutive years.
Importantly, we didn't just raise new debt on attractive terms. We've also proactively managed down our leverage when our valuation metrics were at historic highs and attractive early conversion terms were available. In 2021, we entered into exchange agreements with our debt holders to early convert more than $1.1 billion of our outstanding convertible notes into Class A common stock at a time when our shares were trading at approximately $64. This reduced our outstanding debt to approximately $3.7 billion as of now, with a weighted average coupon of just 24 basis points and a weighted average maturity more than four years into the future.
Conservative and opportunistic management of our balance sheet, along with achieving positive free cash flow over the last two consecutive years, then put us in a position to responsibly deploy $1 billion of capital to repurchase our own shares at historically low valuations. We repurchased shares equivalent to 6.7% of our outstanding common shares as of the most recent quarter. As a result of these efforts, the rate of growth in our fully diluted share count went from 3.4% in 2020, down to 1.2% in 2021, and down to just 0.2% in 2022 after adjusting for the early conversions I noted earlier. Thus far, we've spent a lot of time addressing how we've managed our finances over the last two years.
We've done this in part because we believe the work we've done to scale our cost structure efficiently, our demonstrated ability to balance our level of investment with realized top-line growth, our careful approach to constructing a conservative balance sheet, and our opportunistic approach to managing our share count are all instructive for understanding how we intend to approach financial management of our business in the future. As we look forward, we believe we've cleared a path to deliver Adjusted EBITDA profitability and positive free cash flow, even at low rates of top-line revenue growth. While we're proud of the work we've done in this regard and believe it is critical as an input to establishing a higher floor under our enterprise value, it does not reflect our ambitions for our business. To achieve the full potential of our business, we must accelerate top-line revenue growth.
Let's now take a look at our roadmap to accelerate revenue growth in the near term, medium term, and over the long term. As Jerry discussed in detail earlier, in the near term, we are focused on improving our direct response advertising platform to better capitalize on our already immense reach and depth of engagement. We're making significant progress in this regard through deeper integrations with larger clients, improve click-through performance, and retraining our models to focus on measurable performance. Improvements in DR performance will allow us to use the vast inventory we already have more efficiently. The rapid growth and engagement with Spotlight and expansion of AR advertising within our camera both provide the opportunity to further expand our ARPU opportunity.
The direction of the economy and the operating environment may be uncertain in the near term, but we believe that continuous improvement in our DR business, as well as a focus on building a customer-centric ad platform, will best position our business to take share regardless of the operating environment and to accelerate growth when the operating environment improves. Over the medium term, we believe that our track record of innovation positions us well to expand our ARPU opportunity and diversify our revenue sources over time. For example, Snapchat+ presents an entirely new source of revenue for Snap. In just six months since launch, it has reached more than 2.5 million subscribers and an annual revenue run rate of over $100 million.
The Snap Map presents an opportunity to reach new advertisers with a compelling advertising offering centered around places, with Snapchatters opening places on the map more than twice as much as they did in the prior year. Together, these initiatives present a significant new avenue of growth for Snap that can build on top of our existing advertising business. Over the long term, we believe that augmented reality is important to the growth of our business, and that our leadership in AR will position us to benefit from the next major computing platform transition to one based on augmented reality. History demonstrates that sitting at the intersection of an actively engaged community, developers, and the core technology of a new computing platform is a compelling recipe to becoming a leader in such transitions.
We're innovating to position Snap to benefit from this AR future, even as our community and our advertising partners benefit from our AR innovations today. I spoke earlier about how we've prepared for scenarios where the operating environment remains challenging by building a conservative balance sheet and in how we've prioritized our investments to clear a path to Adjusted EBITDA profitability and positive free cash flow, even at lower rates of growth. Let's talk now about the more exciting possibilities for our financials in a world where we are able to execute on our plans in a constructive macro environment and meaningfully accelerate top-line growth as a result.
In such an environment, we see a path to further gross margin expansion over time with the ability to reach 65% in the medium term and as high as 70% over the long term as our mix of revenue generation shifts from content to other services over time. Top-line growth is a key input to margin expansion, and we will need to accelerate top-line growth to achieve our medium and long-term gross margin objectives. As it relates to controllable costs, and in particular our adjusted operating expenses, we will be disciplined in those investments. We begin 2023 having fully implemented the $500 million in cash cost structure reductions we announced as part of our reprioritization in Q3 of 2022. This included $450 million in adjusted operating cost reductions and $50 million in fixed content cost reductions.
We will continue to be long term-oriented. We may invest in compelling new opportunities as they arise, but we will balance this with appropriate cost discipline. When we're able to accelerate revenue growth, we will prioritize our investments to support that growth to deliver meaningful Adjusted EBITDA leverage or flow-through of incremental revenue to Adjusted EBITDA and free cash flow. We followed a similar approach after the reprioritization of our cost structure in 2018. As revenue growth accelerated over the past several years, we expanded our Adjusted EBITDA margins by more than 50 percentage points. We expect to apply similar discipline and prioritization to drive a margin improvement in the years ahead as growth allows. As our business grows and begins to generate more meaningful free cash flow, we will manage our investments carefully and opportunistically.
Beyond direct operating investments to support our strategic priorities, the two other areas of investment we will focus on include M&A and stock repurchases. We've been measured in our use of M&A over the years with a focus on digestible transactions that pull forward our existing product and technology roadmaps. We've used a combination of shares and cash for deal consideration while being careful to choose the method of payment that affords the lowest cost of capital at the time of each of those transactions. We expect to continue this approach going forward. We view stock repurchases as a tool to manage our share count and protect the long-term returns of our shareholders. In the near term, with stock-based compensation expected to be the primary driver of any share count growth, we prefer to see dilution not exceed 3% year-over-year over any extended period of time.
We've remained well below this level over the last two years and have opportunistically repurchased shares to proactively address dilution while our valuation remains at historically low levels. We've now covered our progress since our last Investor Day. We've discussed in some detail how we see our financial picture evolving in the years ahead. Before we finish up, I wanna take a step back and bring together the broader picture of what the team has presented today, as well as some of the most critical points that we hope you'll take with you today. The first is that we are well on our way to building a community with 1 billion monthly active users, with our core product of visual communication delivering significant reach into some of the most valuable advertising markets in the world and a young demographic that is difficult to reach elsewhere.
Second, we have reprioritized our investments to ensure that our top strategic priorities are fully funded, and we have a clear path to deliver Adjusted EBITDA profitability and positive free cash flow even at lower rates of revenue growth. Third, we are already executing our plans to improve the DR business in order to take share even in a more challenging operating environment. Fourth, we are innovating to drive growth and content engagement, and we're encouraged to see this strategy already delivering clear results as demonstrated by the progress that we shared today on Spotlight, Creator Stories, and Community Stories. Fifth, we are making rapid progress towards diversifying our revenue sources, as evidenced by the remarkable growth of Snapchat+ that we shared earlier today.
We believe that AR will drive the next computing platform and that our combination of leading AR technology, a well-established creator ecosystem, and a community deeply engaged with AR experiences positions us well to be a leader in the next computing platform transition. Before I wrap up today, I'd like to leave you with one final thought, which is that the most critical input to delivering on all of the strategic initiatives we laid out here today is innovation. That includes innovating on our products, our advertising platform, and the future of AR. We believe that our demonstrated track record of innovation over the last 12 years positions us well to deliver on this for our community, for our partners, and importantly, for all of you who are joining us today, our investors. Thank you for joining us today.
We're gonna take a brief break, and then we'll be back to take your questions. Thank you so much.
Programming will resume after this short break.
Please welcome to the stage Snap's Chief Communications Officer, Julie Henderson, along with Jerry Hunter, Derek Andersen, and Evan Spiegel.
Hi. Thank you all so much for coming. I know you heard a lot today, and we got a ton of great questions, so we're gonna do our best to address most of them, if not all of them. What I'm gonna do is I grouped some of the questions together just so to make it a little bit more digestible, and we'll get started. Evan, we had a couple questions on our 750 million MAU number, which we shared. Justin Patterson from KeyBanc has a question which says, "To reach one billion users in the next two to three years, how much of that growth is coming from North America and Europe versus the rest of world?
As you trend toward that goal, how should we think about DAU as a percentage of MAU changing from the 50% level today?
Thanks so much for the question. Thanks again for joining us here today. In terms of absolute volume and number of users, I think it's quite likely that the bulk of this incremental growth that we're trying to drive over the next few years will come from the rest of world. Just given the way the global population is distributed. We're very focused on continuing to drive growth, of course, in North America and in Europe by aging with the community that we have and continuing to engage and retain them, and also by adding incremental new users, typically younger users who are just learning about visual communication for the first time and are using our camera to express themselves.
We're very focused, of course, on making sure that as our community continues to age with us, that we have, you know, content that resonates with them, AR experiences that are immersive and of course, new ways to use our service to connect with their family, like our Map, where folks can see what their family members are up to. I do think in terms of absolute volume, the bulk of new users will come from the rest of world, and we have a lot of opportunity in Europe as well. You know, we'll continue to grow in North America. In terms of the DAU/MAU ratio, what we see is that in more developed markets like the United States, for example, that ratio is higher than the overall average.
What we're trying to do is as users, you know, embrace our service and start using it to talk with their friends and start engaging with more parts of our platform, like our content service or augmented reality, that they increase their frequency of use over time, and that DAU/MAU ratio grows. I think we're always gonna have some percentage of new users who are just getting to know the service, and then users who are more engaged with the service and have been with us longer, and our goal is to increase that engagement, you know, and that DAU/MAU ratio over time.
Thank you. Now we have a couple questions about monetization. Mark Mahaney from Evercore is here. Hi, Mark. Mark's question is, can you help quantify how much of ad effectiveness the AT&T policy changes caused to Snap and how much you have recovered? How long until you fully recover, or is it just impossible to quantify? This is for Evan.
Thanks, Mark. I, you know, I think it's really challenging just given the conflation of factors we've experienced over the last few years to really pull apart the different components. I remember, gosh, what was it? The beginning of last year before the Ukraine invasion, I think we were growing revenue around mid-40s. You know, that was following the ATT changes. Then we saw a very rapid deceleration following the invasion. We've made a lot of progress, I know Jerry shared a ton earlier, so I don't want to repeat all of it, but, you know, step one was really trying to improve observability and measurement, whether that's, you know, through the Conversions API, or of course, with third-party measurement partners, data clean rooms, those sorts of things.
Using that information and that observability to try to improve the overall value of those conversions. Now, you know, really working to retrain our ML models to drive more of those conversions. We've been making steady progress. You know, we're certainly working our way through it. I think sort of one of the bigger challenges is that, you know, the ATT changes upended about a decade of digital advertising best practices, where there was a lot of consistency between the way that advertisers were measuring their results and the way that advertising was being optimized and delivered, and a lot of transparency across both of those areas. Now, as advertisers are adapting, many folks are using different types of tools, and folks are, you know, of course, optimizing their platforms in different ways.
That lack of overall visibility, and transparency has just made it harder to work through, some of these challenges. We're making good progress, as Jerry shared, and, you know, we're really optimistic about our ability to continue working through it.
Speaking about progress, we're gonna talk a little bit about Maps and Map monetization. Andrew Boone from JMP Securities asks, "Can you share more about your path to monetizing the Map? What is the roadmap to make it easier for smaller advertisers to advertise on the platform? How many active advertisers were on the platform in Q4?
Maybe just stepping back a little bit as we talk about SMBs. You know, at Snap, SMBs make up a relatively small percentage of our overall revenue. In other very large, you know, internet advertising platforms, SMBs are a very large percentage of revenue, somewhere I think between 40% and 60%. We've got a lot of opportunity with small and medium-sized businesses. We've been doing a lot of work to improve, you know, their results on our platform. A lot of the platform policy changes we made to focus on, you know, last-click conversions on our platform, for example, are things that will really benefit SMB advertisers.
We've been doing a lot of work to change our go-to market approach, you know, primarily by segmenting SMBs, so making sure that when they show up on our platform, we have a really relevant and ideally automated path to get them started using our advertising tools. We think that that's going to be really important. You know, as we look at the Map, I think the Map is probably a longer-term opportunity for us in terms of SMB advertising, and there's a lot of headroom just in the immediate term with the advertising products that we already offer today. The bulk of our focus will be on our performance DR platform today and bringing SMBs into that experience.
What we've been doing on the Map side, Jack Brody shared a little bit about this earlier, is really making sure that we have a custom basemap so that we can highlight different places near you or around your friends that you can go and check out. We've been using that customizable basemap to run tests to see if we highlight certain places, will folks visit there, you know, in an incrementally more meaningful and measurable way, we're excited about some of the tests that we're doing there. Of course, one of the things that reduces friction for SMBs and the Snap Map is that folks can really easily promote a Place Profile that already exists.
There isn't that friction in terms of developing new creative for Snap, and I think that that's gonna be a real benefit, as well. Lots of headroom in SMBs, lots of near-term opportunity in terms of the core ad platform. Longer term, we're excited about the tests we've been running on the Map. You know, we got a lot of work to do just in the near term, you know, and that's where our focus is gonna be for now.
Okay, moving to Spotlight monetization. Derek, this is a question for you. John Blackledge from Cowen asks, "When should we expect scaled monetization of newer surfaces like Spotlight?" Evan talked about Map. We'd like to hear more about Spotlight specifically.
Sure. It's a great question. Thanks for asking, and thanks for coming today. I think when we think about Spotlight monetization, you know, one of the important things to take note is that it's not a binary move to turn it on or turn it off. We've shared over the last several quarters that we've been dialing up our testing, and that's allowed us to learn a lot about the ad unit we wanna use, the ad interaction we wanna use, and how to manage ad loads so we have the optimal experience for both the Snapchatter as well as the advertiser. I think what you'll continue to see is us ramping that up. We will have more to share on that actually relatively soon as we engage more with advertisers.
Stay tuned because we do have more to share there soon. I think just importantly, though, we've been balanced with this. We're trying to make sure that we're very focused on the long-term opportunity here. The Spotlight represents an incredible opportunity for our business over the long term. Taking time over the last year or so to grow that business, to deepen the engagement, to bring more Snapchatters into that, to grow the content selection and bring our creator community along, has really allowed us to improve that product and improve the business potential. Being careful with that has been the right long-term thing for Snap and the right long-term thing for that business for us. We are excited to share a little bit more soon, maybe in a context with advertisers.
Thank you. Jerry, we had a couple questions from investors and analysts wanting to understand more about our brand, kind of brand and DR mix and kind of what that looks like. Also, if you could provide kind of any color on advertiser growth, whether unique advertisers or any other metric. These came from Ronald Josey from Citi and Andy Cohen from Soma Equity.
Thanks for the questions.
I guess, first thing, we're pretty happy with our DR growth. Right now it's about 2/3 of our revenue, about 1/3 is brand. I think there's a couple of important things to note in there. One is the presentation I gave is largely about how we're driving the value of the DR business. We're happy with the growth there. I think we'll see more growth over time, but maybe more importantly, we'll see the value of that inventory growing as well. From a growth of advertiser perspective, excuse me. Look, what I hear from advertisers love our demo, they love our reach. They love talking, they love our AR ads. That's like the first part of every conversation I have with an advertiser. It starts with AR.
We're seeing advertisers grow. We're very happy with that growth, and the growth is healthy.
Thank you. A little bit more on the financials. First, this is a question for Evan. It's from Barton Crockett from Rosenblatt. Many of Snap's peers are suggesting that ad trends feel a little better recently. The macro certainly seems surprisingly strong, with full labor markets and strong consumer spending. Is Snap seeing any improvement? Have trends felt a little better since your last earnings? And if not, what is driving the disconnect between an economy that in many respects is strong and an ad trend that for many, like Snap, is soft?
Yeah. Well, as we shared on our earnings call, our general view in terms of, you know, the macro advertiser demand is that it hasn't, you know, been getting a lot worse, but it certainly, you know, hasn't been getting much better either. I do think generally speaking advertiser demand, you know, stabilizing in this environment. I think, you know, the things that you mentioned, you know, higher wages, a strong consumer, these are all elements of the inflationary economy that we're in. I think it's important to remember that things like higher wages are actually a business's cost.
While you're seeing higher wages flow through to higher consumer spending, businesses are also spending a lot more to employ their team members, and that actually impacts, of course, their operating expenses and means that they need to cut back in some areas. When they're experiencing, you know, strong demand from consumers, it's easier to pull back on advertising when you're facing a lot of cost pressure, you know, with things like labor, for example. I think what you mentioned is really characteristic of the in, you know, inflationary economy that we're in and why advertisers are so focused on performance advertising where they can really, you know, see a measurable return on their spend. That's really what's informed our focus there, you know, as Jerry Hunter and the team have shared.
Derek, a question for you. Lloyd Walmsley at UBS, has a question about, 50% top-line growth that we mentioned, I think in our last Analyst Day. At the last Analyst Day, you talked about compounding a 50% top-line growth. What is the right way to think about growth over the next several years, assuming a more stable macro environment?
That's a great question. I think I would step back and say that there are a lot of factors that go into how fast we're gonna grow. I think I would start with how big is the potential to grow. I think if you look at what we presented today, over time, the potential for this business to be many times larger than it is. It comes down to a question of how quickly can we execute on all of this, and how constructive will the operating environment be as we execute. We shared, for example, that in the near term, we expect a lot of upside from the improvement in our DR business and the expansion and growth of our AR advertising offerings. That's a huge amount of opportunity right there.
Expanding into the medium term, you look at the potential for Snapchat+ that's reached $100 million ARR after only six months, our ability to grow into other products like the Snap Map that Evan just talked about earlier, again, that contributes to a business that could be many times bigger than it is today. Over the long term, when we look at the potential for us to be a leader in the next computing platform transition to one based on augmented reality, the size of that market is difficult to put a number on, but there's no question that each time we've had a major computing platform transition, that's created an enormous amount of value and opened up enormous new markets for us to potentially be a leader in. We think the potential is huge.
I think Jerry talked earlier about where we sit in terms of ARPU relative to some of our peers, and that gives you an idea of some of the lowest hanging fruit in terms of our ability to grow the business. What I would say is, as a business, what we're focused on is this: We wanna prioritize the opportunities we're gonna go after. Today you got a really good look at what those priorities are. Two, we wanna fully fund those priorities and make sure that all of our investments are focused on those things. It's-
Sponsored AR or AR advertising, as Rob puts in his question, kind of move from early adopter into more mainstream advertising. What does that evolution look like? Do we think it's, you know, reasonable that revenue contribution from sponsored AR can really reach velocity at Snap?
Thank you so much for the question. We're really excited about the progress we're making in augmented reality. We're really well positioned because Snapchat opens up into the camera and opens up directly into augmented reality experiences. We have a tremendous amount of engagement with AR on our platform every single day, with over 250 million people engaging with AR every single day on average. What we've always found with our business is that engagement is really the most important input to long-term monetization. We've been really focused on building a really solid augmented reality platform that's technically very sophisticated and advanced, that appeals a lot to developers, where we now have over 300,000 developers who are using our augmented reality platform.
All of those things, I think, are really important inputs into the longer term, you know, monetization potential of our AR platform. In addition to that, what we've been working on is extending our AR platform through Camera Kit, so making sure other people can use our technology in their applications and websites, which of course increases the overall audience and consumption of augmented reality. There's some great examples of the way that Samsung has integrated Camera Kit into their devices. I believe they reached about, what, 2.5 billion Lens engagements in their Camera Kit integration in their Galaxy devices.
That's an example of how we're extending AR usage outside of Snapchat, which again is gonna be very important to increasing the overall monetization opportunity. When it comes to actual, you know, helping advertisers engage with AR, one of the most important things that we've seen is that improvements to the creative process, and even things, you know, as simple as planning make a huge difference because AR creative is new for advertisers. They need enough time to develop. We're excited about the potential to then connect the Conversion Lift we see through sponsored AR experiences with our fit and size service through Fit Analytics, which then allows consumers to find the right fit and size for the product and ultimately reduces returns as well.
We've seen a lot of product market fit with fashion items in particular. E-commerce is a massive category for us, and so our primary focus right now when it comes to sponsored AR experiences and then extending into other merchants, apps, and websites is really around fashion, in addition to the more immersive product launches and tentpole moments that we've been powering through our work with Arcadia and many of our third-party agency partners as well.
Okay. In fairness to Rob, there was a little more specificity in the second part of his question. Do you think revenue from AR will be a meaningful contributor to our overall revenue in 2024? What does that timing look like?
Certainly what we aspire to, we're working really hard on that. Just based on the engagement we're seeing in augmented reality, I certainly believe that's a real possibility, and it'll really come down to continuing to prove those consistent results for advertisers. I was really heartened. I was talking to one of our advertising partners recently. They run a really big e-commerce business, and they said that when they got the test results back for their sponsored AR engagement, it was the first time in years they'd had to go back and check the numbers 'cause they were so good, you know, that they didn't seem believable at first, at first glance. That's what's so exciting, to have an advertiser like that who's a serious performance advertiser believe that sponsored augmented reality is such a critical component of their performance marketing strategy.
That's where I think we can really break out of, you know, the one-off product launches or immersive AR experiences and into consistent, repeatable, and scalable results in augmented reality, and that's gonna be what unlocks, that bigger revenue contribution for AR.
Thanks. Maria Ripps from Canaccord actually had an interesting, somewhat related question around AR, but moving beyond the sponsored AR piece. What do you think are the meaningful, the most significant drivers of AR generally? Is it more about leveraging generative AI to support content creation? Is it accelerating advertiser adoption, which I know that you talked about? Is it about AR creation and distribution? Is there any one of these considerations that you would deem more foundational than the others in driving the next phase of overall AR growth?
Wow, what a great question. I think ultimately, as we look to the medium and longer term, what's going to be critically important are the platform tools that we offer. That's why we've invested so heavily in Lens Studio and really extending Lens Studio so people can build much more immersive and interactive lens experiences. Attracting the world's best developers to Lens Studio is gonna be one of the most important inputs we have in continuing to extend our AR business. We already have a huge audience engaging with augmented reality. When folks can access really world-class AR experiences that have been created by our developer partners, that drives that flywheel, where then more people wanna check out our AR experiences on our platform or through our partners using Camera Kit.
More developers, of course, wanna be involved, and that allows us to invest more overall into our platform. I think we've done a lot of work trying to get that flywheel really rolling, and that's why three million lenses have been created by our developer partners. As long as we continue to invest in really world-class AR development tools, I think that will help us further in our broader goals for the platform.
Thanks. Let's move to talk about our content strategy and kind of the creator economy and where we are there. A couple questions. Andrew Boone from JMP and Doug Anmuth from J.P. Morgan both had questions that focused on, you know, really what is our value to creators. Why does a creator post to Snap versus TikTok or Reels? Creation appears to have plateaued at five billion daily snaps. How do we re-accelerate that? Or is it less important than, say, media consumption? Where is that line between kind of supply and demand? Mark Mahaney also asked if there's an optimal balance of content between that provided by your friends or that provided just by the open internet.
Okay. Lot, lot in there. I think maybe taking a step back, as it pertains to our content business and creators, one of the really interesting things that we found, because we reach more than 75% of 13-34-year-olds in over 20 countries, it's pretty likely that a lot of the biggest and most talented creators out there are already using Snapchat today with their friends and family, and they're using it to communicate and often to share content privately with their friends and family because that's been a real strength of Snapchat over the years.
What we've tried to do over time is show creators the value of not only just sharing with their friends and family, but also sharing through Creator Stories where they can build an audience over time with their subscribers and now monetize that audience and also extend their reach with things like Spotlight, where folks can, you know, create new videos and find new subscribers by distributing their most compelling and creative videos in Spotlight and getting distribution that way. As we look at building the creator experience on Snapchat, it's really the relationship between Stories and Spotlight that we think is going to be so powerful.
When creators have a stable source of income because they can create stories, in a really efficient way, they share what's happening in their day, they monetize in between those snaps, but then grow their reach through Spotlight, again, they have this really compelling flywheel where they can grow their audience and then monetize in a more stable and dependable way. When you think about the way that the competition, for example, is positioned, there are services like, you know, YouTube, for example, where the barriers to creation are very high. Making a compelling YouTube video takes a lot of time, and effort.
You know, other services, you know, like some short video services like Reels or TikTok don't provide that reliable distribution to your audience and therefore are less appealing for creators because their distribution is very volatile depending on the quality of the content.
What we've tried to do at Snap is, you know, find the best of both worlds, where we've lowered the bar to creation with Stories so people can just share what's happening throughout their day, build an audience over time, and monetize that audience in a way that, you know, provides much more stable income so that they can fuel their career as a creator. Then use Spotlight as a tool to help those creators grow their overall distribution, you know, by, you know, creating new and engaging videos that reach a new audience for them.
Hopefully that positioning, you know, at least from what I've heard, from creators more recently, has just provided a really compelling opportunity for creators to move beyond talking to their friends and family, which is what they're doing already, to really taking place, you know, taking part in our broader creator ecosystem.
Thanks. Just one follow-up, I think this might be from Doug. How expensive will this be? Levels of investment.
We try to be really thoughtful about. Maybe this is a Derek Andersen question. We try to be really thoughtful about how we've invested in our content business. You know, for example, when we first launched Spotlight, we invested significantly to seed that platform with really compelling content and attract creators to Spotlight to, you know, submit their content, get to know the Spotlight experience, and of course, create a more engaging and interesting content for our community to view. You know, in that way, we sort of bootstrapped Spotlight and began this engagement flywheel that's now serving us very well today. As we talked about on our last earnings call, Spotlight time spent grew 100% year-over-year. We're very excited about the momentum we're seeing.
We think we made the right investments early on, and we've been able to, you know, pare back those investments and more selectively see new content categories where we see a lot of interest from our community, but maybe we don't have the depth of content that we'd like for more niche categories in Spotlight. As it pertains to creator stories, which creators are really enjoying, and as I mentioned, in terms of the ease of the creation, the relationship with their audience over time. In terms of monetization, we've been really thoughtful about using that to open up new inventory pools inside of stories, and to drive incremental revenue for Snap.
I don't know if Derek wants to provide more color there, but we have been, you know, we've tried to be very thoughtful with our investments in terms of our content business.
Yeah. I think the key, and Evan touched on it here, is that these investments have been accretive, but also we win when our creators win. The key here is, you know, growing our community, deepening our engagement, building creator ecosystems that are win-win between us and our creators. I don't think of that investment as a bimodal, one winner, one loser. We've been able to grow this business. We've been able to expand our margins consistently over a long period of time, have very healthy margins in aggregate, and invest in these new products and invest in our creator community. I view that investment as actually an input to growing the scale of our business and one that's been incredibly productive for us.
I think the margin profile as it's improved over the years demonstrates that we can do that profitably.
Okay, a question from the Lightshed Partners team, I think Rich and Brandon. Investors fear... This is for Evan. Investors fear is that you were so focused on an AR-enabled future that you were caught flat-footed with ATT, IDFA, did not focus early enough on direct response advertising, and did not see the engagement headwinds posed by TikTok. Why should investors have faith in the plan you all laid out today?
Thank you for the question.
That was a Rich question. Sounded familiar, yeah. Well, I think taking a step back, Rich is right that what we're trying to do is very difficult. There aren't a lot of independent internet companies that have reached the sort of scale that we benefit from today with 750 million monthly active users. It's certainly been a challenging journey over the last 11 years. You know, when it comes to short video, for example, we launched Spotlight back in 2020 because we wanted to provide an entertaining short video experience to our community, and we were able to leverage all the creation happening in our camera and the conversation between friends to help really kickstart that experience that's paying dividends today. You know, in terms of ATT, we've been concerned that this would be disruptive for some time.
We had lots of open conversations with our investors about it. Sure enough, it has been significantly disruptive to our business. We've been working through that and making investments, you know, to be able to measure and optimize advertising in privacy-safe ways, which is foundationally important to the advertising business we've built over time. From the very beginning, we believed that our, you know, our community needed to be protected in terms of their safety and their privacy, and that protecting their safety and their privacy would lead to better, you know, business results over time.
While we really believe that those changes would be disruptive, as we look ahead towards the future, building an advertising platforms in a privacy-safe way is the only way forward, and that's something that really aligns with our values and the sorts of business that we wanna create today. In short, I would say it is, it is challenging. It is difficult, you know, to build an internet business, certainly with such well-funded, well, you know, and large competitors. I think we have made a lot of significant progress over the past 11 years or so, and I'm excited about, you know, our plans looking forward.
Just a couple more questions, and then we're almost done. Some questions on Snapchat Plus, both from Ron Josey and Maria Ripps. On Snapchat Plus, talk a little bit about the process of bringing some of the newer tools and features to the rest of the service to benefit, you know, from overall greater engagement. Said another way, are the Plus features called on a six to nine month ahead of GA schedule or specific just to Plus subs? How are you thinking about Snapchat Plus over the next couple of years? Do you see Snapchat Plus as primarily a driver of engagement? I guess how do you philosophically think about that in the broader Snapchat service?
Yeah, we're super excited about the progress we're making with Snapchat+. I think most importantly, it's created a totally new place for us to experiment with some of the most passionate and engaged Snapchat users. A lot of the features that we released early on were quite simplistic, things like Chat Wallpapers, but things that improve the overall Snapchat experience for folks who love our experience and our products. I think, you know, as I look at our roadmap over the next year or two, we start launching much more sophisticated and complex features to Snapchat+ subscribers, we measure that impact on engagement overall, there's gonna be a lot of interesting opportunity to sort of graduate features from this experimental phase, you know, Snapchat+ to the broader community.
I would say, you know, look to, you know, our roadmap over the next year or two as we develop more of these, you know, e-experimental and fun products just for the Snapchat Plus community, and then think about how to migrate them, more broadly to the entire Snapchat community over time.
Excellent. One last question. This is from Michael Nathanson of MoffettNathanson and Mark Mahaney again. It's really about AI. It's for Evan. How do you think about AI? Are there opportunities for Snap going forward as it relates to AI? Do you think there's a role for large language models at Snap generally?
Wow. AI is extraordinarily powerful and already powers some of the most important parts of our business. I think the question in particular, the reference to large language models, you know, is more targeted towards recent advancements in conversational artificial intelligence. As a messaging platform, that's certainly something that we're interested in and paying attention to. You know, I don't have anything more to share at this exact moment in time.
Okay. Thank you all so much. We're gonna wrap. If you have additional questions, I know David and team will be around. Thank you. Thank you so much.