Brandon Ross: Thank you.
Operator: And your next question comes from the line of Matthew Cost from Morgan Stanley. Your line is open.
Matthew Cost: Hi, everybody. Thanks for taking the question. I have two. Maybe I’ll just revisit DevEx for a second. So step down to like 21% of bookings in 2Q is down a little bit from 1Q. And given your expectation of $800 million of bookings — or excuse me, of DevEx for the full year, it would imply that as a percentage of bookings in the second half, it would have to step up depending on your bookings assumption, 2 points maybe even 3. So I guess I’m wondering, given that it’s a formula that the DevEx payouts are based on and you have gift cards offsetting some of the — some of what’s happening in the second half. What changed in 2Q and then what’s going to change in the second half to kind of cause that ratio of DevEx payouts to go up? And then I have one follow-up. Thank you.
David Baszucki: So hey, I want to go high level on this. And we believe over time, more and more ways creators earn money on our platform, traditional DevEx, engagement-based payouts, we have advertising coming and potentially subscriptions and other things. So this is going to be a very rich ecosystem. We’ve also highlighted that by Q1 of next year, we expect year-on-year bookings growth to be faster and greater than cost of goods than infra and then head count. That leaves either cash generation or DevEx. And that puts us in this wonderful place to balance really how much cash we generate versus how much we distribute to developers. So at a high level, the more we drive to this, the more opportunity we have for both earnings and DevEx. With that, I’ll kick over to Mike for detail on this.
Michael Guthrie: Yeah. And then just on the quarterly and timing, just look at ’22 as the year, DevEx rates were 23, 22, 22, 20 in the fourth quarter, 24% in the first quarter. So the timing of prepaid cards doesn’t in fact, affect the payout ratios back to 21% this quarter. That number, if you can consistently look over time, it’s moving up and it’s moving in the 22%, 23% range, again, 24% in the first quarter. So it’s going to be in — it’s not entirely formulaic because you do have engagement-based payouts on top of the normal formulaic piece. And to Dave’s point, other things that developers can also participate in over time. So the number will fluctuate 100 basis points, 200 basis points quarter-to-quarter sometimes. And overall, so it implies that we’re going to, again, be a bigger business in the second half than we were in the first half, and it implies a good healthy payout ratio for our developers, which is, ultimately, we’re always investing in the developers.
Matthew Cost: Great. Thank you. And then just on the AI model, there’s a comment in the shareholder letter about creating a multi-model generative AI model. Dave, you were talking in the prepared remarks about how efficient you’re able to be on the AI side. So I guess from a head count and infrastructure perspective, are all the investments, if not in place, at least in the plan in order to create those AI models that you’re going to need to go to the next generation of what the platform is going to be capable of? Or could we conceivably be in a position where as you try to build these tools, it requires maybe more investment and that’s a worthwhile thing to do.
David Baszucki: Yes. I want to highlight that right now, we have a lot of people working on AI internally already. So we have a fairly significant team and it’s a fairly significant team considering, once again, the scale of what we’re doing, we’re running 70 different vertical training models right now. And we’ve built fairly significant tech on the trust and safety side. I don’t want to comment on the future opportunity there. We’re always open to things. But right now, we’re still on track to have our bookings expense, beat our head count expense in Q1 of 2024. And we have a really great sophisticated AI team already in place.
Matthew Cost: Great. Thank you.
Operator: And your next question comes from the line of Omar Dessouky from Bank of America. Your line is open.
Omar Dessouky: Hi. Thanks for taking the question. You launched UGC Limiteds in April. I was wondering if you could update us on your commercial learnings thus far, and I’m particularly curious if you saw a corresponding increase in the mix of subscriptions. And I have a follow-up question.
David Baszucki: Yeah. I’ll tell you, right now, limited UGC is the long-term vision. Right now, it’s a smaller proportion of our marketplace. But — you could — one could say that UGC Limit is more accurately near the economics of the real world as far as scarcity as far as cost of goods sold as far as creating really a rich and vibrant economy. And we do expect ultimately for every cohort, every type of asset to follow this pattern of more similarly mirroring the real world. The pricing on UGC items is 3x, the non-UC or non-limited pricing, which is a really, really good sign. And it’s a good sign that we’re moving in the direction of strong economic theory supporting how we build a virtual goods marketplace. We’ll be rolling out expansions of this over the next two quarters and ultimately, it’s our long-term direction.
Omar Dessouky: Any comment on the effect on Prima subscriptions, because for my understanding, you have to have a premium subscription in order to participate in the trading.
David Baszucki: Yeah. I believe we may be referring to be a creator, and we’re using that most likely more as validation of user account. We’ll have to check on that. I want to validate that. But we’re not requiring subscription necessarily, I think, to buy UGC Limited, and we’ll check with the team on that.
