Eric Sheridan: Thanks so much for taking the question. Maybe if I can pivot to the cost side of the equation and just try to tie a few loose ends together. So it sounds like Evan earlier said, there’s obviously some key areas to invest in, that will act as a headwind to margins, even as you exit ’22 and go into ’23. You’ve obviously done a cost cutting initiative coming out of ’22. And then, there’s elements of the business would improve on the back of the DR initiatives, as we move through 2023. Can we get a little more granular on some of the headwinds versus the tail winds and the cost structure and tying it back to how we should be thinking about leverage in the business when you think about your investment cadence versus sort of implementation of the cost cutting initiative, and then an improved revenue profile was removed through 23? Thanks so much.
Derek Andersen: Hey, Eric. It’s Derek speaking. I can take that one. I think to start off, when we approach the reprioritization, that we announced near the end of Q3, where we shared that we were going to be removing $500 million from the cash cost structure. I think it’s important to just understand that we were very thoughtful in our approach about that, because we really wanted to achieve two goals. One is, we wanted to make sure that we were clearly building a path to adjusted EBITDA profitability and positive free cash flow, even at lower growth rates. But we also wanted to make sure that each of our three strategic priorities were fully funded. So that we were fully funding the efforts to continue to grow our community and deepen engagement, the work that we’re doing to improve our DR platform in order to accelerate revenue growth, as well as the efforts around diversifying our revenue growth just see with Snapchat plus.
And then also, of course, being able to continue to invest in the long-term AR business. And so what you can see as we’ve been able to make sure that we have a cost structure that fully funds those three priorities, but we’re still on track to deliver all of the $500 million in cost reduction. So the first 50 million there is coming out of fixed content reductions. And you should see that fully reflected in the fixed component of the content costs in Q1. And similarly, on the cash operating cost structure, the objective there was to remove $450 million. And we were continuing to wind down various operations through the course of Q4. So you’ll see the full benefit of that cost reduction again, in Q1, just as we anticipated. For example, our actual headcount numbers are — at the end of the current quarter are down 20%, from the peak in Q2.
So it gives you a sense of the progress we’ve made and managing down the cost structure and getting ourselves to the prioritized cost structure. So then going forward, first, it’s like, we remain long-term oriented when we’re thinking about the investments in the business. So there are going to be things that are incredibly compelling for us to invest in, in the business. And for example, we just made the investment in creator stories, obviously, a very compelling investment, immediately resulting in an 8% increase in inventory. So there are going to be investments like that along the way that are incredibly compelling. What we have to do is remain one very disciplined on the aggregate cost structure, and very focused on prioritizing our investments to make sure that we maintain that path to adjusted EBITDA profitability and consistent free cash flow generation.
