Twitter Q4 2021 Earnings Call Transcript

Quartr
Provided by Quartr
February 10, 2022

There are 8 speakers on the call.

Operator

Good day, ladies and gentlemen, and welcome to the Twitter 4th Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at the time. I would now like to turn the call over to your host, Christa Bezzinger, VP, Investor Relations. Please go ahead.

Speaker 1

Hi, everyone, and thanks for joining our Q4 earnings conference call. We have our CEO, Parag Agrawal and CFO, Ned Siegel, with us today. We published our shareholder letter on our Investor Relations website And with the SEC about an hour ago, and we hope that you've had a chance to read it. As usual, we'll keep our opening remarks brief so that we can get right to your questions. As a reminder, we will also take questions asked on Twitter.

Speaker 1

So please tweet us at TwitterIR using the cash tag TWTR. During this call, we will make forward looking statements, including statements about our business outlook, strategies and long term goals. These comments are based on our plans, predictions and expectations as of today, which may change over time. Our actual results could differ materially due to a number of risks and uncertainties, including the risk factors in our most recent 10 Q and upcoming 10 ks to be filed with the SEC. Also during this call, we will discuss certain non GAAP financial measures.

Speaker 1

We have reconciled those to the most directly comparable GAAP financial measures in our shareholder letter. These non GAAP measures are not intended to be a substitute for our GAAP results. And finally, this call in its entirety is being webcast from our Investor Relations website and an audio replay will be available on Twitter and on our website in a few hours. And with that, I'd like to turn it over to Parag.

Speaker 2

Hello, everyone. Thanks for joining us today. Since this is my first earnings call, I'll take a step back and talk about where we are as a company. I'll cover 3 things, our strategy, our execution and what this all means for shareholders. I'll start with our I'll start with our strategy.

Speaker 2

Our purpose is to serve the public conversation and Twitter is the best place to find out what's It is unique and it is differentiated. What makes Prita great is, 1, the selection of conversations available on our service, A broad set of people and content on a range of topics that are relevant to the moment. And secondly, how personalized Twitter is to your interest. You can instantly find relevant content across Pinterest from sports to investing and engage with it. The strategy and plan we shared with you about a year ago is meant to continue strengthening these 2 differentiators around personalization and selection.

Speaker 2

And we use these to inform and bring completion to our work across both our consumer and revenue focused teams. Let me discuss a couple of examples. First,

Speaker 3

our work to

Speaker 2

improve personalization Includes us developing a better understanding of customer interest, sometimes through improved machine learning or through building products like followable topics. It also includes us getting better at matching creators and content to consumers. This enables us to create more relevant and personalized products that increase daily utility And also enables us to serve more relevant ads and can be particularly helpful in improving return on ad spend for performance oriented advertisers while also improving the ads experience for our customers. Next, let's talk about selection. I want to describe how several of our new products that we've been iterating on at a rapid cadence fit in.

Speaker 2

I'm talking about spaces, communities, newsletters, professional accounts, creator monetization efforts around Super Follows and tipping and also a test with shopping and commerce. All of these come together to enable an ecosystem of products that enable content creators, Publishers and businesses of all sizes to build and connect with their audience. Together, I believe these will enable more unique content and more content around the long tail of topics. Today, We do well when it comes to topics of broad interest, politics, sports, entertainment, music, but these new features will help expand the range of topics being discussed on Twitter. These will enable opportunities for us to better monetize More relevant and contextual advertising, but more importantly, also enable our customers to monetize.

Speaker 2

Next, I want to talk about execution. Because strategy isn't enough to deliver outcomes we need to execute. In my 1st 10 weeks on the job, I have been focused on improving our execution using 3 key themes: Increased accountability, faster decision making and a focus on doing fewer things in parallel. Let me talk about 2 specific changes we've made. First, I've made strategic organizational changes focused on creating clarity and ownership in the organization.

Speaker 2

This enables faster decision making and increased accountability. We're now operating under a GM model, general manager model, Where cross functional resources for all product development and the budget to support operations are owned by GMs across consumer, revenue and Core Technology, who are responsible for delivering outcomes. 2nd, we are increasing our attention on important data and metrics across the Starting at the top. This enables not just more accountability, but also faster learning. It lets us see how people are using our products, what's working and what isn't and why and adapt based on what we can learn.

Speaker 2

Now let me turn to what this means for shareholders. First, our strategy and our goals 2023 that we shared about a year ago are not changing. What is changing is an increased focus on execution designed to deliver the outcomes our customers and you all expect from us. 2nd, we are investing to deliver growth Given the massive market opportunity we see, we've done reallocations to fund many incremental investments for 2022. And there is also efficiency work underway that will pay off even more over time.

Speaker 2

The goal is to create optionality for the future To either improve margins or invest in high value opportunities, making Twitter an even larger and more profitable company for the long term. I want to close by sharing that I feel a strong urgency to improve our focus and execution, But also a lot of confidence in our strategy and our team. Twitter serves a very important role in the world And we take our responsibility to make it the best it can be very seriously. With that, I want to hand it off to Nick.

Speaker 4

Thanks, Bharat, and hello, everyone. I'd like to cover our results, our outlook and our buyback before turning to your questions. On the results, Q4 closed out a record year for Twitter. Total revenue for the quarter grew 22% year over year to 1,570,000,000 And total revenue for the year grew 37% year over year to $5,080,000,000 nDAU grew 13% year over year to $217,000,000 and U. S.

Speaker 4

MBAU grew $1,000,000 sequentially, both in line with our expectations. During the quarter, we continued to make progress across our portfolio of consumer and revenue products. We iterated on spaces, topics, communities and our onboarding flow, all in service of growing our audience. Performance ads grew faster than ad revenue in Q4, Driven by MAP, our work here is paying off. Over 2,000,000 businesses identified themselves to us since the launch of professional accounts in Q3, Giving us fertile ground to market ad products to a growing base of accounts that are eager to reach their customers on Twitter.

Speaker 4

On the outlook, our strategy remains the same: Invest to drive growth and deliver on our goals of $315,000,000 MDU and $7,500,000,000 or more in total revenue for 2023. Early January, we closed the sale of MoPub, generating proceeds of approximately $1,000,000,000 and enabling us to invest even more resources In Performance Ads, SMB and Commerce, in 2022, we expect revenue to grow in the low to mid-20s range versus 2021, 20% range in 2022 versus 2021, excluding 20 21's one time items, with an upward bias that we see the opportunity to drive faster growth in revenue Or mDAU. Expenses in 2022 are expected to ramp in absolute dollars over the course of the year as we invest, With headcount growth of approximately 20% and a focus on R and D, we're pleased with the decisions we've made to reallocate resources and to make trade off decisions to hold expense growth to these levels. In 2022, we expect mDAU growth to accelerate the U. S.

Speaker 4

And international markets over the course of the year. These expectations are informed by the data that we see, which has been driven by our work to help people successfully create new accounts And reactivate existing accounts to get more value out of Twitter by finding what they're looking for faster. Our work is compounding to deliver results, and we're seeing it in some of the important lead indicators. In Q4, we saw more than 25% year over year increase in the number of people who come to Twitter every day To either create a new account or reactivate an existing account and a 35% year over year increase in daily sign ups. Lastly, let me turn to our new share repurchase plans.

Speaker 4

In Q4, we repurchased $266,000,000 of stock via our Share repurchase program that had been announced in 2020, bringing our total repurchase to $1,180,000,000 to date. I'm excited to share that our Board of Directors has just authorized a new $4,000,000,000 share repurchase program, which is effective immediately and replaces the balance of approximately $819,000,000 from our prior $2,000,000,000 authorization. As part of the new program, we intend to enter into a $2,000,000,000 accelerated share repurchase program and plan to repurchase the remaining $2,000,000,000 over time. We'll continuously evaluate efficient alternatives using cash on hand to on the program, including accessing the capital markets subject to market conditions. In summary, we're pleased with our results, Our strategy and our structure, and we're working hard to deliver improved execution, which will lead to even better results in 2022 and beyond.

Speaker 4

Let's turn to your questions.

Speaker 1

Thank you. Operator, we're ready for questions.

Operator

Our first question comes from Doug Anmuth from JPMorgan. Please go ahead.

Speaker 5

Thanks for taking the questions. You mentioned the strong growth that you're seeing in important lead indicators for future mDAU growth. I'm just curious, could you talk about what that means for retention currently and how you can improve that going forward and how you think about the drivers of mDAU growth and the acceleration through 'twenty two, just beyond the leasing comps? Thank you.

Speaker 2

Thanks for the question. As we've shared, we have line of sight to hitting our goal of $315,000,000 mDAU At the end of 2023. And some of this is informed by the early lead indicators the same. Just to talk about sort of the growth funnel of mBLU as we see it, It's important to think about the very top of the funnel where people show up to Twitter on a daily basis To either create a new account or reactivate an existing account after being away for 30 days. By encouraging people We use put on a logged out basis to log in, we've Created a mechanism where they're able to achieve more daily utility.

Speaker 2

In Q4, as a result of this work, We saw a 25% year on year increase in the very top of the funnel. Further, we've done work to remove friction for As they signed up, through incorporating things like single sign off. As we've done this work, this was part of what drove the 35% Year on year increase in daily sign ups. As you think about all of the users that are coming into Twitter to find value, as you think about the strategy we Earlier around using the great selection of content we have on our service and our ability to create increasingly personalized experiences Through both investments in machine learning and also creating products like Followable Topics, what you see is us sort of play forward a couple of years, we see confidence in us getting to the $315,000,000 NDA you will.

Speaker 6

Thank you, Pera.

Speaker 1

Thanks, Doug. We're ready for the next question, please.

Operator

Our next question comes from Justin Post from Bank of America. Please go ahead.

Speaker 5

Thank you. Maybe one about the quarter and one about big picture revenues. 1st, first on the quarter, can you just talk about how impressions were down and CPE is up? What you were doing within the ad stack to drive that? And then second, maybe this is for Ned.

Speaker 5

It looks like guidance is maybe around $1,000,000,000 appreciate the full year outlook of revenue growth this year, but you need $1,500,000,000 next What are you thinking could help accelerate growth as we work through the next 2 years? Thank you.

Speaker 4

Hey, Justin, thanks for the question. I'll jump in on both of them. First on the ad metrics. So total ad engagements decreased 12% year over year Cost per engagement increased 39%. And there are a variety of things that can cause these to move in one direction or another.

Speaker 4

But in this case, we saw a mix shift to performance ad products, Which, as you know, typically have a higher threshold to be in engagement. At a brand ad, sometimes you just need to see it For it to be an engagement, whereas when there's a call to action to click through to something, the threshold is higher. And so sometimes you can show Great adds to people and they'll be more performance oriented, but ad engagements will go down. And so that's what we saw and that was the driver of it. Similarly, Cost per engagement increased 39%.

Speaker 4

Typically, those lower funnel ads have a higher cost per engagement because of that higher threshold, because It's closer to where the transaction happens, which is why it's such an important part of our roadmap. So those 2 really moved the relationship between them. It was important to think about this quarter in terms of the mix shift that drove each of them. On the second part of your question, so no changes to that $7,500,000,000 or more goal for Next year and if you go back to Parag's comments on DAU, the acceleration that we expect to see over the course This year in the U. S.

Speaker 4

And international is core to the revenue opportunity because it gives us a larger audience to show better ads to, 1. And then 2, this road map that we talked about where we've done a lot of hard work around our performance as we've also delivered excellent growth And brand, which has been our strength historically, is paying off, and we expect to see performance ads grow faster than brand over the course of this year. Those two things together are what we think set us up to grow in the low to mid-20s in terms of revenue growth this year And to hit that $7,500,000,000 or more will go for next year.

Speaker 2

Great. Thank you. Thank you.

Speaker 1

Thanks, Justin. Next question please.

Operator

The next question comes from Brian Nowak. Brian, please go ahead from Morgan Stanley.

Speaker 3

Thanks for taking my question. I have 2, both related to advertising.

Speaker 5

The first one, Praj, can

Speaker 3

you just sort of talk to on

Speaker 4

the Doctor side? Do you think

Speaker 3

you've made the most progress in building out the Doctor product? And then

Speaker 5

where do you still see the key areas you need

Speaker 3

to improve To realize the real 2022, 2023 opportunity. And the second one also on the advertising side, as you think about your 2023 Revenue guide, roughly what percentage of the advertising business

Speaker 2

do you expect to

Speaker 3

be performance within that in your base case? Thanks.

Speaker 2

Thanks for the question. We shared with you our long term goal around mix shift between brand and DRS-fifty. That remains the same, but it's a goal that we have over the long term. As we sort of look at this year, we see the PR business growing So you'll see us make progress towards that goal this year. And I expect that to continue going forward as we approach the fifty-fifty goal over the long term.

Speaker 2

In terms of sort of your question around sort of where we've seen most progress and what we see look across this year, Last year, really, as we shared, our strategy around performance was to initially focus on mobile app promotions, which is app installs and app engagements. And I think we've made progress there with that business growing well. As we sort of look at where we are today, we are now increasing The investments we have to also be on web performance, starting at the top with like new products we shipped in the last few weeks With web traffic, which is a rebrand of the web clicks products we had and increasingly moving more down funnel and the web performance opportunity. We've also, through the sale of Mopa, reallocated a lot of resources towards our efforts across the performance roadmap, but Also into small business focused roadmaps, which will allow us to deliver more value to small businesses through the revamped Quick remote product that we've now been testing. And as all of these come together, it creates opportunities for us to get into commerce.

Speaker 2

So I think that's what you should expect in terms of us Making progress on the performance roadmap.

Speaker 3

Thanks, Brad.

Operator

The next question comes from Ross Sandler from Barclays.

Speaker 3

Hey, Parag, just to follow-up on that last answer. The letter talked about a litany of new Doctor ad formats. And It sounds like e commerce and the new website traffic product is going to be the needle mover in 2022. Am I hearing that correctly that, that will Kicking a lot more than MAP, which has been kind of carrying the day in Doctor thus far. So do you view that as the big opportunity Over the next 2 years.

Speaker 3

And then Ned, a housekeeping question. It looks like cross install was doing about $10,000,000 per quarter and MOPOV was the other kind of $40,000,000 and change. Is that right in terms of how much we should take out of our Add portion versus our licensing portion in terms of taking out those two businesses? Thanks a lot.

Speaker 2

Thanks, Ross. Yes, we have been iterating fast on several of our performance products, Including mobile app promotions, but also now more so on the web performance side. Web traffic, as we think about it, It's not something we consider to be a performance product in terms of how we account for brand versus VR revenue. That being said, It allows us to get increasingly down funnel so that we can deliver end outcomes and conversions to the customers who are starting to use this product. And our strategy for this year includes sort of improvement in mobile app promotion, again increasing investments in more down sort of efforts that Going well beyond app installs.

Speaker 2

And similarly on the web performance side to get more downfellow on conversions leading into Small Businesses and E Commerce Solutions coming across. And on the

Speaker 4

second part of your question, Ross, on the mix, so we haven't broken out $188,000,000 of 20.20 revenue, about $218,000,000 of 2021 revenue, $50,000,000 going towards $60,000,000 over the course of 2021. The details are in the letter. And we said in the past that 2022 would have been between $200,000,000 $250,000,000 of revenue. And just to remind folks what we've talked about here in the past, We did this to reallocate our resources to higher priority work where we think there's a better payoff over time, ads on Twitter. And in doing that, we've already reallocated the people, but the revenue lags the work that the people do.

Speaker 4

We don't expect to make up all of that $200,000,000 to $250,000,000 this year, but we do expect to make up the effective run rate Of mopub plus mopub acquire in 2023, which is why there are no changes to those long term goals that we've laid out.

Speaker 1

Thank you. Next question please.

Operator

The next question comes from Rich Greenfield from Lightyear Partners. Please go ahead.

Speaker 5

Hi. Thanks for taking the question. I guess maybe just first off, it'd be great to understand why you were the right Choice for the Board to appoint CEO. I think maybe helping people understand the key initiatives that you were behind and what drove the Board to make you CEO. Because I still think a lot of people probably listening to this call, they don't know a lot about you historically.

Speaker 5

And so just some historical context would be great. And then just a follow-up for Ned on MDAUs. I think there's a lot of investors that were sort of expecting you to reduce your 2023 guidance. When you think about sort of that reacceleration to 20% growth, which is where you ended sort of or where your Q1 was and where you were back in 2020, What's the single greatest reason why you have such confidence in 20 plus percent growth for the next 2 years?

Speaker 2

Hey, Rich, thanks for the question. Let me take your second question first and then I'll get to the first one. As I said, we have line of sight To our 315,000,000 MDU goal from where we stand today. What gives us this line of sight is the In response to the first question, the information I shared around the top of the funnel, how we are making changes to both customers at the very top of the funnel Showing intent to create an account and to log in and also how we are reducing friction for more and more people to End up creating an account and logging in. That is the information that gives us the Confidence alongside the roadmap we have ahead of us in terms of improving personalization and selection We'll be able to get to the $315,000,000 mDAU.

Speaker 2

Now we've shared these numbers with you in part so that we can understand Why we believe in our ability to hit this and the impact we've seen from this work should be broad based in the U. S. And it's a nice week, which is why we say that our expectation around are seeing an acceleration growth Through the course of this year. To answer your first question,

Speaker 4

I have been at Twitter for over

Speaker 2

a decade now. I've worked I've had the privilege of working on all kinds of initiatives. I started my journey here working on the Ads on bidding ads products, well before the IPO. And I think as a result of that time, I gained a lot Empathy for our advertising customers and a lot of respect for advertising as a business that enables a service like Twitter to be free for all of our customers all around the world. I subsequently spent time working on our consumer initiatives with machine learning efforts To incrementally improve the home timeline, deliver relevance in the home timeline, which allows for us to Start growing MBAUs and accelerate into the low double digits and then sustain that over time.

Speaker 2

I've seen in the most recent phase of my time here as the CTO, I've been on the leadership team involved in all decisions whether they be around technology, but also around product policy, how we do resource allocation, how we reorganize ourselves. And I think that's given me a lot of perspective around both sort of our customers outside the company, but Also the internal for the company and how to drive constant improvement within the company so that we can deliver great

Speaker 1

Thank you. And we'll take the next question from Twitter. Thanks, Rich. We're going to take the next question from Twitter. This is from the account of Damien0x.

Speaker 1

And Damian asks, will you touch on Web3 incorporation and also the amount of new Twitter Blue subscribers?

Speaker 2

Thanks, Damian, for asking your question on Twitter. On Web 3, I think it's Very interesting what you've seen. I think it's important as we sort of look at the opportunity ahead of us to think about the secular trends all around us. If you think about the broader crypto ecosystem, which includes cryptocurrencies, the work in several DeFi projects Or even broader, all of the decentralized technologies and applications being built on top of the various blockchains, what you notice It's this incredible amount of developer energy. Developer energy which is interested in solving problems.

Speaker 2

And what that does, it creates opportunities for a service like ours, which is operating at scale with a lot of customers And this happens to be the place where this entire ecosystem goes to find out what's happening across the ecosystem So really, we connected to sort of how this secular trend is evolving over time. We have a small internal team which is looking at opportunities In terms of how we might harness this change towards benefiting creators on our service, towards benefiting all consumers on Twitter, And we are excited about all the opportunities that creates. On your second question around Twitter Blue, It's been a strong journey for us as we've sort of added more features to Crude and Bloom to give them more value over time. As we've expanded the number of markets this product is available in now in Q4, getting into Both U. S.

Speaker 2

And New Zealand, in addition to the Canada and Australia markets that we started in the earlier part of the year, what we've seen is People use the product, what we've seen is that sort of most heavy users of the product is where this is targeted and we've seen A strong response from them. That being said, it's a very small part of our revenue today. We're really excited about the future roadmap. It's not critical to how we deliver the $7,500,000,000 of revenue in 2023, but creates massive opportunities for us as we look beyond

Speaker 1

Great. Thank you. And we're ready for the next question please, operator.

Operator

Thank you. So we have a question from Eric Sheridan from Goldman Sachs. Please go ahead.

Speaker 7

Thanks for taking the question. First, congrats on the new role, Parag, maybe following up on Rich's question first, Parag, when you look back over the last 2 to 5 years, what do you think Twitter might have done differently? Or what Should we think in terms of your strategic vision for where you might want to do things differently looking forward from where the strategy was in the last Few years. And then maybe on the investment and the margin cadence, with the strong level of investments that you're calling out Ned in 2022, should investors think about whether in the middle innings of an investment cycle versus a late earnings of an investment cycle for Twitter against your goals to position for the long term? Thanks.

Speaker 2

Thanks for the question, Eric. I've been at Credit for 10 years, as I mentioned, and I've been on the leadership team over the last 4 years. One of the things we've constantly been focused on is how we go faster, how we can ship more products to our customers in order to give them more value. As I've taken on this role, my focus has been on improving our execution. I bring a strong amount of urgency to this growth.

Speaker 2

We're very focused on metrics in observing them In reacting to them and being able to understand what's working for our customers, what's not working for our customers And to use that understanding to constantly improve our products. I also bring an increased focus on accountability across the company. It's evidenced by the changes we've made around the GM structure that we're now operating under and how we are driving more accountability at the leadership level, But also as it cascades below that. So what you should expect from us is constantly improving execution, Constant focus in delivering outcomes for our customers and for our shareholders and for you all to be holding accountable for delivering these results.

Speaker 4

Eric, on the second part of your question, I'll step back from the baseball analogy around investment, but share that we still feel like it's really early for us both in terms of The audience opportunity and that those lead indicators that we shared, we won 35% growth in sign ups is Something you're able to see in a quarter that demonstrates what's possible to us and that we're just getting more at bat in terms of helping people Find what they're looking for on Twitter. That's a big part of what gives us the optimism that we're early there. And then when you look on the other side, it's that $150,000,000,000 and growing market for digital ads outside of search outside of China as with a business that's 3% of that Jess will mark it. We still feel like it's really early there too. I'd go back to Parag's opening comments where he talked about creating optionality by reallocating resources, by selling MoPub, By being thoughtful about where we put our dollars to work and putting as much of it behind as few arrows as possible.

Speaker 4

That's all designed to make sure that we have choice over time so that when we do see opportunities to invest against those 2 big addressable markets that we can do so while also creating opportunity To deliver margin over time as well. And with that in mind, of course, there's no change to the margin potential for the company that we've talked about in the past either.

Speaker 7

Thanks so much.

Speaker 1

Thank you. Next question please.

Operator

Next question comes from Mahaney from Evercore. Please go ahead.

Speaker 6

I just want to ask about that 35% growth in sign ups in Can you just provide some more context around that? I'd assume that's the fastest growth you've seen on that particular metric in quite some time. And then Do you have any read into the whatever the character of that of those people that are signing up? Are there people who were on Twitter before and have come back, people that are brand new to the platform? Any color you have on how different that 35% Those people are then the current users.

Speaker 6

Thank you.

Speaker 4

Thanks, Mark. So a couple of thoughts there. First is These are sign ups which could be somebody who's creating a new account, a research analyst who wants to go through the sign up flow perhaps. But typically, we think these are people who are new to Twitter, where this is a new opportunity for us to show somebody what Twitter is all about. That 25% number that we shared, which is sign ups plus reactivations is going to be a better way to look at people who are giving us a second chance and haven't been on It's clear enough in the past where they've made it part of their daily habit.

Speaker 4

When we think about some of the things that are driving this, single sign on has been A big driver. So when people don't have to remember or create a new password, it's been a big help. So 40% of the accounts that were created in Q4 We're created using single sign on. It's just a great example of reducing friction. Parag also talked about where We're encouraging people to log in when they keep coming back to Twitter because somebody sends them a tweet because they saw something on another platform that had come from Twitter.

Speaker 4

We're encouraging them to log in because we believe we can show them better tweets and better ads If they do so. These are compounding in terms of sign ups and reactivation. As we think about the character, I hope these are all about standing These folks. But when we joking aside, when we look at them, they look a lot like the people who have come to Twitter in the past. There's just more of them.

Speaker 4

And although we haven't disclosed this number in the past, it did feel like it was a big enough move from what we've seen in the past that it was important to share we think our work gives us confidence about the progress we can deliver over the course of this year.

Speaker 6

Thank you, Ned.

Speaker 1

Thank you. Next question please.

Operator

We have a question from Deepak Vannan from Wolfe Research. Please go ahead.

Speaker 3

Thanks. This is Zach on for Deepak. First, another one on Doctor. Do you have the sufficient targeting signals from both users and other 3P sources to get better in areas like commerce over the long term? Or is this an area that you plan to invest behind over the next couple of years?

Speaker 3

And then second, Can you just provide any color on the brand spend trends in the Q4? Were there any kind of verticals or categories to call out that saw softness either due to Omicron or Supply chain or labor, and any kind of trends you're seeing so far in the Q1? Thanks.

Speaker 2

Thanks for the question. I'll take the first part and let Nick take the second part. In terms of Doctor, I think this in my opening comments, I spoke about a strategy around personalization. I spoke about how we are investing in Machine learning capabilities that allow us to understand customer interest at us, but we're also building products which allow people to tell us what they're interested in, For example, by following topics. As you think about our understanding sort of this customer intent, it not only helps us improve Consumer product, but it also allows us to channel and use that understanding of customer intent or interest Into creating more relevant advertising and more relevant experiences, including getting down for underperformance advertising And the commerce.

Speaker 2

So that's actually going to be a part of our strategy to be able to really push performance when it comes to Doctor be able to get into more commerce oriented businesses.

Speaker 4

On the second part of your question, Zach, around Q4 trends and Q1. So Q4 got off to a strong start With a big event calendar all around the year all around the world and COVID's impact being less If you think about the October, November time frame, as the quarter went on, we saw The companies who want to show up around the holiday season ramp up quickly, And Twitter was there to help deliver for them when that happened. If you think about where we came in from a revenue perspective relative to the range that we provided, I guess I'd point out a couple of things. The first is FX impacted us by about a point. And the second is that if we look at that That we saw at the beginning of the holiday season in the U.

Speaker 4

S, it just didn't maintain the same pace in the last couple of weeks of the quarter to hit the high end of the Guidance, James. But we're pleased with where we came out. And if we look at the first part of this quarter, which, of course, informs the guidance that we provided today For the quarter and the outlook that we shared for the year, anecdotally, it did feel like advertisers got off to an earlier start Than what we've seen in the recent past, whether it's in planning and thinking about where and how they want to show up around product launches and big events All around the world from the Olympics to the Super Bowl to award shows and other things, and also in executing on those campaigns early in the quarter, sometimes hasn't been the case for one reason or another. So we feel like we're off to a good start.

Speaker 1

Thank you. Thank you. Next question please.

Operator

We have a question from Dan Salmon from BMO Capital Markets. Please go ahead.

Speaker 5

Good morning, everyone. Thank you for taking the question. I've got a few more about your new ad products, Parag. First, just maybe just jump back, you mentioned all of the new ones announced in January. We'll maybe Come back and get a little bit more feedback on those later.

Speaker 5

But earlier in the year, you launched Carousel Ads, ClickID. We'd just love to hear any feedback from that. And then second, you mentioned SMB being sort of the important next frontier for ad product development. I think that One of the themes there. Praful, could you just spend a little bit more time on Quick Promote products as well as professional accounts And in particular, what they solve and how you see them working together more?

Speaker 5

That would be great. Thank you.

Speaker 2

Thanks for the question. We are really excited about the SMB opportunity ahead of us. We relaunched that Quick Promote product, and we're Sort of able to make it easy for people to use this product to drive up revenue from that line. Separately, to talk about sort of how Twitter for Professionals or sort of these professional accounts that we've shipped sort of Connected to that strategy, we've always had a lot of businesses on Twitter with commercial intent and this derived value organically, Except that we've never identified them to be able to tailor amazing experiences for them to drive them into the ad seller. As we sort of started shipping these products which provide them value for creating and deriving value in their organic experiences, we're also now able to channel them and funnel them into sort of products which are oriented for businesses, including our advertising products.

Speaker 2

So if you think about sort of that strategy coming together with a performance oriented advertising strategy inclusive of mobile app promotions, Getting into web performance and if you see sort of how that alongside a product offering for Quick Promote Comes together, we have this incredible top of funnel for these products coming from our professional accounts oriented experiences that we're creating.

Speaker 4

And then

Speaker 5

just any color on QuickID Care SOLAPS

Speaker 4

Traction? Sure, Dan. It's early for those products which we talked about last year, Twitter Click ID And the Carousel product and some of the other formats that you described, I think if you just step back From any one of them individually and you thought about them collectively, we're clearly moving faster in rolling out products to help advertisers of all sizes. We're clearly working hard to adapt to the ever evolving ads ecosystem and changes, whether they're from regulators or operating Makers or from advertisers and how they want

Speaker 2

to show up. So the ones you mentioned

Speaker 4

are just great examples, but you're going to see a playable ads format. You're going to see us Continue to make improvements to the website traffic ads format, which we just rolled out earlier in January And some other things over the course of this year that we're excited about. So I hope you'll continue to see more new products from us over the course of this year. Great. Thank you, both.

Speaker 4

Very helpful.

Speaker 1

Thank you. And I think we have time for just one last

Operator

We have a question from Lloyd Walmsley from UBS. Please go ahead.

Speaker 3

Thanks for squeezing me in. 2, if I can. First, just following up on, I guess, Mark's question on mDAU. Can you just unpack the funnel

Speaker 4

a little bit More, I mean, clearly

Speaker 3

it sounds positive. You're seeing more top of funnel traffic and it sounds like conversion to sign ups is higher. But how does that then that maybe that Cohort behavior changed. Do the new sign ups generally see usage peak when they sign up and then fall? Does it Build over time, like how should that flow into reported MDAUs?

Speaker 3

And then I guess the second one on OpEx. Ned, last quarter, I think you said even if you didn't add headcount, just annualizing last year's headcount would grow into kind of mid 20s. And you said your plan this year is to grow 20%, but you're still kind of in that mid-twenty percent cost Growth range. So were the comments last quarter just conservative or are there new areas of efficiency? And I guess at a high level, How do you get margins to your long term targets from these levels given the level of investment you guys are making?

Speaker 2

Well, I'll

Speaker 4

take the first part on mDAU and then turn to Parag. On the audience numbers, So this is a level of disclosure that we haven't provided in the past, and we shared it because we thought it was an important lead indicator as we enter a big year for us in terms of NDA UCOF relative to Those goals, if you look at the makeup of the people who are creating accounts, The people who are coming back to Twitter to give us another shot, they look a lot like the other couple 100,000,000 people We've been using Twitter every day. And rather than break down the funnel and think about where We've got the most opportunity to just there are opportunities for us throughout the funnel to continue to do better, to show people what Twitter is all about. We've made a lot of progress in reducing friction at sign up and in the onboarding flow, asking people For specific interest, so we can recommend accounts and topics to them. We now have over 280,000,000 accounts that follow a topic.

Speaker 4

But We also are getting better and better at showing people notifications that are relevant to them to bring them back to Twitter and encouraging them to log in When they haven't been logged in but have been benefiting from Twitter, so we can show them better tweets and better ads. All this stuff is paying off. And so I wouldn't want you to focus too much on one Area or another around the funnel because we see opportunity throughout.

Speaker 2

Let me take the margin question. As we've said, our thinking around long term margin has not changed. But this year, we're not optimizing for margin expansion. Right now, we want to make sure that we're investing appropriately for growth given the massive market opportunity we see. But we want to do so efficiently.

Speaker 2

We've shown how we are reallocating resources by having sold MOBAP into sort of higher value opportunities around Performance and Small Businesses. We've also been looking for other efficiencies across the business, including sort of our infrastructure, Whereas we sort of make we do the work to drive optimization, some of it pays off this year, but even more so in the coming years. As we've looked for these efficiencies and done the work, we've been able to make incremental investments that we wanted to make for this year in 2020 2, by staying within the same range that we told you 3 months ago in terms of how we'd grow. And I think that's evidence around sort of how we're trying to be more efficient. And all of this work is in pursuit of increased optionality

Speaker 1

I'm sorry. Please go ahead, Katie.

Operator

Thank you. I'll now hand the call back to the management team for any closing remarks.

Speaker 4

All right. Thank you. We appreciate your interest in Twitter. We look forward to speaking with you next

Operator

Ladies and gentlemen, thank you for participating in today's program. This concludes the program. You may all disconnect. Have a good day, everyone.

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Earnings Conference Call
Twitter Q4 2021
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