Twitter, Inc. (delisted)
Q3 2016 Earnings Call Transcript

Published: 27 Oct 2016

[Operator:]

Good day, ladies and gentlemen, and welcome to the Twitter Third Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will follow at that time. I would now like to turn the call over to your host, Krista Bessinger, Senior Director, Investor Relations. Please go ahead.

[Krista Bessinger:]

Good morning, everyone, and thanks for joining our Q3 earnings conference call. We have with us today our CEO, Jack Dorsey; COO, Adam Bain; and CFO, Anthony Noto. We hope you've had a chance to read our shareholder letter published on our Investor Relations website a little while ago. Like last quarter, we'll begin with just a few prepared remarks before opening the call directly to your questions. During the Q&A, we'll take questions asked via Twitter and additional questions from conference call participants. Questions submitted via Twitter should be directed to @TwitterIR using the hashtag TWTR. We'd also like to remind everyone that we will be making forward-looking statements on this call such as our outlook for Q4 and the full year 2016 and our operational plans and strategies. Actual results could differ materially from those contemplated by our forward-looking statements and our quarter results should not be considered as an indication of future performance. Please take a look at our filings with the SEC for discussion of the factors that may cause our results to differ materially. The forward-looking statements on this call are based on information available to us as of today's date and we disclaim any obligation to update any forward-looking statements except as required by law. Also, during this call, we will discuss certain non-GAAP financial measures. Reconciliation to the most directly comparable GAAP financial measures are included 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. An audio replay of this call will also be available via Twitter and on our website in a few hours. And with that, I would like to turn it over to Jack.

[Jack Dorsey:]

Thanks, Krista. Hi, everyone, and thank you for joining us. Before I talk about our results and strategy, I want to address the recent market speculation quickly by saying that our board is committed to maximizing long-term shareholder value. I don't plan to comment any further on this topic. We're seeing accelerating growth in our audience engagement metrics and we set a goal of driving towards GAAP profitability in 2017. Last year, we set out to do three things

[Krista Bessinger:]

Great. Operator, we're ready to go ahead and poll for questions.

[Operator:]

Thank you.

[Krista Bessinger:]

Okay, great. It looks like our first question comes from Ross Sandler at Deutsche Bank. Ross, can you please go ahead?

[Ross Sandler:]

Yeah, sure. Thanks, guys. Jack, in the letter you mentioned that live video is driving solid engagement with light Twitter users, so can you just talk about the strategy there? Is the goal to bring on more premium content, like the NFL or Bloomberg TV? Or kind of balance that with UGC? And what is the conversion rate of these new folks who are getting the live video experience to regular Twitter users look like? And then the second question, I guess for Anthony or for Adam, the owned and operated revenue growth was up 9%, and I think you guys said in the letter you're reducing the ad load again in the quarter. You're also seeing DAUs accelerate. So if we kind of look at 2017, is this the year where we'll start to see a reacceleration in owned and operated? And is 4Q likely to be the trough quarter for that line? Any color there would be great. Thanks guys.

[Krista Bessinger:]

So, Ross, thanks for the question. I'll just let you know we're having a little bit of a hard time with some technical difficulties hearing the full part of – your full question. I think we understood the first part about NFL, so we'll go ahead and have Anthony answer that, and in the meantime, we'll try to fix the audio so that we can actually hear the latter part of your question. But we'll probably ask you to restate it.

[Anthony Noto:]

Thanks, Ross, and good morning, everyone. Our live initiative is off to a very promising start. Our number one objective when we launched in September behind the NFL and then all of the great programming that followed that was quality, and we couldn't be more pleased with the feedback on the live experience on Twitter. Our team did a great job building a product that can scale to many millions of users in three short months. In addition to building the product for our Twitter platforms, we also built it for a logged out experience on a number of our partners, including web syndication partners, Yahoo!, AOL, Sports Illustrated and SBNation, in addition to connect to TV partners Apple, Amazon and Microsoft. Another significant technical accomplishment was that we developed and launched dynamic ad insertion. That's very important, given the auction dynamics of our overall advertising marketplace, to be able to deliver specific targeted ads to individual people, as opposed to everyone getting the same ad, and we've seen great response there as well. All of that said, we're at the beginning of the beginning as it relates to our product enhancements, and we have a robust roadmap for easier discovery, more engagement and more conversation. As it relates to the NFL in particular, we're very pleased with not only the quality of the product, the feedback that we've gotten from our audience, but also the metrics that we achieved. At the highest level, we had forecasted a range of 1 million to 3 million reach. As measured by unique viewers for all five games, we are over 2 million for those (7

[Krista Bessinger:]

Great. Thank you, Anthony. So we're going to need to just pause for a second while we switch over to the secondary communications line. If everybody on the line can just hold for a minute, we'll be right back. So I think we're back on with the secondary line. Ross, could you please restate the second part of your question?

[Ross Sandler:]

Yes, the second question. Does this sound better?

[Krista Bessinger:]

Yeah, I think you're coming through clearly. Go ahead.

[Ross Sandler:]

Your owned and operated revenue was up 9% and reducing your ad book, while (10

[Anthony Noto:]

Ross, I think the heart of your question is you're seeing an acceleration in daily active users, an acceleration in impressions growth and acceleration in time spent, when will that translate into revenue growth and how do we think about revenue growth in the future in addition to the fact that the auction dynamics are improving with ad load being down. What I'd say is we're not going to give an outlook for revenue growth for the fourth quarter and we can come back to that later in the conference call or for 2017. What I will say is that we're very encouraged by the product changes driving the acceleration in the last two quarters in audience and engagement. We believe those product changes will continue to contribute to growth in audience and engagement. They're not just one-time events. And when you see accelerating growth in audience and then in inventory, typically you'll see an improvement in revenue because that normally bodes well for ROI. So let me flip over to Adam to talk about the benefits that we're seeing in audience and impressions growth and how we go to market and see that translate into faster revenue growth in the future.

[Adam Bain:]

Yeah, hi, Ross. So as Anthony mentioned, marketers are looking for audience growth and audience engagements sustained over time. We've now had two quarters of that kind of growth and it's accelerating. That should help us greatly in our conversations that we're having with marketers. It's also really important to have great ad products as well. We've put out some ads products into the marketplace that are working in terms of some of the early response that we've seen from Madison Avenue. The video products in particular both the live streaming strategy that we have has been performing extremely well. The packages sold very fast, for example, in the NFL deal (12

[Krista Bessinger:]

Okay. Thank you. So we will take the next question from Heath Terry at Goldman Sachs. Heath, please go ahead.

[Heath Terry:]

Great. Thanks. I was just wondering if you could give us a sense about how you're thinking about user growth next year. Obviously, this was a year that benefited from political, Olympics, the addition of live. I realize you still have a lot in front of you for 2016, but to the extent that you would have investors think about the impact that, that had on this year and what it means for user growth next year, that would be helpful.

[Anthony Noto:]

Sure. So I think the first part of your question, Heath, is did the Olympics and the election drive your acceleration and metrics? So what I would say is no. The Olympics were obviously on air for 17 days and were talked about on Twitter, but there's less than 100,000 DAU over that 17-day time period using a seven-day average that we could attribute to the Olympics, so it's pretty small. As it relates to the election, obviously, it generates a lot of conversation on Twitter. Politics and news generate conversations on Twitter every day. There's no noticeable impact that we've seen from the elections. I would note that we saw an acceleration in Q2 in our metrics as well as Q3 where there's a lot less election activity. I would note that in the third quarter we did benefit meaningfully on the particular days that we had the live debates in the integrated product of that curated timeline of the conversations and commentary that are happening around the debates on those days. We did have record DAUs on a couple of days which is a great accomplishment. But the massive size of our DAUs and the fact that we average them over 90 days, we really need to have a debate every day on Twitter for it to meaningfully improve the metrics on a quarterly basis and that's where we're headed. We want to really leverage this nationally and globally recognized content on live to build awareness of underserved so that we do have a dependable place to find live content. So we're very encouraged by those events, but for them to have an impact over a 90-day period our live strategy has to be more fully rolled out. And we're on the process of doing that. And so the product changes were the key drivers. The product changes to the core Twitter application were the key drivers for their growth and the acceleration of DAUs as well as impressions and the time spent. As we look forward, we'll give you perspectives as we report, but we're not going to be in the business of forecasting growth other than to say we're encouraged by the product changes. We think they'll impact more than one quarter given the fact that they are changes that affect all of the users that are currently on the platform and those that come every day.

[Heath Terry:]

Great. Thanks, Anthony.

[Krista Bessinger:]

Thank you. And the next question comes from Brian Wieser at Pivotal Research.

[Brian W. Wieser:]

Well, thanks for taking the question. I was wondering could you talk a little bit about churn metrics and how that might have been trending during the quarter. And maybe separately, regarding advertising spend or spending per advertiser, I was wondering if you could talk about some of the dynamics going on there. I know you provide some commentary around customers using DCM, so I'm certainly also wondering to what degree that customers who are using DCM might be having – expressing different spending trends versus other customers? Thank you.

[Anthony Noto:]

Sure. As it relates to our monthly active user growth, which is what we typically refer to when we talk about retention, et cetera, we've seen growth in monthly active users from both strong top of the fall contribution as well as retention contributing. So both are contributing in the quarter. From our perspective – we've talked about on the call in the past that we are seeing a mix shift from big large branded advertisers, which have a lot higher spending per advertiser than SMB advertisers that have much smaller, and as our mix shift has gone from that large advertisers to the smaller advertisers, there has been pressure on ARPU. Within each individual channel, there are different trends in that, but that's the overall trend as it relates to ARPU and your specific question. On a quarter-over-quarter basis, we did see an improvement despite that trend, in ARPU.

[Adam Bain:]

And, Brian, I can take your DCM question. So the DCM work is starting to take shape. As we mentioned in the letter, we're seeing $75 million now annual run rate of ads that are being tracked and reported through DCM. In Q4, we've already moved to a public beta for all the brand engagement objectives, and we're going to continue our private beta for direct response customers and performance-based marketers who can use the desktop data as a proxy for all the mobile conversions. Obviously, DCM is an important step for us, as we're helping marketers better understand how Twitter ads are impacting their own conversion rates, and also the net effect of cross-device conversions overall. The other part of our DoubleClick deal is DBM, the buying part, and so as we mentioned in the letter, we've already started our alpha of DoubleClick Bid Manager the first few weeks into Q4. So we have a live campaign from advertisers who are buying Twitter through DBM.

[Brian W. Wieser:]

Okay, great. But any – specifically you can offer in terms of growth in spending from those customers who are using products (19

[Adam Bain:]

So it's really early days overall. We're encouraged by what we've seen so far in terms of the track spend and which way that's headed but again, it's still at a beta.

[Brian W. Wieser:]

Okay. Thank you very much.

[Krista Bessinger:]

Thank you. And the next question comes from Eric Sheridan at UBS.

[Eric J. Sheridan:]

Thanks for taking the questions. Maybe two. For Anthony, the commentary in the letter about refocusing around certain initiatives, wanted to know if we can get a little more granularity or color there about where investments might be going up, where you might be pulling back in certain areas around the business. So also the follow-up would be, so we can get a little bit better sense of what that might mean for the cost structure of the business as you move out of 2016 into 2017. Thanks so much.

[Anthony Noto:]

Sure. First, I think it's really important for everyone to understand, we are focused on driving towards GAAP profitability in 2017. We are cutting costs that are non-core to our key objectives of driving audience engagement and monetization growth. It's also, I think, critical to understand that we're fully funding our most important initiatives that are driving those metrics and that are doing that today. As it relates to the broader objective, once a company gets to our scale and growth, it's appropriate to drive long-term margins and GAAP profitability. We're very proud of the fact that we've already generated over $330 million of free cash flow in 2016, and that's defined as operating cash flow less CapEx. And while that's an important milestone to achieve for investor appeal, we think GAAP profitability is also an important milestone to achieve for investor appeal, and we're focused on increasing the value for our investors and future investors. As it relates to what it means to the cost structure leaving 2017, first, I think I would point out that the financial impact of restructuring in 2016 will be small. The bulk of the cost savings will be in 2017. We've talked to you in the past about our long-term adjusted EBITDA margins as a percent of net revenue being 40% to 45%. We remain confident in that objective, and I want to give you a quick snapshot of where we are today and how that will change as we go into 2017. So in the most recent quarter, Q3 2016, our G&A expenses on a net revenue basis were 7.6% of net revenue. So that's revenue ex-tax, 7.6%. Our target that we've shared with you in the past is 7% to 9%. So we're already at the low end of the G&A expenses and quite favorably to our competitive peers, many of which that have magnitudes greater in revenue. On research and development, it's a core investment area of the company. We expect that line to continue to grow with revenue. It's the engine of growth, our engineering part design team is critical to driving the product changes that are resulting in audience engagement and audience metrics increasing. That was 15.4% of revenue on an ex-tax basis and our long-term targets of 11% to 15%. Any changes that you see in that line are going to be from non-core areas as we move forward and we'll keep funding the most important areas. Sales and marketing, as we mentioned in our letter, was the largest area impacted by the restructuring that we announced. That was 30.7% of revenue ex-tax and our goal is to be 22% to 26% and we have a path to get there on the back of these changes and other initiatives as we move over time. And then last, cost of revenue was 29.6% of revenue ex-tax and our goal is to be 19% to 23% there and we're aggressively pursuing and evaluating a host of different options both in our owned and operated data centers as well as partnerships with others. We've utilized third party cloud computing. It's been very efficient for us. We'll continue to look at those options to have that line item improve as well. So we have a framework that we've talked about in the past. Today, we'll make a meaningful change towards that, but the overall team's goal of driving towards GAAP profitability in 2017 will bring it to fruition.

[Eric J. Sheridan:]

Thanks for the color, Anthony.

[Krista Bessinger:]

Thanks. And we will take the next question from Twitter. It comes from the account of Victor Anthony at Axiom Capital, and he asks, which product improvements led to the positive impact on revenue growth, engagement and monetization?

[Jack Dorsey:]

Thanks, Anthony. So a lot of the improvements have been really focused in two areas

[Krista Bessinger:]

Thank you. And the next question comes from Anthony DiClemente at Nomura.

[Anthony DiClemente:]

Thanks for taking my questions, and good morning. Anthony, you gave us the metrics on NFL viewership, but can you quantify how much live video contributed in the quarter in terms of revenue, please? Really just trying to understand if your live video streaming events in Q4 is what's driving the big implied revenue decline in Q4 versus Q3. And then on DAUs, you gave us the growth rate, but can you give us the number of DAUs in the quarter? That would be great. And then any guidance on MAUs or DAUs for next quarter would also be great, even just directionally. Will they be up? And then for Jack, bigger picture – I just heard what you said about the incremental improvements. What is the product roadmap from here going forward other than live video? I just wonder, are there any plans for big revolutionary product changes? If it's really just live video and live streaming, I also wonder the environment's more competitive for premium content. Won't you have to spend more on sports rights acquisition and premium video rights in order to keep this going? Thank you very much.

[Anthony Noto:]

Sure. Thank you, Anthony. It terms of live revenue in the quarter, we had two NFL games in the quarter in Q3, so it's 20% of the overall package that we have. And so there was some revenue contribution, but it was small relative to the total revenue. And we launched the rest of our programming schedule on the back of that with much more of that being launched and monetized in Q4. I will tell you and I alluded to previously, we're obviously very pleased with the response that we've had from advertisers on live advertising, but it also benefits everything else that we do in advertising because part of overall package that we're bringing to bear with advertisers. And so we do bundled packages, amplify and other types of packaged sales. In terms of fourth quarter revenue, we did not give revenue guidance. You referenced a guidance that was not reflective of what we said. I think it's important to understand we did give EBITDA guidance on a 2016 basis as well as adjusted EBITDA margins. And the reason why we did not give a revenue forecast really ties back to the changes we announced today in our sales force. We're restructuring and moving from three channels to two channels. There will be transitions of account that will take place over the course of the quarter. Adam and the team think this is the right thing for the long-term business to drive both efficiency and ability to scale effectively. Sales force transitions can have unexpected impacts when you're transitioning accounts which is what we've seen from other Internet companies. And so given the transition of accounts, the revenue range for the fourth quarter is much wider than we'd normally be looking at, and so we're not going to give a specific narrow guidance range. But I would say that the trends that we're seeing in audience acceleration as well as engagement acceleration, impressions in particular, generally bode well for better ROI and for long-term future revenue growth. And so that's a one quarter focus, which is why we're not providing guidance. Your question on DAU, we'll evaluate our disclosure practices at the end of the year as we've done in the last two years. At the moment, we're not going to give you specific DAU numbers. We are giving you the percent growth as we do for ad engagements as well as CPE. We think that's very helpful and incremental to what we've done in the past and I think more longer term changes we'll announce at the – in February when we announce fourth quarter results in 2016 results going into 2017.

[Jack Dorsey:]

And, Anthony, we're focused on building the most useful open and comprehensive news network on the planet and this is the faster way to see what's happening and our product is already revolutionary and we're focused on improving it every single day. We've been making hundreds of small changes as quickly as we can that will continue to compound and more usage and the people are showing us that these changes are working. We're seeing more people wanting to use Twitter and to use it more often. So we're focused on the most the areas of the product that people spend the majority of their time in which is a home timeline and notifications, making sure that the home timeline becomes more and more relevant. You open up Twitter and you see exactly what's happening. And when you're out of the app, we're sending you notifications about what you may have missed or what you need to see. The more time we spend on on-boarding and making Twitter – tweeting better and enabling people to better capture what's happening, the better the services gets. So we're certainly looking at everything that we can do to improve our core and to strengthen our core because we think it's unique and we think it's powerful in the world. We're also looking at new opportunities like LIFE because this is a pattern of usage that we've seen for 10 years on the platform. We've seen people watch TV with Twitter for 10 years and comment about it which makes whatever they're watching a lot more interesting, a lot more entertaining and a lot more insightful. And we're looking at that and trying to remove friction in every way that we can. And that's what the live streaming initiative is about. And we'll continue to look for opportunities to remove more friction and deliver more value to the people using our service.

[Adam Bain:]

And, Anthony, because we get that question a lot, we want to really emphasize that we think there's a significant opportunity to drive daily usage growth and engagement growth through the refined core initiative. And so in the letter, we quantified that there are millions of users that come every day to Twitter that are either signing up for new account or reactivating account, and the opportunity to leverage those millions that come at top of our funnel has been fairly consistent over the last year. And we have that opportunity to convert them into daily active users. And I know many of you will likely look at that number and try to multiply it by 365 to figure out what the absolute TAM is. Just for your benefit, we look at it not just on a daily basis in the top of the funnel which is very large, millions come every day. But we also look at on a monthly basis which we reported 317 million active unique accounts on a monthly basis. If you look at that same measurement on a quarterly basis, it's 420 million unique active accounts on a quarterly basis and if you look on an annual basis, it's 700 million unique active accounts on an annual basis. And so the changes that we're making that are compounding on each other is applied against a very large opportunity every day, every month, every quarter and annually and that's one of the most powerful things about Twitter is that opportunity presents itself every day because we're pleased to see what's happening.

[Anthony DiClemente:]

Okay. Thanks.

[Operator:]

Great. Thank you. And the next question comes from Michael Graham at Canaccord.

[Michael Patrick Graham:]

Hey. Good morning. I just wanted to ask about the improving option dynamics. Can you go into a little more detail about what's driving that? And then on the mix of brands versus performance advertisers in the quarter, did you see any changes there? And I'm wondering if some of the M&A chatter had any impact on your conversations with brand advertisers and might that bounce back now? Thanks.

[Anthony Noto:]

Thanks, Michael. First, in terms of the auction dynamics, we had tweet impression growth which is our available inventory for the tweet ad product, not the live product. We saw tweet impression growth accelerate, and it grew faster than revenue growth. And so, for the first time in a very long time, our ad load went down sequentially. Simultaneously, our click-through rate went up, and it went up not just because of the shift to our video products, our autoplay video product which has a very high engagement rate, it went up because of like-for-like ad product increases, which is very important. We had increases on like-for-like ad products and click-through rates sequentially in every ad product except for one, and that was flat sequentially. And so, as we see the acceleration in DAU growth, as we see the acceleration in tweet impressions for two consecutive quarters, it's bringing more valuable inventory on to the platform and more scale for advertisers who can be better targeting against (32

[Adam Bain:]

Yeah, Michael. As Anthony mentioned, we're encouraged by the accelerating growth that we're seeing, and certainly marketers now will be aware and be paying attention to this growth. Video for the second consecutive quarter now is our largest ad product by revenue, and it's also our fastest growing. We've seen two big trends in our marketplace. One is that our current advertiser set is upgrading into these video ads, and then the second opportunity that we see clear ahead of us are these new incremental budgets, these OLV budgets that we've talked about. We had a great quarter in terms of product execution for our OLV strategy. We've launched now a reach in (33

[Krista Bessinger:]

Great. And the next question comes from Doug Anmuth at JPMorgan.

[Douglas T. Anmuth:]

A question on the Thursday Night Football, can you just talk about the conversion of new users into regular usage and becoming logged in and using other parts of the service? And then also, how you can personalize the timeline experience going forward to make it more valuable? And then, Anthony, can you just clarify on the 4Q EBITDA, which I think implies $164 million to $179 million? Does that include the $10 million to $20 million of cash costs related to restructuring? Thanks.

[Adam Bain:]

Sure. On Thursday Night Football, what I'd say – I'd highlight a couple user metrics that we'll share with you and over time, we can share a lot more. But I really want to emphasize the point that this is one part of a much broader and a critical strategy for Twitter as it relates to live, and that's to leverage these globally and nationally-recognized pieces of content to build awareness of underserved content. They in and of themselves (36

[Jack Dorsey:]

Yeah. We're focused on adding more machine learning and artificial intelligence to everything that we do. The biggest areas of focus are where people spend the majority of their time which is the home timeline and notifications and also making sure that we bias our on-boarding towards topics and interests rather than accounts. In the past, we've definitely biased more towards helping people find individuals rather than meeting them around what they're interested in and what topics they care about most. We think Twitter is strongest around topics and interests and we think we can do a much better job there. We're not just applying machine learning to the core and to the timelines but also to how we think about video as well. We have some really cool and really awesome technology that enables more and more viewership because we can do just in time compression so we can work on any device type through any network bandwidth and deliver a high quality high definition experience and we're just starting to apply the technology to our live experience and also to Periscope. So we're looking more broadly at everything that we can do around technology and machine learning specifically to improve all of our experiences to make sure that Twitter continues to be the fastest way to see what's happening and also the highest quality way.

[Anthony Noto:]

And then, Doug, on your question about fourth quarter EBITDA, it does not include restructuring charges. You're likely asking the question that it looks like the EBITDA is – and margins are a different trend than what we've seen in the prior quarters. What I've said in the past is that we manage margins for the entire year and we really want to allocate our investments across the most important areas and so we don't necessarily manage it by quarter. So if we over-deliver EBITDA in one quarter, we want to reinvest in the next quarter with those areas that we weren't able to invest in, in the prior quarter. And at the beginning of the year we said EBITDA guidance range of 25% to 27%. We've outperformed. Last quarter, we narrowed that guidance to 26% to 27% and now after third quarter, we've raised it to 27.5% to 28% and that reflects the outperformance but also a desire to still spend back against some key growth initiatives with a discipline. The other thing I'd say about the fourth quarter is it does have some quarter-over-quarter cost trends that are different than the rest of the year. It's our seasonally strongest quarter for advertising and so commissions go up in the fourth quarter relative to the other quarters. Additionally, it's our seasonally strongest third party network quarter, so TAC goes up on a seasonal basis. And then we're obviously rolling out our live strategy in a very big way with all the shows that we've talked about in programming. So that will require some additional infrastructure expense and hosting and delivery expense. Revenue will come on top of that. But we've frontload the expenses there. And so those are the drivers of some of the quarter-over-quarter changes which, I think, is implied in your question.

[Douglas T. Anmuth:]

Great. That's helpful. Thank you.

[Krista Bessinger:]

And we will get the next question from Twitter. It comes from the account of Deborah Williamson (41

[Jack Dorsey:]

Deborah (41

[Krista Bessinger:]

Thank you. And we have time for just one last question. The question comes from Justin Post at Bank of America Merrill Lynch.

[Justin Post:]

Thank you. Anthony, a couple questions. Could you just comment on the streaming deals and the overall profitability of those versus your core business just so we can think about that longer term? And then secondly, just housekeeping, we've got questions on the revenue. If you take the margins you put in the letter and you put them over kind of the different EBITDA numbers you can get to a revenue number, and it seems like the range could be 2,500 to 2,600 (43

[Anthony Noto:]

Sure. From a cost standpoint, the live initiative really builds on the back of the Amplify program that Adam and the team built over four years ago and that have partners with content owners on revenue splits. From an economic standpoint, we approached this from the beginning as an investment area but one that does not require us to lose money. And so we're very pleased with the economic profile of the deals that we've done. They're positive from an economic standpoint, and there's a lot of ancillary indirect benefits, but the NFL deal and the rest of the deals individually, we're trying to drive towards profitability on each one of those and as we leverage the model that we have, it's worked very well. There's a lot of creative things our team is able to do that reduces some of the economic burden. The ads that we get in the NFL games are obviously not every ad, and so it significantly reduces the cost exposure that we have to that content, and that's just one of many ways that we put these different content deals into an economic envelope that works for our business. I think we got another question from Anthony DiClemente that said, what does that bode for the future. I think the important thing for our business relative to others is we're helping these media companies reaching younger audience. As I mentioned, 70% of our audience for the debate and the NFL has been less than 35. We're helping them reach a global audience, and we're helping reach people on mobile. And we're doing it in a unique way. We're not just putting video on the platform. And so we bring all those benefits to the table, and we also partner. We don't put our brand first. We put our partners' brands first, so we're simulcasting much of the content, and so it's better for them in a way that's just not about advertising dollars. And that's a key differentiator that we continue to plan to leverage. As it relates to the range, I think you're referring to the full year range. I don't want to cite any specific numbers. You obviously are very good at math, but our goal was to give you EBITDA and EBITDA margin range but not talk about specific numbers against that range even from the endpoints because it's so wide.

[Justin Post:]

Thank you. Appreciate it.

[Krista Bessinger:]

Great. Thank you. I'll just hand it back to Jack for any closing remarks.

[Jack Dorsey:]

All right. Thanks, Krista. We appreciate everyone joining us a bit earlier today. As we've shown, our core product initiatives are working with accelerating growth in daily active usage, tweet impressions and time spent, and we believe revenue growth will follow. We're being disciplined about how we invest in the business with a strong plan to simplify our efforts and driving Twitter toward GAAP profitability in 2017. And we look forward to sharing further updates on our progress over the coming months. Have a great day.

[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.