Twitter, Inc. (delisted)
Q1 2014 Earnings Call Transcript
Published:
- Operator:
- Good day, ladies and gentlemen, and welcome to the Twitter First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the call over to Krista Bessinger.
- Krista Bessinger:
- Great. Thanks, Jenny, and good afternoon. Welcome to our Q2 (sic) [Q1] Earnings Call, and thanks for joining us. We have with us today our CEO, Dick Costolo; and our CFO, Mike Gupta. We'll be starting with approximately 15 minutes of prepared remarks followed by 45 minutes of Q&A. During the Q&A, we will take questions asked via Twitter in addition to questions from conference call participants. Questions submitted via Twitter should be directed to @TwitterIR using the hashtag #TWTRearnings. We'd like remind everyone that we will be making forward-looking statements on this call, such as our outlook for Q2 and 2014 and our operational plans and strategies. Actual results could differ materially from those contemplated by our forward-looking statements, and reported results should not be considered as an indication of future performance. Please take a look at our filings with the SEC for a discussion of the factors that could 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. During this call, we will discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in our earnings press release. These non-GAAP measures are not intended to be a substitute for our GAAP results. Also, an audio replay of this call will be available via Twitter and on the website in a few hours. And with that, I would like to turn the call over to our CEO, Dick Costolo.
- Richard Costolo:
- Thanks, Krista, and thanks, everybody. I'll kick it off here with a few opening remarks, then Mike will walk through the numbers in detail and we'll come back for questions. We had a great first quarter. Revenue growth accelerated year-over-year by 119% to $250 million, fueled by 2 things
- Mike Gupta:
- Thanks, Dick, and good afternoon, everyone. I will walk you through our financial and operating performance for Q1, and then touch briefly on guidance before opening the call for your questions. At a high level, we are very pleased with our Q1 results. It was a strong quarter despite the challenge of seasonality, and both total revenue growth and ad revenue growth continued to accelerate on a year-over-year basis. Total revenue reached $250 million, up 119% from the year-ago period and up 3% sequentially. Ad revenue reached $226 million, up 125% from last year and up 3% quarter-over-quarter. A number of factors contributed to our strong performance, including a full quarter of media forward, our rich media experience; continued improvements in our prediction and targeting capabilities; and strong demand from advertisers, especially around live events in the U.S. We continue to see very strong growth in ad engagements, up almost 700% year-over-year and up 28% quarter-over-quarter. We saw strong advertiser demand around live events in Q1, including the Super Bowl, the Olympics, the Oscars and the Grammys. And we saw strong adoption of our TV product set, which includes Amplify, keyword targeting and TV conversation targeting. Advertisers are using these tools to achieve the share of voice they're looking for, and we're seeing them increase their mobile budgets around live events. As a percentage of revenue, mobile performed well in the quarter, with approximately 80% of total ad revenue generated from mobile devices, up from approximately 60% in the prior year. In Q1, international revenue accounted for 28% of total revenue, up 183% year-over-year. We continue to expand internationally with both our direct sales effort and our self-serve product. And as a result, we expect to see continued strong international growth in the future. Data licensing and other revenue contributed $24 million in the quarter, an increase of 76% year-over-year. This reflects an increase of 6% quarter-over-quarter, which was driven by better-than-expected performance from our mobile ad exchange. Turning now to expenses. I want to remind you that unless otherwise noted, my comments will focus on our non-GAAP financial measures, which exclude stock-based compensation, amortization of acquired intangibles and income tax effects related to acquisitions. For the GAAP financial measures, as well as a reconciliation between the non-GAAP and GAAP financial measures, please refer to our earnings release posted on our IR website. In Q1, total expenses were $247 million, up 104% year-over-year and up 10% from the previous quarter. The increase was driven primarily by headcount and related overhead costs, as we continue to invest in our workforce to scale our business and drive continued product innovation. We ended the quarter with approximately 3,000 employees. Operating expense by line item was as follows
- Operator:
- [Operator Instructions] The first question comes from Ross Sandler from Deutsche Bank.
- Ross Sandler:
- Just I got 2 basic questions. You had mentioned that you saw some sequential improvement in user metrics, like MAU adds and engagement. I guess, I'm trying to understand if some of the product changes that you've made in the last 6 months are gaining momentum. Did you see that the user metrics were improving as you exited the quarter versus maybe the beginning of the quarter? And then the second question is favorites and retweets continue to increase, but TLV over MAU, this metric continues to drop off a bit. So I guess, sequentially, it looks okay. But when do you start to comp through some of the product-related changes that are impacting that metric? And I guess, a better way to ask that is could you just give us a sense of what the average number of sessions per MAU looks like today versus maybe a year ago for the typical Twitter user?
- Richard Costolo:
- Ross, it's Dick. A couple of questions there. I'll start with the first one around user growth. I'd say that there was no specific one thing in the first quarter, one specific kind of change we made that was responsible for the majority of the growth. It was a combination of some of our improvements and our recommendations -- recommending accounts for you to follow based on our algorithms; two, the more global rollout of our native mobile sign-up process; and then three, as I mentioned in my opening remarks, the process of making Twitter more visually engaging. And I think that -- and how we would frame that vis-à-vis looking forward, is as follows
- Operator:
- The next question comes from Douglas Anmuth from JPMorgan.
- Diana R. Kluger:
- This is Diana on for Doug. First question, which is kind of related to the prior question on timeline views, and maybe if you could prioritize to us which metrics you're looking in order of importance.
- Richard Costolo:
- Sure. It's -- again because we look at these things in aggregate -- I'm glad you asked me that. Thanks, Diana. Because it's not a binary either-or here. If you think about over the course of the long term, we're going to drive up engagement, we believe, over all of these axes. But the current focus on increasing the value of a single timeline has this multiplicative effect, as we've seen, on monetization. And I think that's a way we think about it. We don't think about it as a binary either-or. It's the combination of the 2. When you add to that, the sort of concentric circle of engagement across the broader Twitter platform, you get what, again, what I think is a combinatorial effect of the engagement on platform and the broader billions of users who are consuming tweets off the platform.
- Diana R. Kluger:
- And if you could just quickly clarify the comment on the guidance going forward, how part of it is including only the incremental that isn't already being recognized.
- Mike Gupta:
- Yes. Diana, that's related to the Gnip acquisition. So we have yet to close that. But we currently have a commercial relationship with them, where we receive a meaningful rev share from the company. Upon the acquisition closing, we will then recognize the incremental revenue that we don't recognize today. Just so people understand that it's -- the full 100% of Gnip revenue is not incremental to our financials today.
- Operator:
- The next question comes from Anthony DiClemente from Nomura.
- Anthony J. DiClemente:
- I have one for Dick, and it just has to do with how the use case for Twitter is evolving over time. I use Twitter as sort of a news feed of sort in terms of headlines and things from media outlets. But of course, there's so many people out there that use it for conversation in groups. And with over-the-top messaging platforms out there and trying to get involved in this space, I just wonder what you're doing in response to sort of the piece of the Twitter use case that overlaps with over-the-top messaging.
- Richard Costolo:
- Sure. We think of Twitter as this companion experience to what's happening in your world. One of the reasons when you talk to people, you hear "I use it for this; well, I use it for that" is because it's this companion experience to what's happening in your world. And I really see that as the consistent use case over time. And as you think about the broader question when will -- in the context of when will Twitter be mainstream, the beauty of Twitter as a platform today is that -- as I mentioned in my prepared remarks, we had 3.3 billion views of tweets just about the Oscars in the 48 hours after the Oscars. Now that's a big number. If you think about that in the context of something like YouTube, where you've got YouTube content networks with thousands of channels, some of the biggest of which that will achieve over 3 billion views a month -- I think we'd all consider YouTube a mainstream platform, and we saw that around the Oscars in just 2 days. So Twitter as a platform, we believe, is already incredibly mainstream. And now what we need to do is help that world of users who already experience Twitter every day understand the value, the increased value of the log-in experience.
- Anthony J. DiClemente:
- And if I may, just one quick one for Mike. You mentioned the Olympics as a live event that was a driver of behavior in the quarter. I just wondered if can you talk about other idiosyncratic events like the plane that went down in Malaysia or the events in Ukraine, and how those compared to something like the Olympics in terms of being a driver of the KPIs that you're looking at.
- Mike Gupta:
- Yes. So thanks, Anthony, for the question. When we look at events like that, I think they differ a little bit. The -- some of the key events I talked about in Q1, things like the Super Bowl, the Oscars and the Grammys, those not only attract user attention on the platform, but they also attract advertiser attention. I think some of these other events like the Ukraine or the plane crash of the Malaysian Airlines, those, again, attract meaningful amounts of conversation on the platform and usage from our users, but they're not necessarily, I think, that would attract the advertisers to the platform to advertise specifically around those events. So that's the one distinction I would make.
- Operator:
- The next question comes from Heath Terry from Goldman Sachs.
- Heath P. Terry:
- Dick, is there any sense that you can give us in terms of the kind of user growth cadence you saw over the course of the quarter, particularly relative to the U.S. where you saw that sequential acceleration, and particularly to the extent that you can talk about sort of the cadence month-to-month for the quarter and maybe even into April? And then also, are there any specific products enhancements that you've seen have an impact on user growth in the U.S. that you've yet to roll out internationally that we should be thinking about, that would suggest incremental international growth when they are rolled out?
- Richard Costolo:
- Sure. Heath, this is Dick. I think there wasn't any specific within January, February, March months that was any stronger than any other nor was there any specific product rollout or moment I would point to that resulted in growth. So as you think about things like Moments! or from HERE on, I don't think there's anything like that to look at or to see in the numbers. Vis-à-vis your question, product changes that will be rolled out internationally that will boost growth, I think we already saw some of that in the first quarter when we took our native mobile sign-up and rolled that out internationally. We had initially kicked it off in Q4, and it came out more broadly in Q1. So I think that, that's the way I would think about it. Going forward, again, looking beyond where we are today, I don't think of a specific feature or moment or once these 3 these things are in the product, x will happen. It will be this combination of changes.
- Krista Bessinger:
- Thanks. And we'll take our next question from Twitter, which comes from the Twitter account of Neil Doshi @CRT. And Neil asks, "Are there any ad verticals that showed strength and/or weakness specifically during the quarter?"
- Mike Gupta:
- Great. I'll take that. This is Mike. Thanks for that question, Neil. We generally saw a strong quarter across all of our verticals. I think if I had to point out one that showed some weakness, it would be retail, which is very much as expected as we moved out of the Q4 holiday season into Q1. But we -- in particular, we saw strength around the consumer packaged goods and the media and entertainment verticals. Neil, I'm just looking at the screen. I noticed you have another -- 2 more questions, and maybe I'll just hit those really quickly. The next one from Neil is, "How are self-serve ads tracking in the U.S. as well as the international rollout of self-serve?" So Neil, let me speak a little bit more generally about self-serve in the context of our SMB. That continues to do well for us. We talked last quarter about international expansion and launching the self-serve platform in the U.K., Ireland and Canada. The results from there have been very positive. You may have seen late last week, we announced our relationship with Yahoo! Japan, where they're now selling our inventory into their SMB channel. So we're very excited about the potential there, given the size of that market. And we continue to execute and we do have plans to continue to roll out the platform globally over the remainder of the year. And generally speaking, to the ad platform, we continue to improve the targeting. We improve -- we're continuing to make it more intuitive, and that's being really well received by the SMBs. And then Neil, I'll just hit quickly on your last question, which is about U.S. timeline. "Ad RPM showed nice acceleration in Q1. Would we expect deceleration in the second half given the tough comps?" So I think you're looking at the year-over-year acceleration, we went from 73% in Q4 to 78% in Q1 here in the U.S. And really, that's driven by -- we're seeing a full quarter of media forward, as we've talked about in our comments. That's really driven up engagement, not only from the user side but also translating through to ad engagement. And so we're seeing a full quarter impact of that. And then there was a number of improvements and additions into the targeting capability that we made throughout the course of last year, things like TV conversation targeting, several things within the TV product suite, like TV conversation targeting and others, which are really driving that increased engagement. And then lastly, over the course of the year, we think continuing to add advertisers to the platform. The addition of these advertisers gives us more relevant content to show our users, and we're seeing that translate into higher quality ads; and as a result, higher engagement. Thanks.
- Krista Bessinger:
- Great, thank you. Operator, we'll take the next question, please, from phone line.
- Operator:
- The next question comes from Jordan Monahan from Morgan Stanley.
- Jordan Monahan:
- Actually, 2, if we can. I think higher level, maybe for Dick. The first one is when you think about communication services and short messaging services globally, it seems like there are a number of global competitors. And we're wondering, do you think that over time that users tend to congregate around a single global service? Or do you think there are regional differences that would actually prevent that from happening and natives kind of short messaging and communications just inherently more local and more regional? And then the second question is just around MoPub and your mobile advertising efforts. We're just wondering, from the advertiser perspective, we would assume that having a single point of contact is fairly useful and important, but we wanted to get your thoughts on that. And then from a user perspective, does having MoPub help you reengage existing Twitter users? And are you able to somehow pull them back into the platform?
- Richard Costolo:
- Sure. There are few questions there. On the first one, regarding messaging services specifically, from which I would -- short messaging services specifically, in fact, I think you're referring to some of the private messaging services. I think on the private messaging services, there's certainly -- we see -- you see a regional differentiation there, things like KakaoTalk and Line and so forth. I think that platforms like Twitter don't see that kind of regional differentiation. And in fact, we see a broad global distribution of our users. So that's to your first point, specifically. I think that on your MoPub question, when you asked, "Is a single point of contact powerful for advertisers?" Absolutely. And let me maybe set a little bit of context for that. Marketers are looking for 2 things, right? They're looking for scale and engagement. And when you think about the scale of already having thousands of in-app publishers deploying MoPub that deliver over 1 billion iOS and Android users, you've got scale there. And then when we bring our native ad unit that delivers these industry-leading engagement rates, that combination of scale and engagement, we already have in market. I think it's hugely valuable for marketers. For publishers, when you think about our mobile ad exchange, the beauty of it being a platform and not just an ad network is that we can accept supply and demand from anywhere. And what publishers are looking for is an opportunity to optimize yield. So when they can plug in a platform like MoPub that can accept supply and demand from multiple sources, that's great for them.
- Jordan Monahan:
- And I guess, just on the user engagement. Is there some piece of MoPub that will actually allow you to help users once they've experienced an ad service through MoPub? Is there a way to help you bring them back to the Twitter platform and continue to engage on the platform?
- Richard Costolo:
- Sure. Sorry, I missed your last -- I skipped over your last question there. So here's how I think about that. When I go back to my comments about Twitter the platform and those 3.3 billion views of tweets just about the Oscars, that's a tiny example of the ubiquity, the almost omnipresence we have in the world to be in front of users, any kind of user. And of course, again, that's just online reach. That doesn't include the tweets on air. During Adam Silver's press conference today, there were constantly tweets on air under -- on the screen, tweets in print, et cetera. So we feel like our almost ubiquitous presence in front of these people around the world is what will -- is what gives us an ongoing opportunity to reengage users.
- Operator:
- The next question comes from Mark Mahaney from RBC Capital Markets.
- Mark S. Mahaney:
- Two questions, please. Could you talk about the best or most interesting international white space opportunities, particularly markets or product rollouts you think are particularly interesting over the next year? And then just in terms of engagement, is there any way you could talk about engagement trends on a cohort basis and talk about how timeline views per user from a cohort or other measures of engagement have changed? Maybe that would help us work our way through some of the noise that comes from bringing in newer users.
- Richard Costolo:
- Yes Mark, it's Dick. Let me take the first question there. I think that when you think about the -- I'll try to generalize this, but these things are hard to generalize. When you think about the best international opportunity, and this goes back to one of the previous questions about private messaging or short messaging, private short messaging services, there's a real opportunity for us when we think about our private messaging to strengthen the core of our Twitter product by making it easier for users to move more fluidly between the public conversation that happens everywhere on Twitter and the private conversation between you and a friend or you and a few friends. There are certainly places in the world where the private conversation is culturally looked upon as more valuable. And in those markets, we'll look to strengthen our core product by making it easier for those folks to move more fluidly between the public conversation and the private conversation within the product.
- Mike Gupta:
- And let me take -- Mark, I'll take the engagement by cohort. I mean, if you look at what we just disclosed around timeline views, primarily you see that at a constant quarter-over-quarter. And I think that's indicative more broadly -- outside some of the product changes that we're going through year-over-year and that eventually will anniversary. I think it's indicative more broadly that when we look at cohorts, old cohorts versus new, there's different use cases within those. And so what we would say is on average, these new cohorts are just as engaged. And obviously, there are specific use cases that differ within them. But we generally view them as consistent in -- over time.
- Richard Costolo:
- Yes. And to just hop in there, right, yes, it's a tag-team match. This is Dick again. I think one thing that's probably worth pointing out is that -- we mentioned this on our S-1, our DAU-MAU ratio, if you kind of think of it in terms of just the broadest engagement sense, our DAU-MAU ratio remains in the very high 40%.
- Krista Bessinger:
- And our next question is going to come from our Twitter stream from the account of Rich Greenfield. And he asks, "Please discuss how the new app install ads will impact ad revenue in Q2 and the rest of the year."
- Mike Gupta:
- Great. Thanks, Rich, for the question. I'll take that. So just to state the power of the app install ad, what we're seeing here like many of the recent Cards [ph] we've released is they're designed to drive a specific action tied to the advertiser objective, and we're seeing that result in great conversion and their willingness to pay. I think we view this as a big opportunity. We've seen and gotten great feedback from some of our early partners, like Spotify, Kabam and HotelTonight. Having said that, we think it's too early to quantify more broadly the opportunity, but it is factored into the outlook we've provided for both Q2 and the full year.
- Krista Bessinger:
- Thank you. And let's take our next question, please, from the phone line.
- Operator:
- The next question comes from Peter Stabler from Wells Fargo Securities.
- Peter Stabler:
- Dick, I want to go back to your comments, it might have been yours, Mike, too, about the quarter and then the contribution of the Olympics, Super Bowl, Grammys, certainly a lot of activity, big-profile events. Beyond contributing to tweet volume, do you have a sense of how they contributed to MAU growth, generally? And I was just trying to get a sense of do you expect some sort of unusual seasonality going forward by calling those out?
- Richard Costolo:
- This is Dick. No, I think that I would categorize -- I would just categorize them as interesting. But it's really this collection of product changes that we made over the course of the quarter, combined with some of those things, driving some new people to the top of the funnel. But I wouldn't put too much emphasis on those.
- Operator:
- The next question comes from Justin Post from Merrill Lynch.
- A. Justin Post:
- I was hoping you could talk a little bit about where you are on ad loads. It seems like a lot more room there, and how you think about that. And then on a bigger picture basis, this -- which relates to that, you're doing about $1 per user per quarter, and which -- $4 per year. Where do you think you are on that scale? And as you look at some of the peers out there generating quite a bit more than that, just how do you think about that over the long term? And then one last thing on the financial side, SBC seems somewhat elevated this year. Is there any onetime things affecting this year that might not continue in future years?
- Mike Gupta:
- Justin, thanks. It's Mike. If you look at -- as it relates to ad load, as I said in the prepared remarks, our ad load remains very low. And so we've had the luxury of being able to improve ad revenue per timeline view and monetization without impacting our ad load. Again, the focus for us is user experience. As we look at the $1 per user per quarter, we really think about it more from an ad revenue per timeline view perspective, and we feel like there's meaningful runway there. We've talked about some of the ad product improvements we've made. We've talked about the improvements we've made in the targeting algorithms and then also the improvements we're making on the consumer side that translates to, like media forward. All of these things are driving meaningfully higher engagement in the ad space, which is translating to higher ad revenue per timeline view. The 2 other things I'd mentioned that really can help drive that and propel that forward is as we bring more advertisers to the platform, we're bringing more relevant content and higher-quality ads and we're also seeing that translates to higher engagement. And then lastly, we continue to focus the efforts on expanding the sales force internationally, both self-serve and the direct sales force. So we think that will also narrow the gap internationally on monetization. So we think all of those really give us a runway. And then let me just hit SBC really quickly. We provided the outlook. I'd point to a couple of things. One, a $40 million stock-based comp increase driven by some of the recent acquisitions we've made. And I think just to keep in mind, and you'll see this in our 10-K, about $460 million of the outlook basically is related to grants that were made prior to -- at the end of 2013. And so over time, those will cascade off, but you can see that waterfall in our 10-K.
- Krista Bessinger:
- And our next question comes from the Twitter stream from the account of @JudahE [ph] . And he asks, "Do you care to respond to NBCUniversal's quote in the Financial Times regarding the emperor and his lack of clothes?"
- Richard Costolo:
- So this is the Twitter and TV question, for those of you not familiar with the context. Yes, sure, I'll say this, our Twitter and TV strategy and our investment into that thesis was very much based on data that we saw, informing the 2-way complementary relationship between Twitter and TV. As that strategy has evolved and we've continued to invest in it, there is a host and a continuing emergence of independent third-party rigorous research that validates our belief in that investment thesis and strategy. FOX Research -- has produced research that shows 92% of Twitter users have taken immediately some action like either tuning into the TV show or searching for the TV show after seeing a tweet about the show. Symphony Advanced Media highlighted that use of Twitter while watching TV decreases an audience member's likelihood to change the channel. And then Nielsen found a causal relationship between Twitter activity and tune-in. Further, there were only 3 things that correlated with TV ratings in that study
- Operator:
- The next question comes from Brian Wieser from Pivotal Research.
- Brian W. Wieser:
- I was wondering, first, how many unique advertisers do you have at this point? And I was wondering if you could talk about the spending trend per advertiser and how you see that trending over time. A separate question, I was wondering if you could quantify approximately how much the Gnip transaction was worth and what that says about how your data strategy is going to look going forward.
- Mike Gupta:
- Brian, it's Mike. Let me start. We -- as far as unique number of advertisers, that's not a statistic we share. That number is growing, and we feel good about the growth that we're seeing there. It's growing not only at the top of the funnel with the large branded advertisers, but also with the small to medium-sized businesses, as we continue to expand the self-serve platform internationally. On average, if we have to look at spend per advertiser, if I generalize a little bit, we are seeing that spend go up on a year-over-year basis. And that as we continue to bring more advertisers to the platform, we introduce better targeting capabilities, that spend goes up. As far as the price for Gnip, that's not something we're going to disclose at this time. And then lastly, let me just turn it over to Dick to just speak a little bit about the rationale behind the acquisition.
- Richard Costolo:
- Brian, what we saw was marketers, specific industry verticals and then a bred of companies from the Fortune 500 companies, companies across all sorts of different industries increasingly leveraging Twitter data for business intelligence, customer relationship management, sentiment analysis. And then to marketers specifically, leveraging Twitter data to understand how to better target and delivered advertisements into our platform. So all of that helped us start to feel like that was something we needed to really bring in-house, because it's strategic to the future of the way we think about our data in service to those kinds of companies.
- Operator:
- The next question comes from Eric Sheridan from UBS.
- Eric James Sheridan:
- I guess, first one, on advertising costs going forward, what are you most excited about on the ad product side that could actually cause an inflationary pressure, sort of ad loads or user growth to drive this advertising growth going forward? That's question number one. Question number two, when you look at Q1, you've highlighted a number of special events or news events that may have reacted to engagement. Did you see advertisers changing their budget to either plan for those big events or react to big events in real-time that might sort of impact seasonality as we go forward in the advertising business longer term?
- Mike Gupta:
- Eric, it's Mike. Let me start the second one first. As I mentioned in my prepared remarks, we do see advertisers shift budget and focus budget around some of these live events. In particular in Q1 with these big events, we saw advertisers shift around the TV product suite that we offer that has Amplify and TV targeting, as well as -- TV conversation targeting as well as keyword targeting. And so we're seeing that happen. But what I would point out is that these events, while large, are not the vast majority. The vast majority of the revenue that we see in the quarter is not tied to these live events. And just to put a little bit of that in perspective, you mentioned the Super Bowl, there's 25 million tweets around the Super Bowl in that event. But we have over 1 million tweets about sports on the platform every day. If you look at the Grammys, we have 15 million tweets around the Grammys. There's approximately 3 million tweets about music on the platform every day. And so we are seeing advertisers participate in these conversations throughout the quarter and not just around the live events. As it relates to the first question, we target overall yield on the platform. We're not really looking at CP [ph] . And I think that some of the comments I mentioned earlier that we think can drive the ad revenue per timeline view, things like the better targeting, things like media forward, which improves engagement. And so really, what gets us excited is as we continue to iterate on the platform, we make the ad more engaging either through things like media forward or by bringing more relevant content to the -- from the advertisers -- by bringing more advertisers in platform. We think those things will drive overall yield on the platform.
- Richard Costolo:
- I'd just add one thing to that, Eric. One of the neat things about the way marketers and advertisers around the world are starting to understand the fun ways to leverage the platform during those live events is how they're engaging in both the event and the conversation at the same time. Heineken had this hashtag #ShareTheSofa campaign during the European's Champion League games. And the user tweets to get fans watching at home the chance to have these conversations with soccer greats about the game that's happening, while it's happening. So I think that's kind of cool and highlights -- as advertisers increasingly learn how to think of Twitter as the second screen and connecting the conversation of what's going on right now. We see the sorts of engagement rates with those kinds of campaigns go up as well.
- Krista Bessinger:
- Thank you. And the next question comes from our Twitter stream from the account of Dan Salmon @BMO. And he asks, "How do you expect TV advertisers and agencies to leverage Twitter tools during the upfront, new front process?"
- Mike Gupta:
- Great. Dan, it's Mike. I'll take that one. So as we're in the upfront process right now, we are partnering with a number of broadcasters and agencies during their upfront meetings. And we think there are number of tools that both advertisers and agencies can leverage both on the data side and the product side. Let me just start maybe a little on the data side, which is while marketers continue to purchase audience based on demographics and reach, what we're seeing is more and more, they're evaluating programs and content across the social dimension as well. And we -- as a result, we expect a lot of these networks and agencies to incorporate Twitter TV data into how they approach upfront and in particular leveraging the Nielsen Twitter TV rating as a complement to the other Nielsen ratings that are out there. And then on the product side, I talked a little bit about the TV product suite, which includes TV conversation targeting and Amplify. And we're seeing great momentum in Amplify. We have all of the major broadcasters here in the U.S. on the platform. We continue to sign deals internationally to bring that content to the Amplify program. And I think importantly, Amplify now has been in the market for a while, and advertisers are truly recognizing that Twitter complements and extends their ad spend on TV. It really increases the effectiveness of the TV advertising. Then just one example of that comes to mind is Verizon Wireless. They use Twitter in concert with TV advertising that they were doing around adding gross subscribers, and they saw a very meaningful lift in subscriber additions. And importantly, they've actually found Twitter to be as effective as search and direct response in that context.
- Krista Bessinger:
- And we're going to take one more question from the Twitter stream. It comes from the account of Colin Sebastian @rwbaird. And he asks, "Despite solid Q1 financials, there still seems to be a disconnect with usage metrics. When will these recalibrate?"
- Richard Costolo:
- Yes. Colin, it's Dick. Let me be really clear. I'm really happy with engagement in Q1. It's fantastic across a number of dimensions
- Operator:
- The next question comes from Jordan Rohan from Stifel, Nicolaus.
- Jordan E. Rohan:
- I haven't been following too much the commentary that the executive mayor [ph] at Twitter may have made about the secondary and selling and such. But I wanted to clarify. If there is no secondary, which I fully commend you making that decision because of the debate that continues over engagement metrics, are the investors who have invested privately and the employees, are they precluded from selling? Or would all of those -- all of that selling pressure have to fight itself to the open market?
- Mike Gupta:
- Jordan, it's Mike. Employees and these early investors are not precluded from selling upon lock-up expiration. What I was referring to is the public statements made by many of our early investors, our large early investors, as well as some of our key insiders here, around the fact that they don't intend to sell immediately upon lock-up expiration.
- Jordan E. Rohan:
- Okay. Have you totaled the percentage of -- or the total number of shares that would be represented by those statements? Can you give us some idea for the amount of supply that will not hit the market because of those statements?
- Mike Gupta:
- Yes, I would say it's a meaningful portion of the supply that could, in theory, come to market after a lock-up expiration. You can look at the 8-K and the recent proxy we filed, and you'd see how much those investors are holding, just to give you an aggregate sense. But I would say it's meaningful.
- Operator:
- The next question comes from Ben Schachter from Macquarie.
- Benjamin A. Schachter:
- Is one of your focus areas to drive growth in your own app downloads driving Twitter apps? And if so, what are some of the best ways you're seeing to do that? And also are there any notable differences between Android and Apple downloads? And then separately, should we expect you to build any meaningful independent stand-alone apps? Or will the focus continue to be on the Twitter app?
- Richard Costolo:
- Sure. Ben, it's Dick. Two questions there. First question, yes, absolutely focused on driving Twitter app downloads, no question about it. But we don't particularly think there's anything -- any meaningful difference on any sort of percentage basis to point to on iOS versus Android. To your second question, we're very focused on strengthening our core products, Twitter and Vine. We're very focused on that. That's our plan today. We've talked about our roadmap for that for Twitter, and that's our plan going forward here in the near term.
- Operator:
- The next question comes from Youssef Squali from Cantor Fitzgerald.
- Youssef H. Squali:
- Just as a follow-up to the last question, when do you take the app -- install apps out of the beta, and when does it go live? And then can you maybe just help us gauge the MoPub opportunity? Just how big an opportunity you think it is this year, what's baked into your 2014 outlook?
- Mike Gupta:
- Yes. Youssef, this is Mike. So on the first one, we don't have a specific date to announced on app download at this time. Having said that, as is typical, we want to be thoughtful about how we approach it. We are incorporating both user and advertiser feedback as we look to a GA [ph] type of rollout. Having said that, I just want to point out again, we are seeing great results from the early partners like Spotify, Kabam and HotelTonight. When we look at the MoPub opportunity, we do think it's a meaningful opportunity. Dick talked about the scale and the engagement. We talked about the 1 billion users across iOS and Android. MoPub does 130 billion ad requests a month. They're one of the largest in-app exchanges out there. So we think there's meaningful -- meaningful opportunity around MoPub. That is in our guidance, in the outlook we provided, both for Q2 and the full year, and we feel like we're very well positioned to go against the opportunity.
- Operator:
- The final question comes from John Blackledge from Cowen and Company.
- John R. Blackledge:
- Just a couple of questions. Are there -- back on the ad loads, are the lower ad loads a function of advertiser demand? Or is it a focus by Twitter on a good user experience or some other factor? And if you could just give us a sense of advertisers' view of ROI on Twitter versus maybe some other platforms that they're using.
- Mike Gupta:
- John, it's Mike. Let me take the first one. Ad load is low, very low, as I've stated in my remarks. We are first and foremost focused on a good user experience. We will factor in advertiser demand, though. As I mentioned in the Q4 call, ad load went up very slightly driven by advertiser demand. And really the balance in the trade-off we have there is the quality of the advertising. And if we think we can serve high-quality, relevant ads, that's something we'll consider as we're looking at ad load. But truly, it's the user experience that's the first factor in the guiding factor for us. On ROI, if we think about ROI for advertisers, it truly does vary by advertiser and their objective for the brands. Dick talked about in his response to TV some of the studies that we're seeing around Twitter and TV and some of the closed group studies that we've seen. And that is proving out the ROI and the effectiveness of Twitter advertising, in addition to other forms of advertising. For the SMBs, we continue to enhance our direct response suite. We talked about the app download Card. We've introduced the Lead Gen Card. We've introduced the website Card, a whole host of things. And we think as we continue to give them ad formats that drives specific actions that meet their objectives, we think we'll continue to drive up their ROI because they'll get better conversion and better results more aligned with their objectives.
- Richard Costolo:
- And I'll just -- again, a couple more points about ROI, we consistently hear from marketers that they get better-than-expected ROI on the platform, everyone from large global brands like American Express to GetTaxi, a mobile apps has said that using our mobile app promotion suite, we're now -- Twitter is now their #1 customer acquisition channel; folks like American Apparel who use our Lead Gen Cards to get new customers to sign up. The customers they got from Twitter have an average order value of $90, which is about 15% higher than their normal average order value. So across the spectrum of advertisers from apps and SMBs, the large global brands, and we're delivering ROI for our customers.
- Krista Bessinger:
- Great. Thank you very much. That's all the time we have for today. Thank you for joining us. We look forward to speaking with you again next quarter.
- Operator:
- Ladies and gentlemen, that does conclude the conference for today. Again thank you for your participation. You may all disconnect. Have a good day.
Other Twitter, Inc. (delisted) earnings call transcripts:
- Q4 (2021) TWTR earnings call transcript
- Q2 (2021) TWTR earnings call transcript
- Q1 (2021) TWTR earnings call transcript
- Q4 (2020) TWTR earnings call transcript
- Q3 (2020) TWTR earnings call transcript
- Q2 (2020) TWTR earnings call transcript
- Q1 (2020) TWTR earnings call transcript
- Q4 (2019) TWTR earnings call transcript
- Q3 (2019) TWTR earnings call transcript
- Q2 (2019) TWTR earnings call transcript