Twitter (TWTR) 7 Feb 192018 Q4 Earnings call transcript

Good day ladies and gentlemen and welcome to the Twitter Q4 and fiscal 2018 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 that time. I would now like to turn the call over to your host, Krista Bessinger, Vice President, Investor Relations. Please go ahead.

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Jack. Thanks Great.

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[Operator Instructions].

question JPMorgan. Anmuth from Douglas comes from Your first

open. Your line is

for Thanks for I taking think the two, questions. I both have Ned.

the whether in not in help understand can about in for expand million, are we you $X thinking more just you there it income And like about? think down operating $XX XXXX? XX% Something potentially Is year-over-year? something the be about margins thinking First, that looks second, specific Thank guidance there? then I growth you us How may will million GAAP expense can to which XXXX. you. XQ, you be talked

Doug. questions related. Thanks Hi. Both are

a how out talk and little about growth guidance. me the in Let the expense bit that plays

expenses context XX% of look were GAAP years. up if back expenses higher because we cash XXXX, of remember, cash levels you if down look way last X%. came for through stock-based the grew couple the at XX%. from you comp expenses the So about fourth over at quarter, But

bringing So headcount a in XXXX we XXXX. base are we We XX% the over headcount we into course year of with as the the began added than grew larger expense gradually year. about

we continues XXXX to our take we to a from the with that base same we one into how had and a with in it will larger invest resourcing the XXXX mindset So against expense same as priority and both perspective. prioritization priorities be number continue

operating results base higher you expense to of and today. that income guidance there the see that So the continuing invest is

As is expenses with have result on income lot gave revenue left five a that based the into both information the you can of play. The imagine, revenues. we the to operating we and guidance quarter the quarter is best guidance weeks got just of that a

we hard can. work outcomes to best will deliver We the

If I went those comments help, the the just Doug? you that you back at to point the shared Does in look full-year I prioritization I with I through. that growth, expense think that and

expand It in comments XXXX? helps. more potential just to on Any margin

Yes.

margins, deliver about over health on of of can about service believe people think is a the look Twitter time. when over So who decisions, horizon. long about a use periods think that We way our time we to One it. time. investment there the our that number long-term of We of decisions growing think at make you the ways we is expense couple with periods long

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helpful. It's you. Thank Okay.

you. Thank

Next question, please.

Your Walmsley from Lloyd Bank. Deutsche next from question comes

line open. Your is

Thanks.

a development about last on the up guys a side and focus question, Following engage diversion Doug's quarter talked you bit health on to side. on of

one a budget us less related more budget? you outlook be OpEx was And Or from landscape. the to talk in keep and you I cause give on for maybe meaningful So guess in you What the is then XXXX wondering growth for an to is if terms to XX%? in would for the give Can guys the XQ World out? be event mind XX% the us product? than you And reengage for of you the about how core second the can some of of kind conservatism in grow effort Cup what OpEx fall the strength election spending might aside sense guidance sense might can guidance? that, the And cycle than modeling just and the that a engagement called in much to the in how or monetization?

Lloyd. Thanks, Great.

part easier and making also invest and all about to is prioritization. have is we change think the products change going about think a people invest are hiring. people where our to of which are across platform. the those There second. to to Twitter be see dollars priorities. we that continue sales We revenue on in the conversation And it will and but we No we their is no of priorities of to we health first the for think So the

changes to there. thinking the no So

In evolve the where we so priorities we on about may can terms continue have pretty over the to that. headcount in last thinking more or dollars The always of consistent year variability thinking but obviously OpEx, we is expect go our those been the and fixed. on

try in less to But to about around and based dollars jerk that not things with near-term are OpEx fixed. outcomes. other budget decisions those we from another some horizons there think that we long-term one so And period on the

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Thank you.

Great. Thank you.

please. question, Next

Your from question next Ross Barclays. comes from Sandler

is line open. Your

Hi guys.

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So here. that, ad of plenty I guess, to suggests you got runway load have increase from

looking ad is around DAU the next think years? So the second few quarter the in about in the do given particular. then over I U.S., growth load how just first even guess question out And X% you

XQ, quarter, revenue owned see growth the of do in operated you XX% your guidance? what kind owned on the and first and based ad Given in operated Thanks.

Hi. Thanks Ross.

when question load the a opportunity. see levers On we is of a We the think monetization, lever. ad lot about of

provide help in a about we It the have do many Twitter but relevance. invest advertisers with still more But that public ad Twitter path and audience or conversation that as they out use work wouldn't quarters on We to forever. improve to a room whether we and have us. yet, accounts probably formats definitely improve when four to think excess don't on in them be continue there advertisers to who Twitter our much in think as ad that should the to they a small of the advertisers We trend grown not we of We that to for those advertise have the to grow with of are purpose path about everybody. realize front serving businesses largest world millions revenue Twitter we the already. continue to to the don't use That's in see row. continuing of look

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So definitely still work there for do as us is to well. there

was second that how Your plays O&O question and about out.

movie product see really success. what's lots we or with something new, advertisers new your and whether are and are and We about giving the overall We feel most the is really to The most having guidance audience message good the valuable room Those conversations launch connect of are just of having happening. that customers revenue. us Twitter the are connect to being with of being advertisers. a with continue on a we it's receptive place to when still place and with they resonating

question, comes He the two take Great. Rich from Twitter. has account And Twitter of you. Greenfield. It questions. Thank will we from the next

He app QX his discuss more up seen direct response/performance your around ads health is, had second with of revenues in in Japan advertising? to the Japanese The could And then install you market the XX%. is you Can great the progress Japan. has lately? feed first XXXX? one XXXX a in question talk

Rich, Twitter the Thank right. question. All for you, and

on First direct response.

business out great when they have of of they to a been have will our in an as helping areas game more that those a they the people parts new We and And really Mobile launch for broader path world part the couple of a a we one know they want of be about. a great application response people come next important a it the of also that has new or to It's investment app launch over Twitter apps. downloads place with advertising opportunity business. place opportunity see a is to a where XXXX years. new direct

fourth world. there largest real in we quarter. and The So a MAP and helping format advertisers our there year, with to year, like the largest video a customers with have is advertisers the market. Japan great for so year It's as agencies. our found to with those Twitter on more Japan or XX% the over in It's ads people in second with around still feel the the had XX% agency ad work us realize concentrated success market. a a last all do We and really resonated potential Japan. but a connect finished up terrific their

well. in we our Japan like as really there front also us opportunity So in there that pleased remains is are and performance with of feel

Great. you. Thank

Next question operator. please,

from comes Jason question from next Oppenheimer. Helfstein Your

Your line is open.

Thanks. ask questions. two will I

upon guidance. there that net out Is the at any you that the of you why things range? changes There the CES. pending middle the you low What making if low product first revenue high? about? be guess that that? I And different Thank most specific the quarter just more can are Is anything Just was around to the seeing first excited buzz at number relative is lot specifically Maybe of Jack. reason then of or expand first end end you. come kind there relating a on are to to will

Jason. Thanks

excited product on individuals product is and do we past better are experience first our a lot areas So really is a a actual the One create the three about. the time for less and that there we There is have consumer can the health. spent within that side the can on focusing of party in service infrastructure around much experience. time we reporting on the on lot

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Jason. Hi

Your second question the around was guidance.

just the to guidance about total First, talking in change it the is worth revenue.

the confidence that might range, range into XXXX. got than now. a before. a be to explicit we backing we the tighter business have and head Hopefully, backed the we of our of you that The reflecting are are more as instead into range we to trying So is explicit have health little

visibility based to ours, that notice the play play we have set business focused year imagine, the as forward. like is when for budget out outlook we left of a sometimes remember of starts still is in you our brand point As and that from out. more early gets lot a to the on the quarter today there can

deliver are get our as to we when range just give we information can so we the time best call And when at as the year. great the working and and we outcome we work quarter throughout guidance we this an the with have hard

you. Thank

you. Great. Thank

please. Next question

from comes question Citi. Mark next May Your from

open. is Your line

Thank appreciate you. I it.

key first Just the high-level engagement ARPU ad growth, investment? there areas focus you contributors and areas been secondly, Thanks. there? and like conversion discuss curious teams contributions of inventory can Just getting pricing for been characterize the any Twitter or what's can of And particular investment have key incremental of the improvements? will growth? drivers product be sort year? recent the growth or Are that What from you the this drivers of of yield or more then the within hiring kind of

Mark. Thanks

So first the business. opportunity what's have about think where we success driving things. on areas same seen the few throughout question we on a where of still these in the and XXXX We see are And ads front us.

The is first relevance. just the driving ads better platform doing in job a

help likely more people advertiser show interact relevant or them the or more objectives. You realize ads, they watch are to with their

as replacing XX% more been get dollars to dollars is relevance to continues engagements Twitter a also rates and the driving The which second well format bring engaged ad video where better to card quarter. to is suggest a those card, were audience. A continue might clickthrough with interaction have are with result way and the of those is ads up hopefully but better shift we were more more both newer up deliver Ad ad growing mix XX% that formats, that the video as a relevant going this rates. that in more website and that compelling seeing. the before people Clickthrough app video it incremental

things. constrained When for to than coming result looked but that. to do the like buckets on conversations balance dollars I event, I talking whether sure just product talked to priorities, couple supply have where that if working going big make across platform work Twitter topics it's that we better or people the continuing they The we a consumer about events don't more go Jack the both feel about interacting the conversational. more infrastructure show a talked else health still a a sporting still highlight election, and the are and of to places something investment as conversations would event that are that the that take or the good that speed hard But right see see first. to address experience about television to us and we make happened side hashtag of are with side, them we about Twitter helpful or as can compelling we think that advertisers is on and or demand all guess those for a at around the job and around might on where there the an to that supply look way the they them at they recap of bring and that may be we latest revenue things with a tweets, constrained up demand whatever doing Lastly, the the where into topic. most feel everything we more an

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some So I of that areas the would highlight. will be those

Ned. Thanks

Thanks Mark.

Thank you.

Next question, please.

from Your Thill Jefferies. Brent next from comes question

Your open. is line

re-engaging users have Brian. highlighted Hi. question. on the Yes. This is you users. Thanks Twitter the not also the lapsed John past, opportunity for Streppa, but only on new for for In

lapsed users relevant Just noticed video? of any as Thanks. content, you behavior with more the focus you on in back to curious especially especially the servicing if change have are platform, coming

people help every about ways value Glad definitely We John. to deliver two question. and the get Twitter from day. you Hi asked think

are world, time for is to of That interact anticipate they learn a MAU to to for there that opportunity is when people search come when and about XX%. happened a suggests about they a and or that to find continue lot DAU in about find looking the help to room from link to come learn who to of time, from Twitter it past. to who because Twitter want us around. So things ratio them also on haven't the have having get recent something they the on the somebody, people Twitter to when they before them the day. every for, to for more to great the be have part is world helpful there end what whole And other other us Twitter, value of to Twitter we up might or experience come for But in come they a

look to of for important continue to people's are looking really and still we of top just at us. we get be healthy there. them find need help the they continues They lots to when they trust. are coming have what be to to funnel, earn both When areas it We for opportunity So Twitter.

Thanks. Great.

you. Thank

question, Next please.

question from Merrill next Justin Post from come Your Lynch. will

open. is Your line

Great. Thank you. couple. A

just that's to issue? to talked changes. Twitter. user? techs pricing just tell Is showing just them it usage is is First, will positive Or reach aren't Jack, easier it direct leave Second, to ad per users them in on timeline A up response the the you we strategy and how mentioned the use to Is for out the story? lot it or just a response that channel the making to there. yet just it advertisers? Thanks. I of

Justin. Thanks Yes.

opportunity And that timeline relevance. context give to to machine saw years The we result both. do see in the was us was learning pretty depending three it as engagement. on affecting and we control we something look apply about are service But to made the shift deep and learning an a us more significant people ago also more again to So that more for for add we change we in. some great did

and usually. the missed we it you to helps So a recap is great that ranked service want the away when you are of you and find timeline get from everything

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will help also the the also not most terms Twitter. of to both is but only that result some that there growth within engagement service timeline, on out for the folks we people we relevance think a the we new can in give controls service So in do more of and into the get the lot

Justin. Hi

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engagements, clickthrough rates we delivering which forecast help higher strong X% ad the at where But were to those advertisers more. and last this for they that look it's So the when we are like over really with signs and them higher continued year a have you for pricing. you back we what the come feel success keep coming down CPEs balance of ROI don't done will quarter down, those past

you. Thank Great.

take Thank you. And the his from next can account improve question Twitter. onboarding? on is, give And to comes the we roniethologic. the efforts question you from color will some It of us the

for question. the Thanks Yes.

us. think that area a an of lot we be to to continues for going growth onboarding So is unlock

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match that first the we do is when on of things an service don't to people with come them well the interest. One

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go And think more see of improvements we been is So there a to a consumer and lot focus continue growth. of as should and here the we a it our a should lot for has we team on. months lot opportunity

And you. ready please. for Thank question, the we Great. next are

Next question comes from Sachs. Heath Terry from Goldman

open. is line Your

for be you of of mDAU year in year, just Great. thinking a you growth Is qualitative sense, related of Thanks. Ned, to growth we health in issues conversation I increase users then bit mDAU year. either a ahead? we the much obviously thinking in there course OpEx sort driving are has the could monetization? am about events should this if a last the And are that comping safety characterize as platform be trust about directional us and regulatory growth look wondering just how that sort would you as the how give the that that with against this some year, and talked many earlier or versus even about the that of way think about issues of you Jack defensive over investment or about should around of would product that and areas XX%

Heath. Thanks

about against like is we the revenue priorities. really perspective same lens. we feel feel making coming are of really this with lots a of feel profitability to we work in year a execution delivered like and good in But still about first there XXXX. record from those We do the investments feel We don't On our defensive strategy. clear any year are question, that we the the

want think around is one it at the look the from we that same lens you to the So make which strategy. and just sure about consistency confidence of I

evolve the asked I You it's is an And I one just are and would on from it's where just it perspective, not through investment the been dollars but health dollars priority, number call from have remind going? or enforcement how spend the it you, might over a course working of are on they policies. and mindset whether more they where are and people time, the their of on our perspective proactive the year. growth working mDAU onboarding

to guide changes But is make come better so better and sure any grow. world about grow to grow. to going DAU and on what the to when talked in that Jack job to people go our we not them to continue it's help and how for looking think mDAU the do cause are given continues to time, that they do DAU events Twitter at find to has the that We ought product going to we that to are they

Great. Thank you.

you. Thank Great.

please. question, Next

Mahaney from next Markets. Mark RBC Your from comes question Capital

is line Your open.

be is here? on talk you do are And that you resources? just do human question three an has just Maybe consistent that with content, growth had expense profitability outlook, could AI just spend two this And just the have you point seems there rest that? data in the the One, a would able Thanks. about Is lot. pretty with do why of suggest the times Or growth how the any versus that questions. the a than. raw just Is of more to expense being greater to outlook use about that the reason is solution It expense Just terms resources, second Thanks the how It's vagaries then QX year? you recently. talk to that? is year. normal for of particular of enforcement the effective back are in the stronger growth expenses? outlook reported there QX able about

Mark. Thanks

mix. a it's So

learning effective. lot intelligence to help internal getting a better at artificial to our applying more We machine tools agents our internal and are be

us earlier we changes can that product well that we move delivering lot better them. reports are to and the We queues of more so a so also much faster upon severity our prioritize that allow as act recognize can

only side not is on sure enable use our work tools more be but efficient, a our a of product agents that lot making lot a the the to more lot them So effective. that

appeal minimize to make might opportunities and trust we to in error also rigorous can that decision much understand process for there. looking rates more so make how appeals quickly people And any that a and

and the expenses was ramp. Mark, question, about Your second

on end periods. the first they in happened just when happen might up with That any expenses can previous than you in quarter So more the given growing period. based in hiring

whole a number the for and base you and things that year top being add expense growth last of So end first the better into a increases a we of you with that higher basis. on accumulated XX%, percentage approximately bring But that potentially over up you the larger full-year. team expense that's course the quarter, and merit other on

Okay. Thank you.

Thank you.

Next question, please.

Your from comes question from Anthony Evercore. DiClemente next

open. line Your is

I think Ned, you. thank has CapEx. don't anyone and morning Good asked on

favor calls build your of outlook we And CapEx year? on this a to bit just drivers for which interview should was great. couple one the little interview, the At persuasive speed of Your a really you XXXX. for that Bill Jack, ago, of think argument Simmons listened a I text. then of infrastructure in weeks Maybe point or of in power interesting how about made and a text, in step-up

we look text that as could the are you your opposed I suggested and video. format. growing video fastest emotion with ad to even you thought But ad business, more think formats when the convey at

I your now. half advertising think of than more they are

in Thank on as of business mix confidence the to the you. video spot Twitter? talked Twitter and you if text really versus video, use sweet you shift think text and what about the conversations, the today, when gives for are case So side you for Ned

will on Anthony, CapEx. take one, I first your

So just context, was CapEx XXXX. in XX% up for

in of all in talked payment terms. on about of that we for $XX QX paid that we XXXX year QX normal received have gear We million the

really our So to the On growth. the But to that make where sure to us it's up in it's important for careers. if like continuing that in the to data works out year, as invest XX% XX% do invest our to got was continuing in to continuing amount same and it to $XX similar feels reported the of CapEx of as year-over-year product offices XX%, team you to centers, a their place XX% guide most That they more growth. XX%. the is last work best the invest up million, you XX% normalize, teens mid to normalize XXXX, if an basis, it in

is a wherever to are This, Twitter investing no from we long-term a to CapEx for to we to world. they can deliver So great experience the changes perspective. in the the are sure us, an people make that priorities, indication that

see And text video see at don't odds and we one and are I another. with that don't

that loop of conversation, think service. back In two. between it virtuous to is enriches the And more the there believe another or the a be the any points on text whether through video conversation. We video that fact, I medium,

platform So the a which parts really things and the two. out conversation, we more as we do see point think like the it live which generates see people allows there more And lot do clips is ingest instance, a relationship of a video healthy we or enriching on video between streams, more of video, of for do to conversation. even

service, So on we a conversation. of generate more want that to to all lot happening. that agnostic form That is tends it fuel media people a to any make of sure because what's are comes to show we the we use that

effects continued increased to network from. So able in we conversation and the because express usage lot within people a we service of increase that generates throughout in see video creates and all around being and to benefit engagement love the it it themselves the increase an

you. Thank

Operator, think last you. one just Thank time please? have I for we question,

Then Eric Sheridan Okay. last from question will from come UBS.

open. line Your is

about or sort number leverage out long-term. adjusted one. in items of we parsing you on of OpEx Maybe EBITDA XXXX, the any Number out areas just of talked modeled be look Maybe as line so Thanks purposes margins for questions. that XX% Ned. for mid-forties deleverage much that more getting for to thinking taking pronounced the the correctly? is there growth, two, all areas you or should That's specific P&L

you from almost for have that And to the way will there You GAAP be that Is objective? about think got achieving target translate Thanks volatile there EBIT years? a do long-term coming in how And standpoint? past the a so company you long-term this margin versus how linear much. think QX. profitability the

Eric. Thanks Okay.

It's more question. the priorities for same same the Not share OpEx us. the more and Investing just to of there. First same on at the much relative prioritization.

won't drag again. it So through you I

margins. things couple of point EBITDA the to out. On A

XX% the for at the we first The for XX% is, and year. were quarter

achieve well. to that we those drive So public balance we have with to long-term demonstrate given evidence it the our the realize that EBITDA XXXX in to period to And We talked margins growth did over those QX ability that's and in ability our carefully any about. to our as purpose conversation. margins invest further have can we just long-term serve

over straight margins, teens translate GAAP in time, a somewhere years. operating from you to those EBITDA are you translation. in those try seasonal seen If of the terms we And get you into will they move other with as things that to in affect around a just along in mid advertising were have invest margins to the one going previous can to how business, to margins period another

Thanks so much.

Eric. Thanks

you us. Okay. all Thank for joining

on additional head all our QX our you have for into your we call hold execution support before strategy XXXX, we and never progress we sharing felt our look and market to earnings and Twitter. on XX April updates when we As about Thank better on see the forward our we you quarter open. will next

Ladies in the and for This program. gentlemen, concludes you program. today's participating thank

a Have everyone. disconnect. now good may You day,