Twitter 2Q16 Earnings Call Notes

Twitter (TWTR) Jack Dorsey on Q2 2016 Results

Focusing on the quality of the experience for live streaming

“we are making sure that first and foremost that we focus on the quality of the experience and that the experience stays up. So we’re putting a lot of thought and effort into our architecture and infrastructure around live-streaming. We’re doing a lot of this both on the individual side with Periscope, but also on the premium content side.”

Balancing safety and freedom

“This is Jack. This is really, really important to me and to everyone at the company. So, I want to address both freedom of expression and safety together here, since the two intertwine. We are not and never will be a platform that shows people only part of what’s happening or part of what’s being said. We are the place for news and social commentary. And at its best, the nature of our platform empowers people to reach across divides, and to build connections, to share ideas and to challenge accepted norms. As part of that, we hope – and we also recognize it’s a high hope – to elevate civil discourse. And I emphasize civil discourse there. Abuse is not part of civil discourse. It shuts down conversation. It prevents us from understanding each other. Freedom of expression means little if we allow voices to be silenced because of fear of harassment if they speak up. No one deserves to be the target of abuse online, and it has no place on Twitter. We haven’t been good enough at ensuring that’s the case, and we must do better. ”

Been using deep learning in on boarding

“We’ve been applying a lot more machine learning and deep learning to our on-boarding, so we can match people faster to their interests. And we believe that that interest drive is really important to us and unique to us. ”

Have a very large global audience

“we have a very large global audience. We have obviously over 300 million logged-in users. We just reported 313 million. We have more than 500 million plus logged-out users, and then we have a very large syndicated audience.”

We know what our users care about by who they follow

“logged-in users explicitly express their interests, what they care about, if they’re a Red Sox fan, if they’re a Jets fan, if they’re Republican or Democrat, based on who they’re following. And therefore, we can tailor the content that we’re delivering to them based on their specific interests. ”

Anthony Noto – Chief Financial Officer

Saw better engagement across a number of metrics

“Our engagement metrics did improve across a variety of different metrics that we look at. In the past, we’ve talked about the importance of daily active users, and that grew. And the DAU to MAU ratio remained stable. We also saw an improvement in user active minutes, up double-digits. We saw an improvement in tweet impressions, up double-digits as well on a year-over-year basis. Searches also increased double-digits year-over-year, and then last, DMs increased at a double-digit rate year-over-year. So, strong performance on engagement across all the metrics that we look at.”

Limited opportunity to increase ad load, but opportunity to increase yield

” I think it’s also important to note that for the U.S. home timeline, while the incremental benefits from ad load itself are more limited given where we’re at, there is a significant opportunity to increase yield over time by driving improvements in targeting, creative and measurement that Adam talked about.”

Adam Bain – Chief Operating Officer

We’re a video centric platform

“On the video side, we have become a video-centric platform. Video is now the number-one ad format in terms of revenue on Twitter. It’s interesting, because just a year ago, those set of products did not exist. So, we’ve seen a continuation of some of these trends overall, where promoted tweet advertisers were upgrading into video.”

Online video budgets are a new ad category

“There is a whole new set of video budgets out there today. These are these online video budgets. It’s about a $10 billion marketplace in the U.S. These are video budgets that today we basically don’t qualify for, since the spend is going in other areas. There’s a set of products and features that we’re in development on to land those budgets. We have some good signs of early success around video, and especially around these online video budgets in terms of incrementality.”

Direct response is a $130B marketplace

“On the direct response side of the business, this is a $130 billion or so marketplace. It’s one again that we have very little share of today, and we have a product-driven approach over a multiple set of quarters to improve the ROI, in terms of better creative targeting measurement for our DR advertisers. Both of those opportunities will get us out of just the social category into other large categories that we compete.”

Twitter priced at premium in terms of CPE but ultimately justified by ROI

“I think, overall, as we look at it, there certainly is increased competition for social marketing budgets, and we are effectively priced at a premium in terms of a CPE. We’re doing a bunch of work to help bring both prices down and improve ROI for those advertisers. Ultimately, it comes to hitting that ROI target. There are some advertisers, though, that just look at price that are more sophisticated advertisers that look at value and the price to value exchange. We do think that while we have a premium, that premium is justified overall in the market.”