推特 (TWTR) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen. 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.

Great. Thanks Jamie, and good afternoon. Welcome to our Q2 (sic -- first-quarter) earnings call and thanks for joining us. We have with us today our CEO, Dick Costolo, and our CFO, Mike Gupta. We will 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 TWTR earnings.

We would like to 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 statement 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 our website in a few hours. And with that, I would like to turn the call over to our CEO, Dick Costolo.

Thanks Krista. 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 two things: increased engagement and user growth. Seeing revenue acceleration in Q1 is particularly gratifying coming off our strong fourth-quarter revenue numbers.

Last quarter, I spoke about a number of initiatives we have underway to drive user growth and engagement, and I like the progress we've made there. Monthly active users grew to 255 million in the quarter, including re-acceleration in our largest market, the US, which added 3 million net users. We had great engagement increases as well, and Mike will talk about those.

We're continuing to execute on the product roadmap I laid out for you on the last call. I love the work we've done making the platform more visually engaging, for example, and you'll start to see more in the areas of organizing content for new users and innovating on direct messages, to name two other areas.

I want to speak a bit about the broader Twitter platform that's unfolding, specifically our ad exchange and the impact of Twitter across the entirety of the web and mobile landscape. Content creators, publishers, and marketers care about two things: scale and engagement, and our platform increasingly delivers both of those.

First, I'm proud of the speed with which the teams here integrated MoPub, our mobile ad exchange, into Twitter. It now reaches over 1 billion iOS and Android users, making it one of, if not the largest in-app mobile ad exchange, and the only one at scale to offer publishers native in-app advertising. Our recently announced mobile app download suite is the first product to take advantage of this integration, but there's a lot more to come.

In Q2, we will offer even greater reach and scale to advertisers with the launch of an integrated bidding system, which will allow them to bid across this combined inventory through a single interface for many kinds of ads. To be very clear, there are few other companies with this kind of reach, and we see a strategic opportunity here to assist marketers in making the shift from desktop to mobile.

Second, I want to quickly highlight the reach and impact of Twitter across the entirety of the web and mobile landscape, as this will be an important area for us as we scale. In the two days after the Oscars, there were over 3.3 billion views of tweets just about the show. That kind of reach and impact is why we now have TV measurement and ratings partnerships in 11 countries, and it's what has enabled us to build a partnership with Billboard for the first real-time chart to highlight the music of the moment.

We're going to continue to invest in scaling our syndication capabilities to include new ways to distribute our content. As we do, there's significant opportunity for us in leveraging the widely distributed characteristic of public tweets. These two pieces, our ad exchange and the reach and impact off of Twitter, are just parts of a larger platform strategy, and you should expect to see us offer even more tools to help content creators, publishers, and advertisers make the most of the real-time data that only comes through Twitter, the richness of our interest graph, and our incredible mobile scale.

To wrap up, I'm happy with the Company's focus, the remarkable quality of people we're attracting into the Company, and the positive reaction I hear from customers and partners that I visit around the world. We have an obligation to all our users to be the best companion experience to what's happening in their world, and I've never seen the team more fired up about the opportunity in front of us. And with that, here's Mike to walk you through the numbers.

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 US. 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 seen 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 for mobile devices, up from approximately 60% in the prior year.

n 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 excludes 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 cost 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: cost of sales for the first quarter was $71 million, R&D costs were $71 million, sales and marketing costs were $77 million, and general and administrative costs were $28 million. This resulted in adjusted EBITDA for the first quarter of $37 million, compared to $12 million in the prior-year period, representing an EBITDA margin of 15% in Q1.

Non-GAAP net income was $183,000 in the first quarter, up from a non-GAAP net loss of approximately $11 million in the same period a year ago. Our GAAP net loss in the first quarter was $132 million, which includes $126 million of stock-based compensation expense.

Before I turn to metrics, let me cover a few items related cash and CapEx. We ended the quarter with roughly $2.2 billion of cash and marketable securities. Our CapEx was $67 million, $17 million of which was financed through capital leases. The remaining $50 million was purchased outright. Our total CapEx in Q1 reflects continued investment in co-located data centers and office facilities.

Now, I'd like to turn to our operating metrics. As Dick mentioned, we are seeing early signs that the product enhancements we are making are driving increased growth in monthly active users, timeline views, and interactions per timeline view. These metrics also benefited from new device activations and a significant number of live events in Q1.

First on user growth. We saw good growth in monthly active users in the first quarter. Average MAU's reached 255 million, reflecting 14 million net additions in the first quarter, up from 9 million net additions in Q4.

We saw strong growth in both US and international markets. US MAUs reach 57 million, reflecting 3 million net additions in the first quarter, up from 1 million net additions in the fourth quarter. And International MAUs reached 198 million, reflecting 11 million net additions, up from 8 million net additions in Q4.

Timeline views increased to approximately 157 billion, up 20 billion, or 15% from the same quarter last year, and up 9 billion, or 6% from the fourth quarter. Timeline views per MAU were stable quarter over quarter, suggesting that on average new users added in the quarter are just as engaged as existing users. Interactions per timeline view were also up significantly, with favorites and reTweets up 26% in Q1, highlighting that users are deriving greater value from the timelines that they are consuming.

Moving now to monetization, ad revenue per 1,000 timeline views reached $1.44 in Q1, up 96% year over year and down 3% sequentially due to the typical Q1 seasonality, which is more pronounced here in the US. US ad revenue per 1,000 timeline views reached $3.47, up 78% year over year, and international ad revenue per 1,000 timeline views reached $0.61, up 152% year over year.

Now let me turn to ad engagements, cost per ad engagement, and ad load. As a reminder, we do not optimize for cost per ad engagement. Instead, we optimize for user experience, advertiser ROI, and overall yield on the platform.

In Q1, average cost per ad engagement was down 20% quarter over quarter. This was more than offset by the 28% increase in total ad engagements, thereby driving overall ad revenue up while improving the quality of our user experience and increasing advertiser ROI.

The increase in ad engagements was driven by higher-quality ads and the increased use of rich media by our advertisers. Importantly, we were able to achieve these results while maintaining very low ad load.

Before I turn to guidance, let me touch quickly on our decision not to pursue a secondary offering. One of the primary reasons companies typically pursue a secondary offering is to provide organized liquidity to early investors who are looking to sell stock.

As you may have seen in our recent 8-K and in statements made to the press, many of our largest insiders and early investors have indicated that they have a long-term belief in the Company and are taking a long-term view of the stock. As such, they do not currently have any plans to sell stock immediately upon lockup expiration. And as a result, we have no plans to pursue a secondary offering at this time.

Now let's turn to the outlook. While Q1 was a strong quarter for us, we believe part of it was driven by the live events that I mentioned earlier. And while there will be key events in Q2, like the World Cup, there will be fewer than in Q1. Despite this, we expect total revenue to grow to $270 million to $280 million, with adjusted EBITDA in the range of $25 million to $30 million.

Note that expenses in Q2 will be higher, primarily due to recent acquisitions, as well as the continued investment in our core business. And finally, we expect stock-based compensation expense in the range of $170 million to $180 million.

For full year 2014, we are raising our range for total revenue to be between $1.2 billion and $1.25 billion, $50 million above our previous range. The increase reflects our Q1 out-performance, increased expectations for our advertising business, and the inclusion of Genip, which will be reported in the data licensing and other line going forward.

While we won't be breaking out Genip's results explicitly, it's worth noting that we have an existing commercial relationship in which we receive a significant revenue share from the company. The Genip revenue, added to our outlook, reflects only the incremental revenue that we do not already recognize.

Moving onto profit, stock-based compensation, and CapEx, we are raising our range for adjusted EBITDA to between $180 million and $205 million. Stock-based compensation expense to be in the range of $640 million to $690 million, which is $40 million above the previous range due to recent acquisitions, and CapEx between $330 million and $390 million.

In summary, we are very pleased with this quarter. We saw increased revenue driven by the accelerated growth of our user base and their increased level of engagement. We will continue to invest in growing our user base and enhancing our monetization capabilities.

But we remain disciplined, and we will invest wisely to deliver continued long-term growth for our shareholders. With that, we'd like to open up the call for questions.

(Operator Instructions)

Ross Sandler, Deutsche Bank.

Thanks, guys. Just, I got two basic questions.

You had mentioned that you saw some sequential improvement in user metrics like MAU, ads, and engagement. I guess I'm trying to understand if some of the product changes that you've made in the last six 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 looked 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? Thanks.

Hello Ross, it's Dick. A couple 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 how I would frame that vis-a-vis looking forward, is as follows.

We still firmly believe that it will be the combination of changes that we make over the course of the year on that roadmap we've laid out for you that will result in a change in the growth of the platform, and we're confident in that change based on the results we've seen from the first few changes that we've made that we talk about in the previous quarter.

Vis-a-vis your second point about engagement, there are several things we look at there. Let me just talk about each of those couple -- each of those few things and then tie it all together for you as it regard to your specific question about timeline views per MAU. So first of all, there's timeline views.

And as Mike mentioned in his remarks, the thing that we loved about timeline views in the first quarter was that they're stable vis-a-vis MAUs for all of the net new users that we added. So that means that on average our net new users are just as engaged as our existing users, which is great.

Now compound that with the multiplicative effect, multiplicative impact of engagement per timeline view, which we've really been focused on the last couple of quarters. We talked about that in the Q4 call, and Mike mentioned again today, that favorites and reTweets are up 26%. So you've got this multiplicative impact of engagement per timeline and timeline views per MAU. And the engagement per timeline that we're driving flows all the way through to monetization, as you saw reflected in our results.

So to that specific question about down 8% year over year, we made a number of changes in the second half of the year last year that were focused on increasing the value of an individual timeline view. For example, conversations. Used to be the case that when you came to Twitter and you wanted to follow a conversation, you kind of had to hop around back and forth between timelines, and that would drive up timeline views.

Well, in order to increase the value of the user experience, what we did in the second half of last year, along with a number of other things, is to collapse that conversation into a single timeline view to drive additional value to the user in each timeline view. So it will be the case through the first half of the year that you will continue to see what happened in the second half of the year when we worked on those kinds of collapsing the value into a single timeline view.

Great, thank you. Next question please, operator?

Douglas Anmuth, JPMorgan.

Hi. This is Diana on for Doug. he first question was just kind of related to the prior question on timeline views, and maybe if you could prioritize to us which metrics you look at in order of importance?

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 axis. 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 the way we think about it. We don't think about it as a binary either/or, it's the combination of the two. 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 engagement on-platform and the broader billions of users who are consuming Tweets off the platform.

Thanks, and if you could just quickly clarify the comment on the guidance going forward, how part of it is including only incremental that isn't already being recognized?

Yes. Hi, Diana. That's related to the Genip 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 Genip revenue is not incremental to our financials today.

Thank you.

Thanks. Next question please, operator?

Anthony DiClemente, Nomura.

Hi. It's (inaudible) I hope you hear me. 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 newsfeed of sorts in terms of headlines and things from media outlets, but of course there's so many people out there that use it for conversation and 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? Thanks.

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.

I really see this as a consistent use case over time. As you think about the broader question, when will -- in the context of when will Twitter be mainstream, the beauty of Twitter the 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 the around the Oscars in just two days.

So Twitter the platform, we believe is already credibly mainstream, and now what we need to do is help that world of users who already experienced Twitter every day understand the value, the increased value of the login experience.

Thanks. 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'm just wondering, can you talk about other idiosyncratic events like the plane that went down in Malaysia, or the events in Ukraine and how those compare to something like the Olympics in terms of being a driver of the KPI that you're looking at? Thanks a lot.

Yes. Thanks, Anthony, for the question.

When we look at events like that, I think they differ a little bit. 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 things that would attract the advertiser to the platform to advertise specifically around those events. So that's the one distinction I would make.

That's helpful. Thank you very much.

Thank you. Next question please, operator?

Heath Terry, Goldman Sachs.

Great, thank you.

Dick, is there any sense that you could give us in terms of the kind of user growth cadence you saw over the course of the quarter, particularly relative to the US 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 product enhancements that you've seen have an impact on user growth in the US 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?

Sure. Hello, Health, it's 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 rollouts 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-a-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'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 three things are in the product, X will happen. It will be this combination of changes.

Great. Thanks, Dick.

Thanks. We'll take our next question from Twitter, which comes from the Twitter account of Neil Doshi at CRT. And Neil asks, are there any ad verticals that showed strength and/or weakness specifically during the quarter?

Great. I'll take that. This is Mike. Thanks the 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 move out of the Q4 holiday season into Q1. But in particular we saw strength around the consumer packaged goods and the media and entertainment verticals.

Neil, I'm just look at the screen. I noticed you have another -- two more questions. So maybe I'll just hit those really quickly. The next one from Neil is, how are self-serve ads tracking in the US, 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 watching the self-serve platform in the UK, 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 channels who are 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 for the ad platform, we continue to improve the targeting. We improve it. 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 US 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 US. And really that's driven by -- we're seeing a full quarter of Media Forward as we talked about our comments. That's really driven up engagement, not only from the user side but also translated through to ad engagement. 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've been continuing to add advertisers to the platform. The addition of these advertisers gives us more relevant content to show our users, and we're seen that translate into higher-quality ads, and as a result higher engagement. Thanks.

Great. Thank you. Operator. We'll take the next question, please, from the phone lines?

Jordan Monahan, Morgan Stanley.

Great. Thank you for taking our questions. Actually two, 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] short messaging and communications just inherently more local or 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. Then from a user perspective, does having MoPub help you re-engage existing Twitter users? And are you able to somehow pull back into the platform?

Sure, there's a 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 regional differentiation and 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. 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 ask, 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 two 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 is 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.

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 served through MoPub? Is there way to help you bring them back to the Twitter platform and continue to engage on the platform?

Yes. Sure, sorry. Missed you -- lost -- 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, 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 gives us an ongoing opportunity to reengage users.

Okay, great. Thank you.

Thanks. Operator, can you take the next question, please?

Mark Mahaney, RBC Capital Markets.

Thank you. Two questions, please. Could you talk about the best or most interesting international whitespace opportunities, particular 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? Thank you.

Yes. Hello, 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 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.

And then let me take -- Mike, I'll take the engagement by cohort.

I think if you look at what we just disclosed around the timeline views [primarily] you see that as 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 we'll 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 they're specific use cases that differ within them, but we generally view them as consistent and over time.

Thanks, Mike.

I'll just hop in there right at the end. It's a tag team match here. This is Dick again.

I think one thing that's probably worth pointing out is that, we mentioned this in our S-1. Our DAU/MAU ratio, if you kind of think of in terms of just the broadest engagement sense, our DAU/MAU ratio remains in the very high 40%s.

Great. Thank you very much.

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.

Great. Thanks, Rich, for the question. I'll take that. So just to state the power of the app install ads, what we're seeing here, like many of the recent cards we released, is they're designed to drive a specific action tied to the advertiser objective. And we're seen 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 here, like Spotify, Kabaam, and Hotel Tonight. Having said that, we think it's too early to quantify more broadly the opportunity, but it is factored into the outlook we provided for both Q2 and the full year.

Thank you. Let's take our next question, please, from the phone line?

Peter Stabler, Wells Fargo Securities.

Good afternoon. Thanks for taking the question.

Dick, wanted to go back to your comments, it might've been yours, Mike too, about the quarter and 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? Thanks very much.

This is Dick.

No, I think I would categorize -- I would just categorize them as interesting, but it's really this collection of product changes that we've 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.

Thank you.

Great. Thank you. And the next question please, operator?

Justin Post, Merrill Lynch.

Thank you. 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 relates to that, doing about $1 per user per quarter, which would -- $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 one last thing on the financial side, SBC seems somewhat elevated this year. Is there any one-time things affecting this year that might not continue in future years? Thank you.

Hello, Justin. Thanks, it's Mike.

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 modernization 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 a 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 translate through like Media Forward. All of these things are driving meaningfully higher engagement in the ad space, which is translating to higher an revenue per timeline view.

The two 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 translate 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 monetizaton. So we think all of those really give us the 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 the end of 2013. And so over time those will cascade off, but you can see that waterfall in our 10-K.

Thank you. Appreciate it.

Thanks. Our next question comes from the Twitter stream from the account of @Judah E. And he asks, do you care to respond to NBC Universal's quote in the Financial Times regarding the emperor and his lack of clothes?

So this is a 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 two-way complimentary relationship between Twitter and TV.

As that strategy has evolved and we've continue to invest in it, there is a host, 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 turning 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 on audience members' likelihood to change the channel, and then Nielsen found a causal relationship between Twitter activity and tune in.

Further, there were only three things that correlated with TV ratings in that study. Prior seasons ratings for the show, ad spend for the show, and Twitter activity. So all of that tells us, in addition to, I would say, the growing number of content providers and broadcasters participating on our Amplify program, that our Twitter and TV strategy is on the right track.

Great. Thank you. Operator, we'll take the next question, please, from the phone lines.

Brian Wieser, Pivotal Research.

Hi. Thanks for taking the question.

I was wondering, first, how many unique advertisers do you have at this point? 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 Genip transaction was worth, and what that says about how your data strategy is going to evolve going forward?

Hi, Brian. This is 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-size businesses as we continue to expand the self-serve platform internationally.

On average, if we have 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 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 Genip, that's not something we're going to disclose at this time. And then lastly, let me just turn it over to Dick to speak a little about the rationale behind the acquisition.

Hello, Brian.

What we saw was marketers, specific industry verticals, and then a breadth of companies from Fortune 500 companies to 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 deliver 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.

Okay. Thank you very much.

Thank you. Next question please, operator?

Eric Sheridan, UBS.

Thanks for taking the questions.

I guess first one on advertising cost going forward, what are you most excited about on the ad product side that could actually cause some inflationary pressure so it isn't sort of ad loads or user growth that drives 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? Thanks.

Eric, hi. It's Mike. Let me start with 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 -- 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 here, you mentioned the Super Bowl. There's 25 million Tweets around the Super Bowl and that event, but we have over 1 million Tweets about sports on the platform every day.

You look at the Grammys, we had 15 million Tweets around the Grammys. There's approximately 3 million tweets about music on the platform every day. And so we're 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, and I think 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 from the advertisers by bringing more advertisers to the platform. We think those things will drive overall yield on the platform.

Great thanks the color.

Just to add one thing to that, Eric, one of the neat things about the way marketers and advertisers around the world are starting to understand 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 has had this Hashtag Share The Sofa campaign during the European's Champion League Games, and they use their Tweets to give 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 this 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.

Great.

Thank you. And the next question comes from our Twitter stream from the account of Dan Salmon at BMO. And he asks, how do you expect TV advertisers and agencies to leverage Twitter tools during the upfront new front process?

Great. Hi, Dan. It's Mike. I'll take that one.

As we're in the upfront process right now, we are partnering with a number of broadcasters and agencies during their upfront meetings, and what we think there are a number of tools that both advertisers and agencies can leverage, both of 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 a 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 upfronts, and in particular leveraging the Nielsen Twitter TV rating as a complement to the other Nielsen regions that are out there,

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 the major broadcasters here in the US 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 on 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.

And just one example of that comes to mind here is Verizon Wireless. They use Twitter in concert with TV advertising that they were doing around adding gross subscribers. And they saw 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.

Thank you. And we're going to take one more question from the Twitter stream. It comes from the account of Colin Sebastian at RW Baird. He asks, despite solid Q1 financials, there still seems to be a disconnect with usage metrics. When will these recalibrate?

Yes, Hello, Colin. It's Dick.

Let me be really clear. I am really happy with engagement in Q1. It's fantastic across a number of dimensions. One, the areas of focus for us in the last couple of quarters have been increasing the value of a timeline, and we saw again, as we've mentioned, 26% increase in reTweets and favorites just in this last quarter on top of really great growth in Q4.

And then additionally we saw that our net new users in the quarter in terms of timelines use per MAU, are just as engaged as our existing users. Because I think of these two factors as not an either/or but rather a multiplicative effect, and then we see that impact flow through to monetization, and then we all see the results were there, I think that the engagement rates we're seeing are fantastic.

Thank you. Operator, next question, please?

Jordan Rohan, Stifel Nicholas.

Thanks so much. I haven't been following too much the commentary that the executive 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 that selling pressure have to fight itself to the open market? Thank you.

Hi, Jordan. It's Mike. Employees and these early investors are not precluded from selling up on lockup expiration. What I was referring to is the public statements made by many of our early investors, our large early investors, as well as of some of our key insiders here around the fact that they don't intend to sell immediately upon lockup expiration.

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 that will not hit the market because of those statements?

Yes. I would say it's a meaningful portion of the supply that could in theory come to market after lockup 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 is meaningful.

All right. Thank you very much.

Thank you. Next question, please, operator?

Ben Schachter, Macquarie.

Hello, guys. 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 way you're seeing to do that? Also, are there any notable differences between Android and Apple downloads?

And then separately, should we expect you to build any meaningful independent standalone apps? Or will the focus continue to be on the Twitter app? Thanks.

Sure. Hello, Ben. It's Dick. Two questions there.

First question, yes absolutely focused on driving Twitter app downloads, no question about it. 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.

Thank you. Next question, please, operator?

Youssef Squali, Cantor Fitzgerald.

Thank you very much. Just as a follow-up to the last question.

When do you take the app install adds 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 d think it is this year? What's baked into year 2014 outlook? Thank you.

Hi, Youssef. This is Mike.

So on the first one, we don't have a specific date to announce 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 type of rollout. Having said that, I just want to point out again we're seeing great results from the early partners like Spotify, Caban, and Hotel Tonight.

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 is 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.

Thank you.

Thank you. And operator, I think we have time for just one last question, please.

John Blackledge, Cowen & Company.

Great. Thanks. Just a couple questions.

Are the -- back on the ad loads. Are the low ad loads a function of advertising demand, or is it a focus by Twitter on a good user experience or some other factor? And if you could give us a sense of advertisers view of ROI on Twitter versus maybe some other platforms that they're using? Thanks.

Hello, John. It's Mike.

Let me take the first one. Ad load, very low as I 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 and 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 and 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 seen around Twitter and TV and some of the closed-loop 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 drive specific action that meet their objectives, we think we'll continue to drive up their ROI because they'll get better conversion and better results more in line with their objectives.

And I'll just throw in 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 Get Taxi. A mobile app has said that using our mobile app promotion suite. We are now -- Twitter is now their number one customer acquisition channel.

Folks like American Apparel who use our lead gen cards to get new customers to sign up, their 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 to large global brands, and we are delivering ROI for the customers.

Thank you.

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.

Ladies and gentlemen, that does conclude the conference for today. Again, thank you for your participation. You may all disconnect. Have a good day.