Twitter, Inc. (TWTR) Presents at Morgan Stanley Technology, Media & Telecom Brokers Conference (Transcript)

Mar. 02, 2019 12:51 PM ETTwitter, Inc. (TWTR)1 Comment
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Twitter, Inc. (NYSE:TWTR) Morgan Stanley Technology, Media & Telecom Conference Call February 26, 2018 1:00 PM ET

Company Participants

Ned Segal - CFO

Conference Call Participants

Brian Nowak - Morgan Stanley

Brian Nowak

All right. Good morning, everyone to Day 2 on our morning keynotes here, we're thrilled to have Ned Segal with us, the CFO of Twitter. Before we get started, the disclosures.

Please note that all important disclosures, including personal holdings disclosures and Morgan Stanley disclosures appear on the Morgan Stanley public website at or at the registration desk.

Ned Segal

Well done.

Brian Nowak

Checked. Ned, so Ned joined Twitter in August of 2017. Before you were at Twitter, you were at Intuit Small Business Group, you were also at RPX Corporation and prior to that, you were an investment banker at Goldman Sachs. Thanks for coming, anyway.

Ned Segal

Thanks for having me.

Brian Nowak

Thank you so much. We're very grateful. Thanks, Ned. So here we are, this is year 2, we sat here a year ago, and it was year 1, we talked about sort of the importance of investing in sales, kind of really getting the ad sales, process refined a bit. Here we are in February, sort of talk us through the 1 or 2 key priorities for 2019?

Ned Segal

Well, the great thing about the 2019 for Twitter is, this is going to be a year where we continue to focus on the same priorities that we had in 2018, which for Twitter, is kind of a relief that we're able to maintain our focus, that we feel good about our strategy, that we feel good about the execution that we delivered over the last couple of years, and it puts us in a position to reaffirm our priorities and to invest more against them.

So you'll hear us continue to talk about health, about conversations as a way to drive audience, about the revenue products and sales and about the platform that we use to create and deliver Twitter.

So we mentioned on the earnings call that we would grow expenses approximately 20% this year, which means that all the expenses that we accumulated last year and the 16% headcount growth, we roll all that forward and it gives us a little less than - basically next to $100 million of new money to put to work, to invest against those priorities.

Brian Nowak

Got it. And you mentioned the health and sort of the health of the conversation on the platform. I know, Jack has talked about that to some extent as well. Maybe just for everyone in the room, talk to us about why promoting a healthy conversational platform is important? Where we made the bigger strides? Where can you improve it? And what does that do from a monetization potential?

Ned Segal

Sure. So health is the number one priority for the business. And the reason is, in order to - the purpose of the company is to serve the public conversation, and in order to do that people need to be able to trust the information that they see on Twitter, and they need to feel comfortable being a part of the conversation.

And so that means that we need to do everything we can to prevent spammy and suspicious accounts from getting on to the service, to prevent them from amplifying Tweets or conversations in an inappropriate way, and we need to make sure that people feel comfortable trusting information that they see.

So there is so much work that goes into all of that, whether it's around elections, where we had the opportunity in 2018, both in the midterms and in the presidential elections in Mexico, Brazil and elsewhere, to demonstrate all the improvements that we read not just where it's easier to find things, but where there is an ads transparency center, and you can actually see who is buying ads, what they're paying for them, what demographic they're after.

This kind of transparency goes a long way towards allowing people or enabling people to trust the service and what they find there. We also are doing a better job catching accounts at sign up, so - through forcing people to verify an e-mail or a phone number that used to be friction, it's not really friction any more.

People who want to get on to the service will go through that and people who are using it in spammy or suspicious ways won't be able to, so that's worked really well. There are other examples I can give, but when we netted all out, we're starting to see signs that these things are making a difference.

We're seeing fewer of certain kinds of reports, we're hearing anecdotal evidence that we find really affirming. When we talk to the largest advertisers in the world, they applaud the work that we're doing. We're doing it because it's the right thing, we're doing it because it will ultimately be a growth vector both around audience and around advertisers as they trust the platform more.

Brian Nowak

Some parts are improving the discussion of advertisers, I imagine as to why they should spend and how they think about the spending then?

Ned Segal

Yes. It makes a big difference for advertisers when they know that, if we all have challenges that we face to run our business, and when we're upfront with them about the challenges that we see around health, when we talk them through the work that we're doing to remove spammy and suspicious behavior, to put an interstitial over a Tweet that might not be appropriate.

Being more proactive in what we remove from the service, so that people feel healthy, feel that they can trust that they find on Twitter and feel comfortable being a part of the conversation, they applaud that work.

Brian Nowak

Yes. The - one of the conversations you usually have about the platform is sort of the core use case and how people use the platform, why people come back to the platform. Now over the years, you've made a series of changes to the way the time line is ranked, is it reverse chron, is it based on relevancy? You reorged the Explore tab somewhat.

So I guess, I'd be curious you sit here in 2019, how has the core user behavior changed on the platform, both for the better and also some of the challenges you've encountered that sort of made some of the changes?

Ned Segal

So a couple of things to point out around the audience and engagement. The first is, the top of the funnel has really been consistent, that's really encouraging in lots of ways, and it also reminds us of how many people are coming to Twitter every day where we're not giving them everything they're looking for, and they're leaving and not coming back for a month or more. The good news is it continues to be healthy, so we still have the opportunity to make it easier to find things on Twitter, so that they will come back more frequently and stay longer when they're there.

Secondly, when we look at engagement, we haven't really focused on a specific metric because there are so many different ways to look at engagement, and we think the best way to measure if we're able to drive engagement, it's going to be to look at the monetizable DAU and see how we're able to drive that over time, but we continue to be pleased with the engagement trends that we see. But when we think about work that we can do on the products in order to get people to Tweet more, in order to make it easier for people to find the information that they're looking for, we think about a couple of things.

We want Twitter to be more conversational, we want people to be comfortable being a part of the conversation, we want them to know who started the conversation, we want people who start conversations to reply to the people who added to the conversation, we want people to know who is on Twitter at a given moment and who might not be on Twitter.

And so you'll see work around those types of things over the course of this year because Tweets are the lifeblood of Twitter, that's all the breaking news and information that we all care about, whether it's about the Giants or a natural disaster, somewhere in the world, or politics or other things that we might care about on the surface.

Brian Nowak

You mentioned the monetizable DAU, so we have a new metric. You know we love our

little metrics. So mDAU, so now we'll certainly talk a lot about on Wall Street about the stock. So the mDAUs has sort of broke those out now relatively flattish growth in the U.S. over the last year, and it seems like the growth is really coming internationally, and I think you even mentioned about 5 to 10 markets are still growing double digits, I guess so.

As we sort of think about the addressable market for users, how can you drive faster mDAU growth, what are 1 or 2 key factors you think can actually drive growth on the U.S. side? And what learnings do you have from some of those stronger markets, the double-digit growers, do you think could actually play out in other markets?

Ned Segal

So a couple things around monetizable DAU. First is, this is the same metric for which we've given the percentage - year-over-year growth for the last few years, and we've just now given the absolute number. So there is no change in the calculation. We actually have been using that “m” internally. We haven't been using it externally as we were effectively conforming to how other people talked about their metrics.

And as we made this change to give out the absolute number, we thought it was important to talk about it externally the same way that we talk about it internally. And so that's why the put the “m” on it, and that's why we've given the absolute number. That's why we'll stop talking about MAU. It's not something that we're goaling around internally, it's not something that measures our success in bringing people to Twitter every day. So that's a little bit about monetizable DAU.

As - when we think about ways that we can drive them, we've got a lot of work to do both in the United States and in the rest of the world. When we look at the growth that we've delivered over the last couple of years where we've been in this 9% to 14% band, it's going to take a long time to get the rest of the world to use Twitter, if we can't get out of that band and grow much at faster rates.

And when we think about the things that we can do that, they're broadly applicable, they're not U.S. specific, they're not Japan specific to think about a couple of our larger markets, but they're also not specific to India, Brazil, Mexico, the Middle East places, where we've seen real strength in the recent past, but where we know that we're still leaving a lot of on the table because everybody in the world cares about what's happening in the world and what people are talking about. We all have topics and events that we care about and a lot of people are coming to Twitter every day to find out about them.

We're making it too hard for them to find what they're looking for, so the events and topics infrastructure that we've talked about, which makes it a lot easier to find and soon hopefully, actually, follow topics and events making it - so that you can go back and forth between reverse chronological and algorithmic in an easier and more transparent way, making it easier for people to Tweet and giving them more confidence and more space with which to do it.

Those are some of the things that we have ever done in the recent past or that we think about doing in the future, but there is a lot of work for us to do around events and topics. It's not like a big reveal, it's much more of a rolling thunder over the next couple years.

Brian Nowak

And we'll just stick to the United States. We have - our President is pretty active on Twitter. So I imagine, you mentioned the top of the funnel is healthy. So I guess, the first question is, do you have any updates or stats you are sharing the number of people who come to Twitter or exposed to Twitter on a daily or monthly basis? And I know a focal point has been try to catch more of these people and really convert them in the onboarding process. Maybe talk us through some of the challenges you still have to overcome in the U.S. to convert those people to bring them back more recurrently?

Ned Segal

So the top of funnel has been pretty constant. We haven't really updated the numbers around it. What has changed is, we're doing a better job of catching spammy and suspicious accounts at sign up, and so that causes sign ups to vary from one period to another. Signups don't necessarily affect DAU or MAU for that matter and as many ways as you might expect because an account may be active for a brief period of time, and then be inactive for an extended period of time.

Think about the tens of millions of accounts that we suspended or removed early last year and how those didn't really affect the disclosed metrics because they were effectively inactive accounts that already has liked and followed and retweeted things, so had already amplified messages that probably they shouldn't have. Remind me the second part of your question?

Brian Nowak

Is the challenge you still can overcome on the onboarding process to convert people?

Ned Segal

Sure. We've talked a lot about onboarding because we know it's an opportunity, but we've prioritized other things over the last couple of years, and this is a time when we should turn back on to onboarding. As we prioritized health in 2018, we actually took people off of onboarding and put them on health.

We also asked the onboarding team and said, if you see the opportunity to close a door, we'd rather you did that than figure out how to open a new one. And so those are things that impact onboarding both in just the time that you have, the number of people that you have and the mindset that they're taking, so the work that they're doing.

But there's still a lap that we should do around onboarding. We often ask ourselves why is it that we have to ask you bunch of questions before we show you a timeline. Why can't we based on where you are, what kind of device you're on, how you got to Twitter, show you a rough time line and get feedback from you in your first few uses that help you - that reduce friction and help you find what you're looking for pretty quickly. We ask ourselves questions like that, and I hope over the next few quarters, that you'll see some evolution on the work there.

One of the fun things about Twitter is, you don't have to come to Twitter to find what people are saying on Twitter. You can turn on the news, you can open a newspaper, there may even be an article or story about what somebody said in 280 characters or less.

Tweets can be found on over a million websites. They can be found on every newspaper and in every TV channel that you - where you might be watching the news. We view so many of those as really just more top of funnel opportunity and creates ways for people to know about all the amazing things that are on Twitter, and the work for us is really just to make it easier for people to find the things they're looking for when they get there.

Brian Nowak

So that's the tricky balance because there's this debate sometimes we have with investors where because the information is so public, does that actually hold back user growth to an extent? Maybe it helps the funnel, but - go ahead.

Ned Segal

It may hold them back from seeing the first Tweet, but what's great about Twitter is the whole conversation, not just the Tweet. If you care about the Warriors, you want to know what the smartest sportscasters are saying, but you also want to know what one of the guys or gals who is one of the biggest fans of the team, who knows something about something and is mentioning it on Twitter, how they're contributing to the conversation, you want to know what Draymond's mother is saying as a part of the conversation, and you can't get all of that from one Tweet.

So the hope is that when people see Twitter wherever they might be in the world, that it is a path for them to want to learn more, and the work for us is to make sure that when they get to Twitter, that they can find what they're looking for, that they're not intimidated by everything that they see.

We also talked a lot in the last couple of years about notifications as a way to do a better job of that. Notifications is a really broad thing for us. It can mean sending you an e-mail to bring you to the service. It can mean a pop-up on the app, it can mean a badge icon on the app. It also, as you saw over the course of last year, can mean that we're putting - using that most valuable real estate on Twitter, which is the very topic or timeline to tell you about things that we think you ought to care about and then to bring you into an experience around those topics and events.

There's still a lot of work for us that we're not perfect at it. We're getting much better at relevance around all of those things because as you can imagine, if you get those wrong, you've lost trust and you've missed an opportunity. And if you get them right, you're giving somebody great experience.

Brian Nowak

Yes. I want to talk about the ad business. You started out and you talked about how a lot of the priorities this year are very similar to last year from the ads, the overall priority.

Ned Segal

They're the same.

Brian Nowak

Yes. And remember last year, we talked about sort of almost hiring and retraining, to a certain extent, some of the sales people to kind of how to teach brands, how to spend on the platform. So maybe talk to us about sort of couple of the highlights or successes you've had in that area of how you pitched advertisers has improved? And what are sort of 1 or 2 of the key hurdles you still need to overcome to get a further share of budget?

Ned Segal

So we become much more clear with advertisers why they should use Twitter. We don't tell them that - well, let me tell you what we do tell them. We tell them that they - we've got the most valuable audience when they're most receptive. They're not coming for something different when they hear that, when they think about who is on Twitter and the conversations that are starting on Twitter, the thought leaders, the opportunity for people to engage with their brands that really resonates with them.

And we tell them there are two specific use cases that we think a lot about. The first is launch something new. So if you have a movie, you have a mobile device, you have a case for a mobile device, you have a new brand of ketchup or mayochup, you have something else that you're doing that is new that you want to talk to your customers about, Twitter is a must buy when you launch. And that has worked really well where some launches effectively become events in and of themselves when a new mobile device is launched by a big handset manufacturer, you'll see them, an entire ecosystem, advertising and people talking and engaging with the brands around that event, leading up to it and afterwards.

So launch is a big important use case that we talk about with advertisers. The second one is connect with what's happening. It's there - the Super Bowl is a great example of it. We had 30 of the 38 advertisers during the Super Bowl advertise on Twitter because when people who are on Twitter either because they weren't watching the game anymore or because they were watching the game and they wanted to learn more about it and engage around it, it was a great place to amplify a message that was already somewhere else that the advertisers were working hard to make sure that they're getting more for their money for their big ads that they had done around the Super Bowl.

Those messages have been pretty consistent now for the last year or so with advertisers. And when you're consistent and clear and when you're able to demonstrate and ROI to advertisers, they start to embrace these use cases and they think about them in the context of their ad spend.

So those have worked really well, and we think there is a lot more to do around them. We've also done great work around our ad formats, where we came out with the Video Website Card and the Video App Card about 1.5 year ago. So when they first come out, people test and they experiment and they might use copy that was meant for somewhere else.

And when you take a 30-second ad and you put the first 6 seconds inside a clickable surface on Twitter, people may not even see your brand as the story builds up over those 30 seconds. Well, 1.5 years later, we have people doing Twitter-specific copy for those ads. You can imagine they're much more effective when people do Twitter-specific copy than when they jam something else and that wasn't meant for the space. So we've learned a lot about how these can best be used, they've learned a lot, and we're able to help them get stronger ROIs as a result.

Brian Nowak

Yes. The Video Website Card and the Video App Card that you mentioned, you talked about those throughout the course of last year as well, being it seems a pretty big driver of the overall business, especially given how big your video business is.

One of the questions that comes up is, as we go throughout the course of 2019, the growth comparison is more difficult on the ad side, and maybe it's because you're launching a bigger push of those ad units or some of other factor, I don't know you can tell us. But is that a factor in your head when you think about the full year? Are the comps an issue? Or you just sort of saying we can continue to innovate and club with the new ad products in better ways to pull budget and don't worry about the comps Wall Street?

Ned Segal

Well, the comps are an output, and we'll leave it you to judge how to measure outputs, but we think about how we can deliver for advertisers and give them a strong ROI over an extended periods of time. And when we look at things like the Video Website Card and Video App Card or just the ongoing transition to video and people are using video better and better, we're delivering better relevance in the ad that we show people. We think there is just a ton more work for us to do around all of those things.

Last year, we did work so that we could sift through more ads before we showed you the ad that you saw on your screen. That's a tradeoff around latency, around server utilization, around weather, sifting through more - were there enough ads that we had more to sift through, and we were able to make a tradeoff that was transparent to the person who saw the ads, but allowed us to show them a more relevant higher cost ad that the advertiser was thrilled to pay more for because it was more relevant.

We also did work so that we preloaded video ads that weren't yet on the screen because it turns our people don't wait around for ads to load. There are more things like those that we can do to deliver better relevance, they continue to improve the formats. We'll continue to try to innovate around the formats as well to deliver for advertisers.

When we look at the mobile advertising or digital advertising market, we think about, I think, I read a Morgan Stanley report that there was like $15 billion of new digital ad dollars, working ad dollars this year. We feel like that's a lot for us to work against them. We're going to work hard to deliver for advertisers and get as much of that as we can.

Brian Nowak

Yes. That's just blocking and tackling, yes, just the blocking and tackling. The - one of the topics that does come up is sort of the advertising TAM, right? I know above your respective and sort of how you think about addressing direct response versus direct - versus branded advertising dollars as you go into 2019, where are you strong or working to improve, so where is the bigger driver of growth. And then what about capturing some of the below the line sort of marketing service dollars? Are you capturing those yet or is it still too early?

Ned Segal

Let me talk about the first one, then we'll get to the marketing services. The funnel that marketers think about, Twitter has historically been really strong at brand and not as strong at things lower down the funnel, where you're not buying things, where you could through on Twitter, where there is less attribution for the work that we're doing to drive the interest in a product or service through the ads that are on Twitter.

When Bruce Falck came to the company a little bit before I arrived, he leads revenue product for us and he made the priorities really clear that the first thing we're going to do to continue to earn the trust at advertisers was to get brand advertising, so a place that we felt really good about it. That man continuing to work on Video Website Card, the Video App Card making sure that things were stable, relevant and delivering. 1.5 years later, we feel we've done a really good job at that, and there is always more work to do around brand, but we feel we've earned the right to turn to some of the other things. And so that means direct response.

We do have some direct response advertising on Twitter but not as much as we should. Most of the direct response that you see on Twitter is either brand like Video Website Card or Video App Card, where you may - or you may be buying of the objective of people watching the video, but you also may be buying of the objective that somebody clicking through. But - the mobile application download product is something that we've seen real success in over time, but it's something we didn't invest in for the last 1.5 years as we really prioritize brand.

This will be a year where we invest in MAP as we call it and getting MAP to a place that we feel really good about isn't just about the mobile application download product, it's also about having a clearer path to more opportunity around helping advertisers with direct response.

So when you can do a better job around attribution and relevance, when you can help them further down in the funnel than we do today. With regards to our marketing services, we'd only think about marketing services to the extent that it was really in the service of the ads that we were delivering. If you just think about priorities at Twitter, we want to get the whole world to use the service.

So we think about things, everything else is a way that it may distract us from getting people to use Twitter. On the revenue side, we think about showing great compelling, highly relevant ads. And so if we did marketing services at the expense of those other 2, we'd really have to question whether we were impacting the long-term opportunity in the interest of some near-term dollars.

Brian Nowak

Video, we talked a few times about video sort of the strength of your video ad products, and you even said that over half of advertising is now - is on video advertising on the platform. Couple questions. One, how does that compare to engagement on the platform can you share that? It says time spend is - consumed - is on consumed video. And then sort of philosophically, how does Twitter think about premium content video versus general content video that I might shoot at the Warriors game to really drive overall video engagement?

Ned Segal

So a couple of things. The first is we should talk about all the different things a video can be on Twitter. Video can be an ad that you can click through to go to a website and to download an app. It could be user generated content, live or stored.

It could be licensed content where we work with one of our content partners to bring highlights, to bring a live cam from the NBA, 20 games during the second half of the season, the ISO CAM to Twitter, it could be a whole game sometimes, it could be a concert or something else like that. And all of these things are on service of the job that we're trying to help people with, which is people come to Twitter to find out what's happening in the world and what people are talking about. Video is a great medium to do that, but it's only one of them.

So we don't think about video as a destination. We don't think about video as, well, if you go in and just get more video on the platform, we think about making it so that it's easy for people to discuss what matters, to stay informed or to inform others however they want to do it, whether it's 280 characters or a picture or a video or the spoken word, whether it's live or stored. And if we make it easy to do all of those things, there'll be more Tweets, there'll be more people and there'll be more engagement.

But for now, I think, 5 quarters into where videos did more than half of the ad dollars, we're really pleased with how we navigated that transition, but there is so much more work for us to do around video, it's not like when it gets to - let's say, we're at 100% or it's just got really close to it, it wouldn't mean that we were done, right, because there'd still be work around relevance, around formats, around adjusting that demand supply balance that we've talked about where we still feel more demand constrain or supply constrain as we look across the service, we think about advertising. But so still lots of work to do around video broadly.

You asked about how we think about licensed content. Well, we're always looking for ways to do differentiated things with content owners, where we can bring their content to Twitter in a way that's different than where it might be somewhere else because people are coming to Twitter for something different than they might be coming to somewhere else.

So that means highlights like all the goals right after they were scored during the World Cup was an awesome thing last year. It means the highlights that we do with the bunch of these sports leagues where people are going to be talking about them anyways and this is great engagement, brand extension for the leagues and the teams and the players, that's all the stuff that's worked really well, and we'll continue to work hard at getting more of those.

Brian Nowak

On the revenue side before we turn to the cost is on Japan. Japan has been a particularly strong market for Twitter, I'm sure you've been asked this question a lot of times. You talked about the strength in video, the concentrated ad agency infrastructure within Japan. Anything else you can help us understand sort of from an engagement or a user perspective or anything else that has worked particularly well in Japan that might potentially be able to be used in other markets?

Ned Segal

Sure. There are couple things that we think about in Japan that we're really proud of. One is, we have a great audience there. People love Twitter, they use it to search, they use it on their long train rides to work, they use it to find out about the same things that we care about here in the United States, and we've been really pleased with how we've been able to deliver and grow for the audience there.

The second is on the advertiser side. It's a very concentrated agency market, and there was a while where the Twitter message wasn't resonating, but it turns out when you are clear on the message, when you're clear on your strategy, when you're clear on the best ways for them to use a service, when you've got good formats, when you are able to engage with them consistently, that they listen and they're more likely to recommend that their clients use the service. And so we had a breakthrough really over the last 18 months with the largest agencies in Japan, which really unlocked a lot of spend in Japan. The second is the video formats that we've come out with have also just worked really well in Japan.

And we've been pleased with how that's come, but there's still a lot of people in Japan who aren't using Twitter and there are a lot of advertisers in Japan who probably aren't using it as much as they should have.

Brian Nowak

All right. On to OpEx, you've guided or talked to 20% overall growth in GAAP OpEx this year. A few questions behind that. One, how should we think about the headcount growth within that

overall equation? And where are the biggest areas of investment? Or where are the most heads

going to be deployed throughout the P&L?

Ned Segal

Sure. And we didn't actually specify GAAP versus non-GAAP on the expenses because they'll be roughly similar, and so approximately you allowed us to talk about both with the same words and still gives us some latitude in the good decisions as we run the business over the course of the year and opportunities evolve. So the priorities are unchanged and then when we think about how we prioritize them, it's unchanged as well.

So we'll continue to think about health first from a resourcing and mindset perspective, then conversations as a way to drive audience, then revenue products and sales and platforms. And so those will continue to be the priorities and in that order. From a headcount perspective, headcount grew about 16% last year. It will grow nicely this year probably in the double digits, but we didn't get specific about it because we still are sorting out where the best way to allocate resources is, and we want to make sure we've got the room to navigate as we work through the year.

One of the interesting things that as I reflect on how we talked about expenses on the call that I perhaps sort of shared if we have a chance to think about it was, if you think about how expenses work, if you take your whole fourth quarter expense base into the new year as opposed to the average of the 4 quarters. And so we left - we grew expenses 11.5-or-so percent in Q4, then you add merit increases on top of that, you're now at over 15% expense growth, just annualizing what you did in Q4.

So if you think about every point as about $20 million, you pretty quickly get to if we're going to grow approximately 20%, there is $90 million, $100-ish million of new money to put to work. And so maybe I would have explained it that way if I thought about how that might help people.

Brian Nowak

The first quarter, I think is implied 25%-ish OpEx growth in the first quarter. So the investment priorities between health and then the platform and then sort of sales being - the revenue and the sales being the third piece, I guess, if last year's investments were sort of on the sales front, you're deploying people, you're training them how to actually generate more revenue. Is the payback from this year's investment, is it longer in duration? Or how are you sort of thinking internally around the return of the investments this year versus last year's probably?

Ned Segal

Well, a lot of it - when you do investments, sometimes, they don't pay off in year. Twitter did a lot of hard work in 2017, and the business contracted, but the payoff seems to have present itself in 2018 where we grew 25%. We'll work on things in 2019, some of which we'll deliver in period, but we'll hire new people who can add impacted immediately either in sales or in product, but other times, the work that they're doing really will drive impact in 2020 and beyond. So there's really no change to the type of people that we're hiring or the work that they're doing such that they're going to pay off on a different time frame now than they might before.

What is different for us over the last year or so is the consistency of our strategy allows us to be putting more resources against the same priorities as opposed to doing new things. And so the payoff effectively ought to be a more consistent than it would be if you're starting new things with nothing that's paying off today.

Brian Nowak

As you sit there with your future CFO hat on the 2019 investment…

Ned Segal

What does that look like?

Brian Nowak

Pretty big - big cowboy hat, 2019 sort of map made where you're going to invest to sort of improve the overall platform, but that's stepping to kind of 2020 and beyond and kind of long term where you think about the incremental margin of this business. Which of the OpEx lines you still see the biggest source of potential leverage long term?

Ned Segal

Well, the leverage will come from delivering revenue as opposed to from cutting costs. And when we look at how the different parts of the P&L benchmark, they don't look - they look relatively consistent with other businesses like ours. And we're in that long-term EBITDA target range that we put out a few years ago, both this Q4 and in Q4 of 2017. And we just have to carefully balance the ability to deliver target margins with our ability to drive long-term growth.

If we want the whole world to use Twitter, and we see opportunities to drive health on the surface, to drive audience, to improve the revenue and product sales and platform, those can impact near-term margins relative to that target range that we've now demonstrated an ability to be in that they'd be in service of the long-term opportunity.

There's no change to our thinking around margins generally because 40% to 45% adjusted EBITDA margins, they get you to the teens in GAAP operating income margins. And there is no change to our thinking about the things that we have to balance when we think about delivering them. But I wouldn't think about it coming - the leverage coming from a line so much as it being a lot like 2018 where the leverage will come when we deliver on the revenue line.

Brian Nowak

Revenue line, yes. We're going to open it up to audience Q&A for Ned. If you have any questions, raise your hand, I'm sure there are mic runners running, you just need to flag them down, there's one in the back. While the mic's heading to him, let me just ask you one on the regulatory environment. I made the joke yesterday about getting a lawyer on my team, I still think I do. Just kind of any perspective at all and sort of your view of the regulatory environment, the way it has impacted the investments in the business, the way you've been managing the business, sort of any thoughts on the regulation?

Ned Segal

Well, we want to do the right thing on the service so that people can trust what they find on Twitter, so they feel comfortable being a part of the conversation because it's the right thing to do. We engage with regulators and policymakers all over the world because it's important for them to understand our business, and it's important for us to hear their concerns. So we're open to regulation where it makes sense.

But we're going to keep working hard to do the things that we think we need to do, so people can trust the information that they find on Twitter, so they're comfortable being a part of the conversation regardless of what we might hear in one country versus another. Last year was a year where we spent a lot of time in upfront part of the year, the early part of the year, to prepare for GDPR. We were pleased with how we were able to prepare and execute around that, then we will continue to engage with the regulators and policymakers all around the world.

Brian Nowak

Question in the back.

Question-and-Answer Session

Q - Unidentified Analyst

Can you talk a little bit of an onboarding and the work that you've done there. It seems like historically, new user was thrown into a time line with a lot of large accounts that would not respond to them, and so it was very difficult to get sort of a 2-way interactivity for a new account. How do you think about solving that problem? And then, secondly, as you look at the migration of an account from an onboarding to sort of surviving to be an mDAU, what are the key milestones to getting someone from sign up to being that ongoing user?

Ned Segal

Sure. Those are great questions. So on the account point, it really gets to the heart of how Twitter is organized and how people use it because we follow accounts but we come to Twitter around topics and events. And so we need to keep doing a better job of highlighting those topics and events for people who are new to the service or for those of us who have been on it for many years. So that when you see that first time line, we're telling you about the topics and events that we think you ought to care about based on where you are and the other things that we know about you as opposed to showing you the largest accounts, on your first question.

Your second one, remind me, please?

Unidentified Analyst

The secret sauce and what are the steps to take someone from the funnel and to go...

Ned Segal

Yes. So there are a lot of things that we can do to bring somebody from new to Twitter or haven't been on it for a while and are giving us another chance to deeply engage. One is, what we just talked about, getting them into topics and events and not follows on accounts and not asking them as many questions. Two is making it easier and less intimidating to Tweet.

When we moved the Tweet button to the bottom of the page, from the top of the page, sometimes that helps, for other people may not help as much, when we give you more space with which to Tweet, that may help, but there are other things that we need to do as well to make the Tweeting part easier, so we don't end up with people just coming to see what other people are saying, but so they just want to be part of the conversation. These things are not just in service of people who are new to Twitter though, they ought to be in service all the people who use the service because I think we all need the same types of improvements for us to get better.

Brian Nowak

Time for one more question. There's one back there.

Unidentified Analyst

We have another presidential election coming up in the - last summer, there was a lot of discussion about the objectivity on Twitter. And probably not as relevant in California, but maybe in the middle of the country people are paying attention. I'd love to hear your thoughts on that.

Ned Segal

Thanks for asking. So we've had the opportunity to learn and improve our work around elections all around the world over the last few years since the last presidential election in United States, both in the midterms here and in presidential elections all over the world. And there's 2 components to that.

One is, we want it to be easy for people to find the things that they're looking for, and there is now an events experience around an election, so we had them for all of the U.S. midterms, you could go and see something with the latest and the recap and if there was live television, you could see the live television, you could scroll down and the TV would stay at the bottom of the screen and that's just a much better experience than it was before.

But then there is also this issue where it's critical that people feel they can trust what they see on Twitter and they're comfortable being a part of the conversation. It's true for the whole service, but it's also very true around elections. We want them to know who's advertising, how much they paid and who they targeted and so they can go to our ads transparency center to do that, anybody can go to and do that.

We want people - as we've been testing this over the course of the year, we want people to know who the candidate is because they've been identified as such, we want to help the candidates have dual factor authentication on, so that people aren't taking their accounts. We want to keep spamming and suspicious behavior and spamming and suspicious accounts off of the service because they may inappropriately amplify messages and so we've done a much better job and you can go to our blog, where you'll see some more detail about it.

We're moving accounts that are influencing from one country what might be happening in another country around an election. This is all critical work to allowing people to trust what's on Twitter because for us to be successful, we have to be the Twitter for the whole world not a Twitter for people who have belief, whether it's a sports team or political party.

Brian Nowak

Is there anything you learned from the - just to squeeze one more in. Is there anything you learned from the last election where I think President Trump is pretty effective at actually using organic Tweet to not having to spend as much on advertising and some of the spot on Twitter? Is there anything you've learned from that where you can sort of make it more important that the candidates have to spend to actually get more awareness on the platform where you can view this time?

Ned Segal

Our view has historically been and will continue to be that we want to get the whole world to use Twitter, and we want people to Tweet. And if they do, the rest will figure itself out, and the engagement that you described is a great example of it because if individual's Tweet, it creates conversation, it creates interest, news breaks on Twitter, things are happening that we all find out about - that we all care about and want to find more out about see, so we come to Twitter.

If that happens, the monetization will be fine. And that so - and you've seen, I think, historically what ads have been of - what political ads have been as a percentage of our business and it's really not much, and we don't think about, boy, it'd be great if we got that to be a lot bigger, we think it'd be great for people trusted everything they saw on Twitter, felt comfortable being a part of the conversation, stayed longer, came back more frequently and the rest will figure itself out.

Brian Nowak

Okay. All right, Ned, thank you so much.

Ned Segal

Thank you.

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