TWTR – Twitter, Inc. (TWTR) CEO Parag Agrawal on Q4 2021 Results – Earnings Call Transcript

Twitter, Inc. (NYSE:TWTR) Q4 2021 Earnings Conference Call February 10, 2022 8:00 AM ET

Company Participants

Krista Bessinger – VP, IR

Parag Agrawal – CEO

Ned Segal – Chief Financial Officer

Conference Call Participants

Douglas Anmuth – JPMorgan

Justin Post – BofA Securities

Brian Nowak – Morgan Stanley

Ross Sandler – Barclays

Richard Greenfield – LightShed Partners

Eric Sheridan – Goldman Sachs

Mark Mahaney – Evercore ISI

Zach Morrissey – Wolfe Research

Daniel Salmon – BMO Capital Markets

Lloyd Walmsley – UBS

Operator

Good day, ladies and gentlemen, and welcome to the Twitter Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at the time.

I would now like to turn the call over to your host, Krista Bessinger, VP, Investor Relations. Please go ahead.

Krista Bessinger

Hi, everyone, and thanks for joining our Q4 earnings conference call. We have our CEO, Parag Agrawal; and CFO, Ned Segal with us today. We published our Shareholder Letter on our Investor Relations website and with the SEC about an hour ago, and we hope that you’ve had a chance to read it. As usual, we’ll keep our opening remarks brief so that we can get right to your questions. As a reminder, we will also take questions asked on Twitter, so please tweet us at @TwitterIR using the #TWTR.

During this call, we will make forward-looking statements, including statements about our business outlook, strategies and long-term goals. These comments are based on our plans, predictions and expectations as of today, which may change over time. Our actual results could differ materially due to a number of risks and uncertainties, including the risk factors in our most recent 10-Q and upcoming 10-Q to be filed with the SEC. Also during this call, we will discuss certain non-GAAP financial measures. We have reconciled those to the most directly comparable GAAP financial measures in our shareholder letter. These non-GAAP measures are not intended to be a substitute for our GAAP results. And finally, this call in its entirety is being webcast from our Investor Relations website, and an audio replay will be available on Twitter and on our website in a few hours.

And with that, I’d like to turn it over to Parag.

Parag Agrawal

Hello, everyone. Thanks for joining us today. Since this is my first earnings call, I want to take a step back and talk about where we are as a company. I will talk about three things: our strategy; our execution; and what this all means for shareholders.

I’ll start with our strategy. Our purpose is to serve the public conversation, and Twitter is the best place to find out what’s happening. It is unique and it is differentiated. What makes Twitter great is, one, the selection of conversation available on our service, a broad set of people and content on a range of topics that are relevant to the moment; and secondly, how personalized Twitter is seeing our interest. You can instantly find relevant content across interest from sports to investing and engage with it. The strategy and plans we shared with you about a year ago is meant to continue strengthening these 2 differentiators, around personalization and selection. And we use these to inform and bring completion to our work across both our consumer and revenue focused themes.

Let me discuss a couple of examples. First, our work to improve personalization includes us developing a better understanding of customer interest, sometimes through improved machine learning, or through building products like followable Topics. It also includes us getting better at matching creators and content to consumers. This enables us to create more relevant and personalized products that increase daily utility and also enables us to serve more relevant ads and can be particularly helpful in improving return on ad spend for performance-oriented advertisers while also improving the ads experience for our customers.

Next, let’s talk about selection. I want to describe how several of our new products that we’ve been iterating on at a rapid cadence fit in. I’m talking about Spaces, Communities, Newsletters, Professional Accounts, creator monetization efforts around Super Follows and Tipping and also a test with Shopping and Commerce. All of these come together to enable an ecosystem of products that enable content creators, publishers and businesses of all sizes to build and connect with their audience. Together, I believe these will enable more unique content and more content around the long tail of topics. Today, we do well when it comes to topics of broad interest, politics, sports, entertainment, music. But these new features will help expand the range of topics being discussed on Twitter. These will enable opportunities for us to better monetize through more relevant and contextual advertising, but more importantly, also enable our customers to monetize.

Next, I want to talk about execution. Because strategy isn’t enough, to deliver outcomes, we need to execute. In my first 10 weeks on the job, I have been focused on improving our execution using 3 key themes: increased accountability; faster decision-making; and a focus on doing fewer things in parallel. Let me talk about 2 specific changes we’ve made. First, I’ve made strategic organizational changes focused on creating clarity and ownership in the organization. This enables faster decision-making and increase accountability. We’re now operating under a GM model, general management model, where cross-functional resources for all product development and the budget to support operations are owned by GM across consumer, revenue and core technology, who are responsible for delivering output. Second, we are increasing our attention on important data and metrics across the company starting at the top. This enables not just more accountability but also faster learning. It lets us see how people are using our products, what’s working and what is it and why and with that based on what we can learn.

Now let me turn to what this means for shareholders. First, our strategy and our goals for 2023 that we shared about a year ago are not changing. What is changing is an increased focus on execution designed to deliver the outcomes our customers and you all expect from us. Second, we are investing to deliver growth given the massive market opportunity we see. We’ve done reallocation to fund many incremental investments for 2022, and there is also efficiency work underway that will pay off even more over time. The goal is to create optionality for the future to either improve margins or invest in high-value opportunities, making Twitter an even larger and more profitable company over the long term.

I want to close by sharing that I see a strong urgency to improve our focus and execution but also a lot of confidence in our strategy and our team. Twitter serves a very important role in the world, and we take our responsibility to make it the best it can be very seriously.

With that, I want to hand it off to Ned.

Ned Segal

Thanks, Parag, and hello, everyone. I’d like to cover our results, our outlook and our buyback before turning to your questions.

On the results, Q4 closed out a record year for Twitter. Total revenue for the quarter grew 22% year-over-year to $1.57 billion, and total revenue for the year grew 37% year-over-year to $5.08 billion and DAU grew 13% year-over-year to 217 million and U.S. mDAU grew 1 million sequentially, both in line with our expectations. During the quarter, we continued to make progress across our portfolio of consumer and revenue products. We iterated on Spaces, Topics, Communities and our onboarding flow, all in service of growing our audience. Performance ads grew faster than ad revenue in Q4 driven by MAP. Our work here is paying off. Over 2 million businesses identify themselves to us since the launch of Professional Accounts in Q3, giving us fertile ground to market ad products to a growing base of accounts that are eager to reach their customers on Twitter.

On the outlook. Our strategy remains the same, invest to drive growth and deliver on our goals of 315 million mDAU and $7.5 billion or more in total revenue for 2023. In early January, we closed the sale of MoPub, generating proceeds of approximately $1 billion and enabling us to invest even more resources in performance ads, SMB and commerce. In 2022, we expect revenue to grow in the low to mid-20s range versus 2021, excluding MoPub and MoPub Acquire, with performance revenue growing faster than brand. We expect total cost and expenses to grow in the mid-20% range in 2022 versus 2021, excluding 2021’s onetime items with the number of buys that we see the opportunity to drive faster growth in revenue or mDAU. Expenses in 2022 are expected to ramp in absolute dollars over the course of the year as we invest with headcount growth of approximately 20% and a focus on R&D. We’re pleased with the decisions we’ve made to reallocate resources and to make trade-off decisions to hold expense growth to these levels.

In 2022, we expect mDAU growth to accelerate in the U.S. and international markets over the course of the year. These expectations are informed by the data that we see, which has been driven by our work to help people successfully create new accounts and reactivate existing accounts to get more value out of Twitter by finding what they’re looking for faster. Our work is compounding to deliver results, and we’re seeing it in some of the important lead indicators.

In Q4, we saw more than 25% year-over-year increase in the number of people who come to Twitter every day to either create a new account or reactivate an existing account and a 35% year-over-year increase in daily sign-ups.

Lastly, let me turn to our new share repurchase plan. In Q4, we repurchased $266 million of stock via our share repurchase program that had been announced in 2020, bringing our total repurchase to $1.18 billion to date. I’m excited to share that our Board of Directors has just authorized a new $4 billion share repurchase program, which is effective immediately and replaces the balance of approximately $819 million from our prior $2 billion authorization. As part of the new program, we intend to enter into a $2 billion accelerated share repurchase program and plan to repurchase the remaining $2 billion over time. We’ll continuously evaluate efficient alternative fees and cash on hand to fund the program, including accessing the capital markets subject to market conditions.

In summary, we’re pleased with our results, our strategy and our structure, and we’re working hard to deliver improved execution, which will lead to even better results in 2022 and beyond.

Let’s turn to your questions.

Krista Bessinger

Thank you. Operator, we’re ready for questions.

Question-and-Answer Session

Operator

[Operator Instructions]. Our first question comes from Doug Anmuth from JPMorgan.

Douglas Anmuth

You mentioned the strong growth that you’re seeing in important lead indicators for future mDAU growth. Just curious if you could talk about what that means for retention and how you can improve that going forward, and how you think about the drivers of mDAU growth and the acceleration through ’22 and just beyond the using comps?

Parag Agrawal

Thanks for the question. As we’ve shared, we have line of sight to hitting our goal of 315 million mDAU at the end of 2023 and some of this is informed by the early lead indicators we are seeing. Just to talk about sort of the growth funnel of mDAU as we see it. It’s important to think about the very top of the funnel where people show up to Twitter on a daily basis to either create a new account or reactivate an existing account after being away for 30 days. By encouraging people who use Twitter on a locked-out basis, to log in, we’ve created a mechanism where they’re able to achieve more daily utility. In Q4, as a result of this work, we saw a 25% year-on-year increase in the very top of the funnel. Further, we’ve done work to remove friction for people as they sign up through incorporating things like Single Sign-On. As we’ve done this work, this was part of what drove the 35% year-on-year increase in daily sign-ups.

As you think about all of the users that are coming into Twitter to find value, as you think about the strategy we described earlier around using the great selection of content we have on our service and our ability to create increasingly personalized experiences through both investments in machine learning and also creating products like followable Topics, what you see is us creating really personalized, relevant experiences for people so that they keep coming back to Twitter on a daily basis. And as you see all of this work sort of playing forward a couple of years, we see confidence in us getting to the 315 million mDAU growth.

Operator

Our next question comes from Justin Post from Bank of America.

Justin Post

Maybe one about the quarter and one about big picture revenues. First on the quarter, can you just talk about how impressions were down and CPE is up, what you were doing within the ad stack to drive that? And then second, maybe just for Ned. It looks like guidance is maybe around $1 billion. I appreciate the full year outlook of revenue growth this year. But you need $1.5 billion next year to get to $7.5 billion. What are you thinking could help accelerate growth as we work through the next 2 years?

Ned Segal

Hey, Justin, thanks for the question. I’ll jump in on both of them. First on the ad metrics. So total ad engagement decreased 12% year-over-year and cost per engagement increased 39%. And there are a variety of things that can cause these to move in one direction or another. But in this case, we saw a mix shift to performance ad products, which, as you know, typically have a higher threshold to be an engagement. At a brand ad, sometimes you just need to see it for it to be an engagement whereas when there’s a call to action to click through to something, the threshold is higher. And so sometimes you can show great ads to people and they’ll be more performance-oriented, but ad engagements will go down. And so that’s what we saw and that was a driver of it.

Similarly, cost per engagement increased 39%. Typically, those lower funnel ads have a higher cost per engagement because of that higher threshold because it’s closer to where the transaction happens, which is why it’s such an important part of our roadmap. So those 2 really move — the relationship between them, it was important to think about this quarter in terms of the mix shift that drove each of them.

On the second part of your question, so no changes to that $7.5 billion or more goal for next year. And if you go back to Parag’s comments on DAU, the acceleration that we expect to see over the course of this year in the U.S. and international is core to the revenue opportunity because it gives us a larger audience to show better ads, number one. And then two, this roadmap that we talked about where we’ve done a lot of hard work around our performance ads, we’ve also delivered excellent growth, and brand, which has been our strength historically, is paying off. And we expect to see performance ads grow faster than brand over the course of this year. Those 2 things together are what we think set us up to grow in the low to mid-20s in terms of revenue growth this year and to hit that $7.5 billion or more goal for next year.

Operator

The next question comes from Brian Nowak from Morgan Stanley.

Brian Nowak

I have 2, both related to advertising. The first one, Parag, can you just sort of talk to on the DR side? Where do you think you’ve made the most progress really building out the DR products? And where do you still see the key areas you need to improve to realize the real 2022, 2023 opportunity — And the second one also on the advertising side, as you think about your 2023 revenue guide, roughly what percentage of the advertising business do you expect your performance within that in your base case?

Parag Agrawal

Thanks for the question. We’ve shared with you our long-term goal around mix shift between brand and DR is 50-50. That remains the same, but it’s a goal that we have over the long term. As we sort of look at this year, we see the DR business growing faster than brand business. So you’ll see us make progress towards that goal this year, and I expect that to continue going forward as we approach 50-50 goal over the long term.

In terms of sort of your question around sort of where we’ve seen most progress and what we see looking across this year, last year really, as we shared, our strategy around performance was to initially focus on mobile app promotions, which is app installs and app engagements. And I think we’ll make progress there with that business growing well. As we sort of look at where we are today, we are now increasing the investment we have to also be on web performance, starting at the top with like new products we shared in the last few weeks with Web Traffic, which is a rebrand of the Web Clicks product we had, and increasingly moving more down funnel on the web performance opportunity. We’ve also, through the sale of MoPub, reallocated a lot of resources towards our efforts across the performance roadmap but also into small business focused roadmaps, which will allow us to deliver more value to small businesses through the revamped Quick Promote product that we’ve now been testing. And as all of these come together, it creates opportunities for us to get into commerce. So I think that’s what you should expect in terms of us making progress on the performance roadmap.

Operator

The next question comes from Ross Sandler from Barclays.

Ross Sandler

Parag, just to follow up on that last answer. In the letter you talked about a litany of new DR ad format. And it sounds like e-commerce and the new Website Traffic product is going to be the needle mover in ’22. Am I hearing that correctly? That, that will kick in a lot more than MAP, which has been kind of carrying the day in DR thus far. So do you view that as the big opportunity over the next 2 years? And then, Ned, a housekeeping question. It looks like CrossInstall was doing about $10 million per quarter and MoPub was the other kind of $40 million and change. Is that right in terms of how much we should take out of our ad portion versus our licensing portion in terms of taking out those 2 businesses?

Parag Agrawal

Thanks, Ross. Yes, we have been initiating fast on several of our performance products, including mobile app promotions, but also now more so on the web performance side. Web Traffic, as we think about it, is not something we consider to be a performance product in terms of how we account for brand versus DR revenue. That being said, it allows us to get increasingly down funnel so that we can deliver end outcomes and conversions to the customers who are starting to use this product. And our strategy for this year includes sort of improvement in mobile app promotion, again, increasing investments in more down funnel efforts that are going well beyond app installs. And similarly, on the web performance side, to get more down funnel conversions leading into small businesses and e-commerce solutions coming across.

Ned Segal

And on the second part of your question, Ross, on the mix. So we haven’t broken out MoPub versus MoPub Acquire, the old CrossInstall business. But just to walk you back to what we’ve shared in the past, it was about $188 million of 2020 revenue, about $218 million of 2021 revenue, $50 million going towards $60 million over the course of 2021. The details are in the letter. And we said in the past that 2022 would have been between $200 million and $250 million of revenue. And just to remind folks what we’ve talked about here in the past, we did this to reallocate our resources to higher priority work where we think there’s a better payoff over time, ads on Twitter. And in doing that, we’ve already reallocated the people, but the revenue lags the work that the people do. And so we don’t expect to make up all of that $200 million to $250 million this year. But we do expect to make up the effective run rate of MoPub plus MoPub Acquire in 2023, which is why there are no changes to those long-term goals that we’ve laid out.

Operator

Next question comes from Rich Greenfield from LightShed Partners.

Richard Greenfield

I guess maybe just first off, it’d be great to understand why you were the right choice for the Board to appoint CEO. I think maybe helping people understand the key initiatives that you were behind and what drove the Board to make you CEO? Because I still think a lot of people probably listening to this call, they don’t know a lot about you historically. And so just some historical context would be great. And then just a follow-up for Ned on mDAUs. I think there’s a lot of investors that were sort of expecting you to reduce your 2023 guidance. When you think about sort of that reacceleration to 20% growth, which is where you ended sort of — or where your Q1 was and where you were back in 2020, what’s the single greatest reason why you have such confidence in 20-plus percent growth for the next 2 years?

Parag Agrawal

Hey, Rich, thanks for the question. Let me take the second question first and then I’ll get to the first one. As I said, we have line of sight to our 315 million mDAU goal from where we stand today. What gives us this line of sight is the — in response to the first question, the information I shared, around the top of the funnel, how we are making changes to both customers at the very top of the funnel, showing intent to create an account and to log in; and also how we are reducing friction for more and more people to end up creating an account and logging in. That is the information that gives us the confidence alongside the roadmap we have ahead of us in terms of improving personalization and selection to be able to get to the 315 million mDAU. Now we’ve shared these numbers with you in part so that we can understand why we believe in our ability to hit this. And the impact just from this work should be broad-based in the U.S. and internationally, which is why we said that our expectation around us seeing an acceleration in growth through the course of this year.

To answer your first question, I have been in Twitter for over a decade now. I’ve worked — I’ve had the privilege of working on all kinds of initiatives. I started my journey here working on the ads, on bidding ads products well before the IPO. And I think as a result of that time, I gained a lot of empathy for our advertising customers and a lot of respect for advertising as a business that enables a service like Twitter to be free for all of our customers all around the world. I subsequently spent time working on our consumer initiatives, working on machine learning efforts to incrementally improve the Home time line, deliver relevance in the Home time line, which allowed for us to sort of start growing mDAUs and accelerate into the low double digits and then sustain that over time. I’ve since — in the most recent phase of my time here I’ve been the CEO, I’ve been on the leadership team involved in all strategic decisions, whether they be around technology, but also around product, policy, how we do resource allocation, how we reorganize ourselves. And I think that’s given me a lot of perspective around both sort of our customers outside the company, but also the internal for the company and how to drive constant improvement within the company so that we can deliver great products for our customers.

Krista Bessinger

Thank you. And we’ll take the next question from Twitter. Thanks, Rich. We’re going to take the next question from Twitter. This is from the account of [@damianeurox]. And Damian asks, will you touch on Web3 incorporation and also the amount of new Twitter Blue subscribers?

Parag Agrawal

Thanks, Damian, for asking your questions on Twitter. On Web3, I think it’s very interesting what you’ve seen. I think it’s important as we sort of look at the opportunity ahead of us to think about the secular trends all around us. If you think about the broader crypto ecosystem, which includes cryptocurrencies, the work and several E5 projects or even broader, all of the decentralized technologies and applications being built on top of the various blockchains, what you notice is this incredible amount of developer energy, developer energy, which is interested in solving problems. And what that does, it creates opportunities for a service like ours, which is operating at scale with a lot of customers and which happens to be the place where this entire ecosystem goes to find out what’s happening across the ecosystem to really be connected to sort of how this secular trend is evolving over time. We have a small internal team which is looking at opportunities in terms of how we might harness this change towards benefiting creators on our service, towards benefiting all consumers on Twitter. And we’re excited about all the opportunities that creates.

On your second question around Twitter Blue. It’s been a strong journey for us as we’ve sort of added more features to Twitter Blue to give them more value over time as we’ve expanded the number of markets. This product is available in now in Q4, getting into both U.S. and New Zealand, in addition to the Canada and Australia markets that we started in the earlier part of the year. What we’ve seen is people use the product. What we’ve seen is our sort of most heavy users of the product is where this is targeting. And we’ve seen a strong response from them. That being said, it’s a very small part of our revenue today. We’re really excited about the future roadmap. It’s not critical to how we deliver the $7.5 billion of revenue in 2023 but creates massive opportunities for us as we look beyond that.

Krista Bessinger

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

Operator

So we have a question from Eric Sheridan from Goldman Sachs.

Eric Sheridan

First, congrats on the new role, Parag. Maybe following up on Richard’s question first, Parag. When you look back over the last 2 to 5 years, what do you think Twitter might have done differently? Or what should we think in terms of your strategic vision for where you might want to do things differently, looking forward from where the strategy was in the last few years? And then maybe on the investment and the margin cadence, with the strong level of investments that you’re calling out, Ned, in 2022, how should investors think about whether we’re in the middle innings of an investment cycle versus a later innings of an investment cycle for Twitter against your goals to position for the long term?

Parag Agrawal

Thanks for the question, Eric. I’ve been at Twitter for 10 years, as I mentioned, and I’ve been on the leadership team over the last 4 years. One of the things we’ve constantly been focused on is how we go faster, how we can ship more products to our customers in order to give them more value. As I’ve taken on this role, my focus has been on improving our execution. I bring a strong amount of urgency to this growth, very focused on metrics in observing them and reacting to them and being able to understand what’s working for our customers, what’s not working for our customers and to use that understanding to constantly improve our products. I also bring an increased focus on accountability across the company. It’s evidenced by the changes we’ve made around the GM structure that we’re now operating under and how we are driving more accountability at the leadership level but also as it cascades below that. So what you should expect from us is constantly improving execution, constant focus on delivering outcomes for our customers and for our shareholders and for you all to hold me accountable for delivering these results.

Ned Segal

Eric, on the second part of your question, I’ll step back from the baseball analogy around investment but share that we still feel like it’s really early for us, both in terms of the audience opportunity and that those lead indicators that we shared. When 35% growth in sign-ups is something you’re able to see in a quarter, that demonstrates what’s possible to us and that we’re just getting more add backs in terms of helping people find what they’re looking for on Twitter. That’s a big part of what gives us the optimism that we’re early there. And then when you look on the other side, it’s that $150 billion and growing market for digital ads outside of Search, outside of China has — with a business that’s 3% of that addressable market, we still feel like it’s really early there, too. I’d go back to Parag’s opening comments where he talked about creating optionality by reallocating resources, by selling MoPub, by being thoughtful about where we put our dollars to work and putting as much rent behind a few errors as possible. That’s all designed to make sure that we have choice over time so that when we do see opportunities to invest against those 2 big addressable markets, that we can do so while also creating opportunity to deliver margin over time as well. And with that in mind, of course, there’s no change to the margin potential for the company that we’ve talked about in the past either.

Operator

The next question comes from Mark Mahaney from Evercore.

Mark Mahaney

I just want to ask about that 35% growth in sign-ups in the quarter. Could you just provide some more context around that? I assume that’s the fastest growth you’ve seen on that particular metric in quite some time. And then do you have any read into the — whatever the character of that, of those people that are signing up? Are there people who were on Twitter before and have come back, people that are brand-new to the platform? Any color you have on how different that 35% is those people are than the current users?

Ned Segal

Thanks, Mark. So a couple of thoughts there. First is these are sign-ups which there could be somebody who’s creating a new account, a research analyst who wants to go through the sign-up flow perhaps. But typically, we think these are people who are new to Twitter, where this is a new opportunity for us to show somebody what Twitter is all about. That 25% number that we shared, which is sign-ups plus reactivation, is going to be a better way to look at people who are giving us a second chance and haven’t been on Twitter enough in the past where they’ve made it part of their daily habit.

When we think about some of the things that are driving this, Single Sign-On has been a big driver. So when people don’t have to remember or create a new password, it’s been a big help. So 40% of the accounts that were created in Q4 were created using single sign-up. It’s just a great example of reducing friction. Parag also talked about where we’re encouraging people to log in when they keep coming back to Twitter because somebody sends them a tweet because they saw something on another platform that had come from Twitter. We’re encouraging them to log in because we believe we can show them better tweets and better ads if they do so. These are compounding in terms of sign-ups and reactivations. As we think about the character, I hope these are all of outstanding character, these folks. But when we — joking aside, when we look at them, they look a lot like the people who have come to Twitter in the past. There’s just more of them. And although we haven’t disclosed this number in the past, it just feel like it was a big enough move from what we’ve seen in the past. It was important to share when we think about what gives us confidence about the progress we can deliver over the course of this year.

Operator

We have a question from Deepak Mathivanan from Wolfe Research.

Zach Morrissey

This is Zach on for Deepak. First, another one on DR. Do you have the sufficient targeting signals from both users and other 3P sources get better in areas like commerce over the long term? Or is this an area that you plan to invest behind over the next couple of years? And then second, can you just provide any color on the brand spend trends in the fourth quarter? Were there any kind of verticals or categories to call out that saw softness either due to Omicron or supply chain or labor? Any kind of trends you’re seeing so far in the first quarter?

Parag Agrawal

Thanks for the question. I’ll take the first part and let Ned take the second part. In terms of DR, I think that in my opening comments, I spoke about our strategy around personalization. I spoke about how we are investing in machine learning capabilities that allow us to understand customer interest, but we are also building products which allow people to tell us what they’re interested in, for example, by following Topics. As you think about understanding sort of this customer intent, it not only helps us improve our consumer product, but it also allows us to channel and use that understanding of customer intent or interest into creating more relevant advertising and more relevant experiences, including getting down funnel the performance, advertising and commerce. So that’s actually going to be a part of our strategy to being able to really push performance when it comes to DR and be able to get into more commerce-oriented business.

Ned Segal

On the second part of your question, Zach, around Q4 trends in Q1. So Q4 got off to a strong start with a big event calendar all around the year — all around the world and COVID impact being less if you think about the October, November time frame. As the quarter went on, we saw the companies who want to show up around the holiday season ramp up quickly. And Twitter was there to help deliver for them when that happened. If you think about where we came in from a revenue perspective relative to the range that we provided, I guess I’d point out a couple of things. The first is FX impacted us by about 1 point. And the second is that if we look at that strength that we saw at the beginning of the holiday season in the U.S., it just didn’t maintain the same pace in the last couple of weeks of the quarter to hit the high end of the guidance range. But we’re pleased with where we came out. And if we look at the first part of this quarter, which, of course, informs the guidance that we provided today for the quarter and the outlook that we shared for the year, anecdotally, it did feel like advertisers got off to an earlier start than what we’ve seen in the recent past, whether it’s in planning and thinking about where and how they want to show up around product launches and big events happening all around the world from the Olympics to the Super Bowl to award shows and other things and also in executing on those campaigns early in the quarter, which sometimes hasn’t been the case for 1 reason or another. So we feel like we’re off to a good start.

Operator

We have a question from Dan Salmon from BMO Capital Markets.

Daniel Salmon

I’ve got a few more about your new ad products, Parag. First, just maybe just jump back, you mentioned all of the new ones announced in January. We’ll maybe come back and get a little bit more feedback on those later. But earlier in the year, you launched Carousel Ads, Click ID. Would just love to hear any feedback from that. And then second, you mentioned SMB being sort of the important next frontier for ad product development. I think that was one of the themes there. Parag, could you just spend a little bit more time on Quick Promote products as well as professional accounts and in particular, what they solve and how you see them working together more? That would be great.

Parag Agrawal

Thanks for the question. We are really excited about the SMB opportunity ahead of us. We relaunched that Quick Promote product and we’re sort of able to make it easy for people use this product to drive up revenue from that line. Separately, to talk about sort of how Twitter Professionals or sort of these professional accounts that we’ve sort of connected into that strategy, we’ve always had a lot of businesses on Twitter with commercial intent. And the design to value organically, except that we’ve never identified them, to be able to tailor amazing experiences for them to drive them into the ad funnel. As we’ve sort of started shipping these products which provide them value for creating and driving value in their organic experiences, we’re also now able to channel them and funnel them into sort of products which are oriented for businesses, including our advertising products. So if you think about sort of that strategy coming together with our performance-oriented advertising strategy, inclusive of mobile app promotions, getting into web performance, and if you see sort of how that alongside a product offering for Quick Promote comes together, we have this incredible top of funnel for these products coming from our professional accounts-oriented experiences that we’re creating.

Daniel Salmon

And then just any color on Carousel Ads traction?

Ned Segal

Sure, Dan. It’s early for those products, which we talked about last year, Twitter Quick ID and the Carousel product and some of the other formats that you described. I think if you just step back from any one of them individually and you thought about them collectively, we’re clearly moving faster in rolling out products to help advertisers of all sizes. We’re clearly working hard to adapt to the ever-evolving ad ecosystem and changes, whether they’re from regulators or operating system makers or from advertisers and how they want to show up. So the ones you mentioned are just great examples, but you’re going to see a playable ad format. You’re going to see us continue to make improvements to the website traffic ad format, which we just rolled out earlier in January and some other things over the course of this year that we’re excited about. So I hope you’ll continue to see more new products from us over the course of this year.

Krista Bessinger

Thank you. And I think we have time for just one last question. Operator if you could please put that person on the line?

Operator

We have a question from Lloyd Walmsley from UBS.

Lloyd Walmsley

Thanks for squeezing me in. Two, if I can. First, just following up on, I guess, Mark’s question on mDAU. Can you just unpack the funnel a little bit more? I mean, clearly, it sounds positive. You’re seeing more top of funnel traffic, and it sounds like conversion to sign-ups is higher. But how does that then that — maybe that cohort behavior changed? Do the new sign-ups generally see usage peak when they sign up and then fall? Does it build over time? Like how should that flow into reported mDAU? And then I guess the second one on OpEx. Ned, last quarter, I think you said even if you didn’t add headcount, just annualizing last year’s headcount would grow in the kind of mid-20s. And you said your plan this year is to grow 20%, but you’re still kind of in that mid-20% cost growth range. So were the comments last quarter just conservative? Or are there new areas of efficiency? And I guess at a high level, how do you get margins to your long-term targets from these levels given the level of investment you guys are making?

Ned Segal

Well, I’ll take the first part on mDAU and then turn to Parag. On the audience numbers. So this is a level of disclosure that we haven’t provided in the past, and we shared it because we thought it was an important lead indicator as we enter a big year for us in terms of mDAU growth relative to those goals. If you look at the makeup of the people who are creating accounts, the people who are coming back to Twitter to give us another shot, they look a lot like the other couple of hundred million people who have been using Twitter every day. And rather than break down the funnel and think about where we’re — we’ve got the most opportunity to just — there are opportunities for us throughout the funnel to continue to do better, to show people what Twitter is all about. We’ve made a lot of progress in reducing friction at sign-up and in the onboarding flow, asking people for specific interest so we can recommend accounts and Topics to them. We now have over 280 million accounts that follow Topics. But we also are getting better and better at showing people notifications that are relevant to them to bring them back to Twitter and encouraging them to log in when they hadn’t been logged in but have been benefiting from Twitter so we can show them better tweets and better ads. All this stuff is paying off, and so I wouldn’t want you to focus too much on one area or another around the funnel because we see opportunity throughout.

Parag Agrawal

Let me take the margin question. As we’ve said, our thinking around long-term margins has not changed. But this year, we’re not optimizing for margin expansion. Right now, we want to make sure that we’re investing appropriately for growth given the massive market opportunity we see. But we want to do so efficiently. We’ve shown how we are reallocating resources by having sold MoPub into sort of higher value opportunities around performance ads and small businesses. We’ve also been looking for other efficiencies across the business, including sort of our infrastructure, where as we sort of make we do the world to drive optimization, some of it pays off this year but even more so in the coming years. As we look for these efficiencies and done the work, we’ve been able to make incremental investments that we wanted to make for this year in 2022 by staying within the same range that we told you 3 months ago in terms of how we’d grow. And I think that’s evidence around sort of how we’re trying to be more efficient. And all of this work is in pursuit of increased optionality in the future, where we can use this optionality for delivering margin expansion or we can identify other high-value growth opportunities to invest in.

Operator

Thank you. I’ll now hand the call back to the management team for any closing remarks.

Ned Segal

All right. Thank you. We appreciate your interest in Twitter. We look forward to speaking with you next quarter when we report our Q1 earnings on April 28 before the market opens. Until then, we’ll see you on Twitter.

Operator

Ladies and gentlemen, thank you for participating in today’s program. This concludes the program. You may all disconnect. Have a good day, everyone.

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AMZN – Amazon Air launches daily service to Omaha, Nebraska

The relentless beat of expansion for the Amazon Air express network continued Thursday with the launch of daily service to Omaha, Nebraska.Amazon (NASDAQ: AMZN) said an inaugural flight operated by partner Silver Airways using an ATR72-500 turboprop arrived at Eppley Airfield from its regional air hub in Fort Worth, Texas. Package handling at the airport is being provided by GAT Airline Ground Support.The daily service will support faster deliveries for Prime members in Nebraska and western Iowa, areas that are seeing increased demand for online orders. Amazon opened its first fulfillment center in Nebraska, in Papillion, last year.Amazon Air last month began flying to Wichita, Kansas. It has added about a dozen destinations to its network in the past year.Silver Airways, a privately held regional airline based in Fort Lauderdale, Florida, that operates passenger service in the Southeast, Bahamas and the Caribbean with small propeller aircraft and seaplanes, is Amazon’s latest outsourced transportation partner. It began flying under contract with Amazon in November, serving Des Moines, Iowa, and Albuquerque, New Mexico, from Alliance Fort Worth Airport.Click here for more FreightWaves/American Shipper stories by Eric Kulisch.RELATED NEWS:Amazon Air begins daily express delivery to Wichita, Kansas

KSS – Kohl's Responds to Director Nominations from Macellum Advisors; Company Reaffirms Commitment to Maximize Value for All Shareholders

MENOMONEE FALLS, Wis.–(BUSINESS WIRE)–Kohl’s Corporation (NYSE:KSS) (“Kohl’s” or the “Company”) today issued the following statement regarding Macellum Advisors GP, LLC’s (“Macellum”) announcement of its nomination of directors for election to the Kohl’s Board of Directors (the “Board”) at the Company’s 2022 Annual Meeting of Shareholders (the “2022 Annual Meeting”):

Kohl’s believes Macellum’s effort to take control of the Board is unjustified and counterproductive. Kohl’s appointed two of Macellum’s designees, along with an additional mutually agreed upon designee, to its Board pursuant to the 2021 settlement agreement with Macellum and certain other shareholders. All members of the Kohl’s Board, other than its CEO, are independent.

Macellum’s claim that Kohl’s Board is not equipped to evaluate sale opportunities is groundless. The Board designated its Finance Committee, which is comprised entirely of independent directors, was formed pursuant to the settlement with Macellum and includes one of Macellum’s 2021 designees, to lead the review of any expressions of interest. Additionally, the Company and the Board have engaged financial advisors, including Goldman Sachs and PJT Partners, and have asked Goldman Sachs to engage with interested parties.

Furthermore, Macellum’s claim to be “disappointed and shocked” by Kohl’s rejection of the previously disclosed expressions of interest is disingenuous. Macellum has on multiple occasions stated publicly that Kohl’s is worth “at least $100 per share.”

Finally, Macellum’s comments on the Board’s adoption of a limited-duration shareholder rights plan are misleading. The Board adopted the rights plan to protect shareholder value by ensuring that the Board can conduct an orderly review of any expressions of interest and by preventing any person or group from gaining control of Kohl’s through open market accumulation.

The rights plan does not preclude the Board from considering any offers that recognize the value of the Company. Macellum itself publicly acknowledged on February 4 that the shareholder rights plan Kohl’s adopted is “still a stop, look and listen mechanism.” As demonstrated by Macellum’s latest announcement, the rights plan also does not impact shareholders’ ability to initiate a proxy contest.

The Board reaffirms its commitment to maximizing the long-term value of the Company. It will continue to pursue all reasonable opportunities to drive value, consistent with its fiduciary obligations.

Our strategy is delivering results.

As we previously announced, based on our performance in 2021, we are positioned to exceed our key 2023 financial goals two years ahead of plan. Our work to fundamentally restructure the business allowed us to achieve a nine-year high operating margin in Q3, and record Q3 earnings per share, positioning us to achieve significantly enhanced profitability going forward. These results reflect our strategic focus on transforming the operating model and making Kohl’s the leading omnichannel destination for the active and casual lifestyle.

We are optimistic about significant value creation in both the near and long term as a result of our transformational strategy. As one example, we have rolled out 200 Sephora at Kohl’s shops to date and expect to launch an additional 650 shops in the next two years, including over 400 in 2022. As we noted in our 2021 third quarter earnings, we are seeing an incremental mid-single-digit lift to store sales where we have opened Sephora at Kohl’s shops, and more than 25% of Sephora at Kohl’s shoppers are new to Kohl’s.

Kohl’s looks forward to sharing additional details on the progress against its growth strategy as well as an updated financial framework and capital allocation strategy at the previously announced Investor Day on March 7, 2022.

Shareholders are not required to take any action at this time.

The Board will present its recommendation regarding director nominees in Kohl’s definitive proxy statement and other materials, to be filed with the U.S. Securities and Exchange Commission and made available to all shareholders eligible to vote at the 2022 Annual Meeting. The Company will announce details regarding the 2022 Annual Meeting in due course.

Cautionary Statement Regarding Forward-Looking Information

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements include information concerning the Board’s review of expressions of interest and the Company’s business strategies, plans, and objectives. The Company intends forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates,” “plans,” or similar expressions to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause the Company’s actual results to differ materially from those anticipated by the forward-looking statements. You should understand that these forward-looking statements are not guarantees of strategic action, performance, or results. These risks and uncertainties include, but are not limited to, risks described more fully in Item 1A in the Company’s Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described in the Company’s filings with the SEC. Forward-looking statements relate to the date initially made, and Kohl’s undertakes no obligation to update them.

Important Shareholder Information and Where You Can Find It

Kohl’s intends to file a proxy statement and BLUE proxy card with the SEC in connection with the solicitation of proxies for Kohl’s 2022 Annual Meeting of Shareholders (the “Proxy Statement” and such meeting the “2022 Annual Meeting”). Kohl’s, its directors and certain of its executive officers will be participants in the solicitation of proxies from shareholders in respect of the 2022 Annual Meeting. Information regarding the names of Kohl’s directors and executive officers and their respective interests in Kohl’s by security holdings or otherwise is set forth in Kohl’s proxy statement for the 2021 Annual Meeting of Shareholders, filed with the SEC on March 19, 2021 (the “2021 Proxy Statement”) and in Kohl’s Current Report on Form 8-K, filed with the SEC on April 14, 2021 (together with the 2021 Proxy Statement, the “2021 Filings”). To the extent holdings of such participants in Kohl’s securities have changed since the amounts described in the 2021 Filings or were otherwise not included, such changes or amounts have been reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC or will be filed within the time period specified by Section 16 of the Securities Exchange Act of 1934, as amended, and the regulations thereunder. Additional information is available in Kohl’s Quarterly Reports on Form 10-Q for the first three quarters of the fiscal year ended January 29, 2022 filed with the SEC on June 3, 2021, September 2, 2021 and December 2, 2021, respectively. Details concerning the nominees of Kohl’s Board of Directors for election at the 2022 Annual Meeting will be included in the Proxy Statement. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND SHAREHOLDERS OF KOHL’S ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH OR FURNISHED TO THE SEC, INCLUDING KOHL’S DEFINITIVE PROXY STATEMENT, ANY SUPPLEMENTS THERETO AND THE ACCOMPANYING BLUE PROXY CARD BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and shareholders will be able to obtain a copy of the definitive Proxy Statement and other documents filed by Kohl’s free of charge from the SEC’s website, www.sec.gov. Copies will also be available at no charge on the Kohl’s website at investors.kohls.com.

About Kohl’s

Kohl’s (NYSE: KSS) is a leading omnichannel retailer. With more than 1,100 stores in 49 states and the online convenience of Kohls.com and the Kohl’s App, Kohl’s offers amazing national and exclusive brands at incredible savings for families nationwide. Kohl’s is uniquely positioned to deliver against its strategy and its vision to be the most trusted retailer of choice for the active and casual lifestyle. Kohl’s is committed to progress in its diversity and inclusion pledges, and the company’s environmental, social and corporate governance (ESG) stewardship. For a list of store locations or to shop online, visit Kohls.com. For more information about Kohl’s impact in the community or how to join our winning team, visit Corporate.Kohls.com or follow @KohlsNews on Twitter.

PBI – Pitney Bowes Recognized as One of America's Best Large Employers 2022 by Forbes Magazine

STAMFORD, Conn.–(BUSINESS WIRE)–Pitney Bowes (NYSE:PBI), a global shipping and mailing company that provides technology, logistics, and financial services, has been named one of America’s Best Large Employers for 2022 by Forbes magazine. This is the third year the company has been included in the rankings.

“Our people are the heart of our business. They are the ones that make Pitney Bowes a great place to work,” said Marc B. Lautenbach, President and CEO. “We are extremely honored to be included among the best employers in America. It reinforces Pitney Bowes reputation as a company that provides excellent employment opportunities, and more importantly the reservoir of good will that exists between the company and the people that work here.”

America’s Best Employers 2022 were identified in an independent survey taken by approximately 60,000 American employees working for companies with more than 1,000 workers in the United States. In total, 1,000 employers were recognized across 25 different industry sectors. The list is divided into two rankings: 500 large and 500 midsize employers. The evaluation was based on direct and indirect recommendations from respondents who were asked to rate their willingness to recommend their own employer to friends and family.

Pitney Bowes 2021 engagement survey results showed 84% of Pitney Bowes employees would recommend Pitney Bowes as a good place to work.

Other recognitions by Forbes include World’s Best Employers 2021, America’s Best Employers for Women 2021 and Best Employers for Diversity 2021. Early this year, Pitney Bowes earned a 100 score on the Human Rights Campaign Foundation’s 2022 Corporate Equality Index for the second consecutive year and was named to Bloomberg’s Gender-Equality Index (GEI) 2022.

To learn more about what makes Pitney Bowes a Best Employer visit https://www.pitneybowes.com/us/newsroom/forbes-americas-best-employers.html.

About Pitney Bowes

Pitney Bowes (NYSE:PBI) is a global shipping and mailing company that provides technology, logistics, and financial services to more than 90 percent of the Fortune 500. Small business, retail, enterprise, and government clients around the world rely on Pitney Bowes to remove the complexity of sending mail and parcels. For the latest news, corporate announcements and financial results visit https://www.pitneybowes.com/us/newsroom.html. For additional information visit Pitney Bowes at www.pitneybowes.com.