Twitter executive: Apple's new iOS 14.5 privacy collection permission policy has little impact

Beijing time, April 30 morning news, Twitter today announced the first quarter financial report of fiscal year 2021 ending March 31. The report shows that Twitter's revenue in the first quarter was US$1.036 billion, an increase of 28% from US$808 million in the same period last year, and an increase of 27% year-on-year excluding the impact of exchange rate changes; net profit was US$68 million, compared with a net loss of US$8.4 million in the same period last year.

After the financial report was released, Twitter CEO Jack Dorsey and CFO Ned Segal attended the subsequent financial report conference call to interpret the key points of the financial report and answer questions from analysts.

The following is the main content of the analyst question and answer session of this conference call:

Doug Anmuth, an analyst at JPMorgan Chase: The latest performance reports of major Internet platforms in the past few days have shown strong growth. Some companies have even achieved significant growth on a very large base. Why did the company not achieve similar growth in the first quarter? In addition, the company mentioned that Apple's advertising monitoring framework SKAdnetwork has increased the company's mobile app promotion audience by 30%. Can you give us a detailed introduction to this aspect?

Ned Siegel: From an operational perspective, 85% of the company's advertising is brand advertising, while direct response advertising accounts for 15%. In terms of brand advertising, advertisers usually plan how to display their brands in the following year after the year-end holidays, so brand business usually starts relatively slowly. There are two other reasons that may have dragged down the growth of this part of the business: one is the Capitol Hill riots, and the other is the preparations for the presidential inauguration and related follow-up. In addition, activities that were previously held early in the first quarter, including the Grammy Awards and the Oscars, were either postponed to the end of the first quarter or directly postponed to the second quarter, so advertisers were even less willing to invest budgets in the first quarter when they did not fully formulate a plan for delivery. In short, the brand advertising business started relatively slowly in January and February, and the situation grew relatively strongly in March.

Direct response advertising performed very well throughout the quarter, and the best evidence is mobile app promotion, where app installs are a very important indicator. We launched a new version of the website, click mode and mobile app promotion in early February, and then we saw an acceleration in growth in the first quarter based on the 50% growth in the fourth quarter. Interestingly, betting and investing in the cryptocurrency space is a very popular topic on Twitter. Advertisers in this space increased their investment in the first quarter of this year compared to other years in order to increase their cryptocurrency app downloads and related investment activities, allowing the company's business to benefit from the increase in the audience of popular topics and the improvement in the relevance of advertising recommendations. These are some of the situations we observed in the first quarter. Looking forward to the second quarter, the strong growth of brand advertising will continue, and it is possible to achieve the growth peak we expected. The advantages of the platform mobile app promotion, the popularity of related topics and our hard work will continue throughout the year.

With SKAdnetwork, we can provide advertisers with relevant data to guide their delivery. With the help of iOS platform services, the audience of our mobile app promotion ads has increased by 30%. These users can also see our ads, but the matching degree was not high enough before, and they were not displayed as mobile app promotion ads, so there was no feedback to advertisers, thereby improving advertising effectiveness. This is part of our work to alleviate the impact of the iOS 14.5 version adjustment. Through our further analysis, the new version of iOS has a greater impact on direct response ads than on brand ads, and the market environment for users to obtain notifications has been reorganized. We believe that Apple’s "App Tracking Transparency (ATT)" privacy collection permission policy has little impact on us, which has also been reflected in our outlook for the second quarter.

Justin Post, Bank of America analyst: Following up on the previous question, the quarter-on-quarter decline in U.S. business revenue in the first quarter was larger than the same period last year. Does the company expect this part of the business to recover in the second quarter? Or will it still be at a relatively low level? In addition, in the second half of the year, will the revenue contribution from mobile application promotion products increase?

Ned Siegel: The impact of the epidemic on different parts of the world at different times, and the impact on Asia and Europe was more serious in the early first quarter, so the proportion of international business during this period was relatively high, and the year-on-year growth rate was also higher. Considering the various factors mentioned in my previous answer to Doug's question, I believe I can answer your question. For the outlook for the second quarter, if the growth momentum in March can be maintained, the high point of the forecast figure can be achieved. Regarding the business of mobile application promotion in the second half of the year, due to the base of the business last year, it may be more difficult to predict year-on-year. On the other hand, we also believe that based on the current situation, including more advertising audiences and advertisers who invest more because the service may bring them more returns, the cryptocurrency field is an example, and I believe it is not the only example, which can achieve business improvement. The company will disclose the proportion of direct response advertising and brand advertising every year. I just mentioned the 15%/85% ratio in 2020. Our long-term goal is half and half.