By Yoree Koh
Twitter Inc. executives on Wednesday laid out their long-term
strategy at the company's first analyst day, attempting to counter
mounting investor concerns about the company's growth prospects and
vision.
Speaking at San Francisco's Four Seasons Hotel, the executives
spoke at length about each part of the company's business, mainly
advertising and data licensing. They also for the first time
disclosed specific initiatives they plan to ease investors'
long-time worries.
While Twitter Chief Executive Dick Costolo has said on recent
earnings calls that the company aims to "build the largest daily
audience in the world," he has provided few details on how the
social-media service, with one-fifth as many users as Facebook
Inc., planned to get there.
For its core service, which has had five leaders in as many
years, Twitter unveiled several features and changes to make the
service easier to use and more valuable for its audience. The
changes include the ability to upload and share videos, beefed-up
private messaging capability, more-targeted notifications, better
use of location and a "while you were away" feature that will
highlight relevant tweets a user missed while offline.
New users, when they first sign up, will no longer have to go
through the painstaking process of picking other users to follow in
order to see Twitter content. Instead, the company will do that for
them, delivering what Mr. Costolo called an "instant timeline." He
said the company will take everything they know about a new user
when they sign up to build a "high-value" feed right off the
bat.
"Moving forward, you can expect us to accelerate the pace and
breadth of product change," Mr. Costolo said.
He added that the company is "working toward creating a Twitter
that everyone in the world can get value from immediately. A
Twitter that connects everybody to their world."
Investors liked what they heard, sending the company's shares up
7.5% Wednesday to $42.54. The stock has fallen 37% this year.
Chief Financial Officer Anthony Noto underscored the company's
strategy and touted its strengths. He mentioned three objectives:
to strengthen the core audience of users; to reduce barriers to
consuming Twitter content across the entire audience; and to
deliver new services and apps to attract new users.
"They're doing all the necessary things, or at least talking
about all the necessary things about product and marketing," said
RBC Capital Markets analyst Mark Mahaney, who attended the
presentation. "But at the end of the day, when it comes to the
stock, all of this needs to translate into reaccelerating user
growth and growing engagement per user."
Mr. Noto, who emceed most of the all-day event, read out
Twitter's new strategy statement, which he conceded was a mouthful:
"Reach the largest daily audience in the world by connecting
everyone to their world via our information sharing and
distribution platform products and be one of the top
revenue-generating Internet companies in the world."
"I struggle to read it every time," he said.
The company gave analysts a better idea of its size, which it
considers to be a combination of three separate groups: its core
users, which totaled 284 million in the latest quarter; visitors to
the website or app who don't log in; and those who see Twitter
content embedded on other websites or apps.
Mr. Noto said more than 500 million people come to Twitter a
month without logging in. About 200 million view a profile--of a
celebrity like Lady Gaga, for example--but more than half navigate
away. Another 100 million per month view individual tweets, but 70%
of those visitors immediately leave the site. Aside from those
visits, tweets that are embedded on places other than Twitter get
an estimated 185 billion views per quarter, Mr. Noto said, a new
metric the company has started to measure to indicate the size of
its reach beyond core users.
Twitter executives said they are working on ways to get people
to sign up when they visit Twitter pages, such as by offering more
content related to what the user is viewing. For example, visitors
who go to pop star Katy Perry's profile page might stick around
longer if more music or information about similar artists were
available, said Trevor O'Brien, a director of Twitter product
management.
On a slide that showed Internet companies like Google Inc.,
Amazon.com Inc. and eBay Inc. whose annual revenues have reached
$14 billion, Mr. Noto placed Twitter, with a goal of reaching that
mark within 10 years of hitting the $1 billion level.
Mr. Costolo stressed the importance of bolstering Twitter's
private-messaging function, an area in which Facebook and other
Internet companies have gained strength.
"I strongly believe private-messaging virality is important to
our long-term growth," Mr. Costolo said, adding that Twitter will
begin changes in messaging this quarter.
He said the company also will look to invest in separate apps,
as it has done with Vine, an app that lets users share short video
clips. Facebook and others have adopted this sort of multiapp
strategy over the past year.
For Mr. Costolo, Wednesday was a chance to show critics and
investors that Twitter was on track with a clear plan after its
rocky first year as a public company, with a raft of executive
departures and confusing signals from the service. Though the
company had initially focused on its core user base, it later said
analysts should consider visitors to the site and those who see
Twitter content elsewhere as part of its audience. Twitter's
situation was complicated by signs that its user growth rate was
beginning to stall.
Mr. Costolo has lost or replaced five executives in the year
since Twitter's initial public offering. Operating chief Ali
Rowghani abruptly resigned in June. The following month CFO Mike
Gupta was demoted to lead a newly created strategic investments
group. He was succeed by Mr. Noto, a former Goldman Sachs Group
Inc. banker who had worked on Twitter's IPO.
An indication of how far the company has to go was on display
Wednesday, however, when an analyst in the audience admitted he
created an account that morning after hearing the encouraging
talking points, but then became frustrated when he couldn't figure
out how to follow certain interests, such as tech and finance.
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