Twitter, Inc. (TWTR) Q4 2021 Earnings Call Transcript

Twitter, Inc.  (NYSE: TWTR) Q4 2021 earnings call dated Feb. 10, 2022

Corporate Participants:

Krista Bessinger — Vice President Investor Relations

Parag Agrawal — Chief Executive Officer

Ned Segal — Chief Financial Officer

Analysts:

Doug Anmuth — JPMorgan — Analyst

Justin Post — BofA Merrill Lynch — Analyst

Brian Nowak — Morgan Stanley — Analyst

Ross Sandler — Barclays — Analyst

Rich Greenfield — LightShed Partners — Analyst

Eric Sheridan — Goldman Sachs — Analyst

Mark Mahaney — Evercore — Analyst

Zach Morrissey — Wolfe Research — Analyst

Dan Salmon — BMO Capital — Analyst

Lloyd Walmsley — UBS — Analyst

Presentation:

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 that time. I would now like to turn the call over to your host, Krista Bessinger VP, Investor Relations.

Please go ahead.

Krista Bessinger — Vice President Investor Relations

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 cashtag 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 that our most recent 10-Q and upcoming 10-K 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 and 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 — Chief Executive Officer

Hello everyone. Thanks for joining us today. Since this is my first earnings call I will take a step back and talk about where we are as a company. I’ll cover three things, our strategy, our execution and what this all means for shareholders. As part of 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 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 can trigger interest. You can instantly find relevant content across interest from sports to investing and engage with it.

The strategy and plan we shared with you about a year ago is meant to continue strengthening these two differentiators around personalization and selection. And to use these to inform and bring position to our work, across both our consumer and revenue focused teams. Let me discuss a couple of examples, first our work to improve personalization includes us developing a better understanding of customer redress 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 enabled us to create more relevant and personalized products that increase daily utility and also enables us to serve more relevant ad and then be particularly helpful in improving return on our 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 those unique 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 living and also a test with shopping and commerce.

All of these come together to enable an ecosystem of products that enables content creators, publishers and business of all sizes to build and connect with their audience. Together I believe these will enable more unique content and more context around the long tail of topics. Today, we do well when it comes to topics of broad interest, politics, sports, entertainment, music but these features will help expand the range of topics during 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 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 things, increased accountability, faster decision-making and a focus on doing fewer things in tablet. Let me talk about two specific changes we’ve made. First I’ve made strategic organizational changes both of them create clarity and ownership in the organization. This enables faster decision-making and increase accountability.

It is now operating under a GM model — general manager model where cross-functional resources for all product development and the budget to support operations are owned by GMs across consumer, revenue and core technology who are responsible for delivering outlook [Phonetic]. 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 isn’t and why and adapt 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 reallocations 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 feel 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 — Chief Financial Officer

Thanks Parag, and hello everyone. I would 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 was 37% year-over-year to $5.08 billion and DAU grew 13% year-over-year to $217 million and US 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 on-boarding 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 identified 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 Acquire with performance revenue growing faster than brand. We expect total costs and expenses to grow in the mid 20% range in 2022 versus 2021 excluding 2021’s one-time items with an upward bias 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 US 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 items in 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 everyday 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 plans. In Q4, we repurchased $256 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 remaining $2 billion over time.

We’ll continuously evaluate efficient alternatives to using 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 — Vice President Investor Relations

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

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Doug Anmuth from JPMorgan. Please go ahead.

Doug Anmuth — JPMorgan — Analyst

Thanks for taking the questions. You mentioned the strong growth that you’re seeing an important lead indicators for future mDAU growth, just curious to 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 2022, just beyond remittance [Phonetic] and comps. Thank you.

Parag Agrawal — Chief Executive Officer

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 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 logged out basis to logged 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 up. 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 and if you think about the strategy we described earlier around using the great selection of content we have under service and our ability to get 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 saw — as you see all of this works — play forward a couple of years, we see confidence in us getting to the 315 in mDAU goal.

Doug Anmuth — JPMorgan — Analyst

Thank you Parag.

Krista Bessinger — Vice President Investor Relations

Thanks Doug. We’re ready for the next question please.

Operator

Our next question comes from Justin Post from Bank of America. Please go ahead.

Justin Post — BofA Merrill Lynch — Analyst

Thank you. Maybe one about the quarter and one about big picture revenues. First person on the quarter, can you just talk about how impressions were down and CPEs up what you were doing within the ad stack to drive that? And then second, maybe this is for Ned, it looks like guidance is maybe around $1 billion 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 do you think could help accelerate growth as we work through the next two years? Thank you.

Ned Segal — Chief Financial Officer

Hey Justin. Thanks for the question, I’ll jump in on both of them. First, on the ad metrics so total ad engagements decreased 12% year-over-year and cost per engagement increased 39% and there are a variety of things that can cause these to move them in one direction or another. But in this case, we saw a mix shift to performance to 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 is 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 the 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 two really moved 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 US and international is core to the revenue opportunity because it gives us a larger audience to show better ads to 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 start to see performance ads grow faster than brand over the course of this year. Those two 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.

Justin Post — BofA Merrill Lynch — Analyst

Great, thank you.

Krista Bessinger — Vice President Investor Relations

Thanks Justin, next question please?

Operator

The next question comes from Brian Nowak. Brian, please go ahead. From Morgan Stanley.

Brian Nowak — Morgan Stanley — Analyst

Thanks for taking the question, I have two, both are related to advertising. The first one, Parag you just talked on the DR side, where do you think you’ve made the most progress building really building out the DR products and then where do you still see the key areas you need to improve to realize the 2022-2023 opportunity. Then 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 to your performance within that in your base case? Thanks.

Parag Agrawal — Chief Executive Officer

Thanks for the question. We’ve shared with you our long-term goal around mix shift between brand and DR are 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 and 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 where we’ve seen more progress and what we see — look 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’ve made 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 traffics which is a rebrand of the web click products we had and increasingly moving more down funnel on the web performance opportunity. We’ve also through the sale of [Indecipherable] and 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 I have 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 thanks roadmap.

Brian Nowak — Morgan Stanley — Analyst

Thanks Parag.

Krista Bessinger — Vice President Investor Relations

Thank you. Next question please?

Operator

The next question comes from Ross Sandler from Barclays. Please go ahead.

Ross Sandler — Barclays — Analyst

Hey Parag, just a follow up on that last answer the letter talked about new DR ad formats and it sounds like e-commerce and the new website traffic product is going to be the needle mover in 2022 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 and thus far, so do you view that as the big opportunity over the next few years.

And then Ned, a housekeeping question, it looks like cross install we’re doing about 10 million per quarter and MoPub was the other kind of 40 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 two businesses. Thanks Parag.

Parag Agrawal — Chief Executive Officer

Thanks Ross. Yes, we have been increasing 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 revenues. 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 improvements in mobile app promotions again increasing investments in more down funnel efforts there going well beyond app installs and similarly on the web performance side to get more down follow on conversions leading into small businesses and e-commerce solutions coming across.

Ned Segal — Chief Financial Officer

And on the second part of your question Ross, one the mix so we haven’t broken out MoPub versus MoPub Acquired yield cross install business but just to walk you back to what we’ve shared in the past it was about $188 million, 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 the 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 is a better pay off over time — ads on Twitter.

And in doing that we’d 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.

Krista Bessinger — Vice President Investor Relations

Thank you. Next question please?

Operator

The next question comes from Rich Greenfield from LightShed Partners. Please go ahead.

Rich Greenfield — LightShed Partners — Analyst

Hi, thanks for taking the question. I guess maybe just first off, it would be great to understand Parag, 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 in 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 growth for the next two years?

Parag Agrawal — Chief Executive Officer

Hey Rich. Thanks for the question. Let me take your second question first and then I’ll get to the first one, as I said, we have line of sight to our 316 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’re 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 you can understand why we believe in our ability to hit this. And the impact we’re seeing from this work should be broad based in the US and internationally, which is why we’ve said that our expectation around us seeing an acceleration growth through the course of this year.

To answer your first question. I have been at Twitter for over a decade now. I have worked, I’ve had the privilege of working on all kinds of initiatives I started my journey here, working on the ads, on building ads products well before the IPO and I think as a result, at 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 consumer initiatives, working on machine learning efforts to incrementally improve the Home timeline, deliver relevance in the Home timeline, which allowed for us to sort of start growing mDAUs and accelerate into the low double digits and then sustain that over time. I think 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 organize 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.

Rich Greenfield — LightShed Partners — Analyst

Thank you.

Krista Bessinger — Vice President Investor Relations

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 [Indecipherable] and Damian asks will you touch on Web3 incorporation and also the amount of new Twitter Blue subscribers?

Parag Agrawal — Chief Executive Officer

Thanks Damian for asking a question on Twitter. On Web3 I think it’s very interesting what we’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. As you think about the broader crypto ecosystem which includes crypto currencies, the work and several D5 [Phonetic] are even broader all of the decent life technologies and applications being built on top of the biggest 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 it happens to be the place where this entire ecosystem goes to find out what’s happening across the ecosystem to really with 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 who is 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 US 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 have seen is us sort of — the most heavy users of the product is where this is targeted and we’ve seen a strong response from them.

That being said, it’s a very small part of our revenue today. They’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 opportunity for us as we look beyond that.

Krista Bessinger — Vice President Investor Relations

Great, thank you. And we’re ready for the next question please operator.

Operator

Thank you. So, we have a question from Eric Sheridan from Goldman Sachs. Please go ahead.

Eric Sheridan — Goldman Sachs — Analyst

Thanks for taking the question, first congrats on the new role Parag. Maybe following up on Rich’s question first Parag, would 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 in the middle innings of an investment cycle versus the later innings of an investment cycle for Twitter gives your goals to position for the long term? Thanks.

Parag Agrawal — Chief Executive Officer

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 role, with very focused on metrics and observing them and reacting to them and being able to understand what’s working for our customers, what’s not working for the customers and to use that understanding to constantly improve our products.

I also bring the increased focus and accountability across the company, it’s evidenced by the changes we’ve made around the GM structure that we are 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 in delivering outcomes for our customers and for our shareholders with and for you all to be hold me accountable for delivering these results.

Ned Segal — Chief Financial Officer

Eric, on the second part of your question, I’ll step back from the baseball analogy around investors 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. We went 35% growth in sign ups is something you’re able to see in a quarter that demonstrates what’s possible to us that we’re just getting more at-bats 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, $150 billion and growing market for digital ads outside of search, outside of China as — with a business that’s 3% of that addressable market we still feel like it’s really early there too. I go back to Parag’s opening comments right, 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 [Indecipherable] as possible. That’s all designed to make sure that we have choices over time, so that when we do see opportunities to invest against those two 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 is no change to the margin potential for the company that we’ve talked about in the past, either.

Eric Sheridan — Goldman Sachs — Analyst

Thanks so much.

Krista Bessinger — Vice President Investor Relations

Thank you. Next question please?

Operator

The next question comes from Mark Mahaney from Evercore. Please go ahead.

Mark Mahaney — Evercore — Analyst

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’d 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 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? Thank you.

Ned Segal — Chief Financial Officer

Thanks Mark. So a couple of thoughts there. First is, these are sign ups, which could be somebody is 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 reactivations 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 a 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 password it’s been a big up. 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 reactivation. As we think about the character, I hope these are all about standing 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, it’s just more of them. And although we haven’t disclosed this number in the past, it did feel like it was a big enough move from what we’ve seen in the past that was important to share when we think about what gives us confidence about the progress we can deliver over the course of this year.

Mark Mahaney — Evercore — Analyst

Thank you, Ned.

Krista Bessinger — Vice President Investor Relations

Thank you. Next question please?

Operator

We have a question from Deepak Mathivanan from Wolfe Research. Please go ahead.

Zach Morrissey — Wolfe Research — Analyst

Thanks. 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 to 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, supply chain and labor and any kind of trends you’re seeing so far in the first quarter? Thanks.

Parag Agrawal — Chief Executive Officer

Thanks for the question. I’ll take the first part and let Ned take the second part. In terms of DR I think 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 allows people to tell us what they’re interested in, for example, by following topics. As you think about us 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 of the performance, advertising and the 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 — Chief Financial Officer

On the second part of your question Zach around Q4 trends and Q1, so Q4 got off to a strong start with a big event calendar all around the year — all around the world and COVID’s impact being less as we think about the October, November time frame. As the quarter went on we saw the companies who [Indecipherable] around the holiday season ramp up quickly and Twitter was there to deliver for them when that happened.

As we 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 and we saw at the beginning of the holiday season in the US, it just didn’t maintain the same pace in the last couple of weeks of the quarter, given 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’ve 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 event 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 one reason or another. So, we feel like we’re off to a good start.

Zach Morrissey — Wolfe Research — Analyst

Thank you.

Krista Bessinger — Vice President Investor Relations

Thank you. Next question please?

Operator

We have a question from Dan Salmon from BMO Capital Markets. Please go ahead.

Dan Salmon — BMO Capital — Analyst

Good morning everyone. Thank you for taking the question. I have a few more about your new ad products Parag. First, just maybe to jump back to you’ve 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, we’d 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, you just spent 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, that would be great. Thank you.

Parag Agrawal — Chief Executive Officer

Thanks for the question. We are really excited about the SMB opportunity ahead of us. We relaunched that Quick Promote product and sort of able to make it easy for people to use this product to drive up revenue from that line. Separately, to talk about sort of how Twitter for Professionals or sort of these professional accounts that we’ve shipped sort of connected with that strategy, we’ve always had a lot of businesses on Twitter with commercial intent and the their derived organically except that we’ve never identified them to be able to tailor amazing experiences for them to drive them into the ad system.

As you sort of started shipping these products, which provide them value for creating — deriving value in their organic experiences we are 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 a performance oriented advertising strategy, inclusive of mobile app promotions, getting into performance and if you see sort of how that alongside the 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.

Dan Salmon — BMO Capital — Analyst

And then just any color on Carousel Ads traction?

Ned Segal — Chief Financial Officer

Sure Dan, it’s early for those products that we talked about last year sort of Click ID and the Carousel product and so the other format that you described, I think if you just step back from any one of them individually and you thought of us and collectively, we’re clearly moving faster and rolling out products to help advertisers of all sizes. We’re clearly working hard to adapt to the ever evolving ads ecosystem and changes whether they’re from regulators or operating system makers or from advertisers and how they want to show up.

Because the ones you mentioned are just great examples but you’re going to see playable ads 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 courses here that we’re excited about. So, I hope you’ll continue to see more new products from us over the course of this year.

Dan Salmon — BMO Capital — Analyst

Okay, thank you both, really helpful.

Krista Bessinger — Vice President Investor Relations

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

Operator

Of course. So, we have a question from Lloyd Walmsley from UBS. Please go ahead.

Lloyd Walmsley — UBS — Analyst

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 to funnel a little bit more? I mean, clearly it sounds positive, you’re seeing more top of funnel traffic and it sounds like convert into sign ups is higher, but how does that then — maybe that cohort behavior change? 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 mDAUs 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 head count 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 — Chief Financial Officer

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 mDAU growth, relative to those goals. If you look at the make-up 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 on-boarding 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 but has 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 — Chief Executive Officer

Let me take the margin question. As we’ve said, our thinking around long-term margin 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 the looking for other efficiencies across the business including some of our infrastructure where as we sort of make — we do the work to drive optimization, some of it pays off this year but even more so in the coming years. As we’ve looked at these efficiencies and done the work we’ve been able to make incremental investments that we’ve wanted to make for this year in 2022 by staying within the same range that we told you three months ago, in terms of how we’d grow. And I think that’s evidenced around sort of how we are trying to be more efficient and all of this work we will pursuit of increased optionality in the future, but we can use this optionality for delivering margin expansion or we can identify other high value growth opportunities to invest in.

Krista Bessinger — Vice President Investor Relations

I’m sorry. Please go ahead Katie.

Operator

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

Ned Segal — Chief Financial Officer

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

[Operator Closing Remarks]