Yahoo Finance 3 Must-See Quotes From Twitter Management
Twitter (NYSE: TWTR) stock surged on Tuesday, following its first-quarter earnings release. Double-digit growth in revenue, adjusted earnings per share, and monetizable daily active users impressed investors.
As investors look over Twitter's strong growth and assess its future potential, they'll benefit from looking beyond the company's earnings release to management's conference call with analysts. During the call, management discussed a range of important topics. But three notable items worth highlighting are Twitter's ad load, its use of deep learning to remove abusive tweets, and how investments in platform health can drive growth.
Image source: Getty Images.
Room for ad load to increase
When asked about the status of ad load, or the percentage of potential ad inventory on its platform being deployed, Twitter CFO Ned Segal indicated the company has plenty of room for growth:
[W]e continue to feel that we're more demand constrained than supply constrained as we look across the platform; different surface areas, different times of year, different geographies. But we also feel like there continues to be work that we can do to drive better relevance, to improve ad formats, even to improve the copy in the ad formats to make sure that we're helping advertisers achieve their objectives and they could feel like a part of the experience for the people who use the service.
It's a luxury to have meaningful ad load available for marketers. Facebook's (NASDAQ: FB) ad load has seen its effectiveness as a growth catalyst moderate in recent years. The company started warning investors in 2016 that ad load growth would have a much smaller impact on the company's growth beginning in the second half of 2017. This proved to be true, and Facebook's revenue growth rates have since decelerated significantly.
While Twitter needs to find ways to solicit more demand for its ad inventory, this is a better problem to have than being supply constrained.
Using technology to improve platform health
Twitter is making significant progress on improving the overall health of its platform. One way it is making inroads on identifying abuse and spammy accounts is by using technology alongside employees. For instance, the company said deep-learning models are now proactively removing 38% of abusive tweets that were previously manually taken down -- up from 0% a year ago.
"What this means is that we're taking a bunch of the burden away from the victims of abuse and harassment on our service and we're making the agents that we have working on this process much more effective and much more efficient," said Twitter CEO Jack Dorsey. "We're going to continue applying technology, machine learning and deep learning specifically, to the health challenges that we're facing, and we expect to continue to make steady progress."
Health investments will lead to growth
Dorsey also said during the call that Twitter's initiatives to improve the health of its platform will not hamper the platform's growth. Sure, cleaning up its platform includes removing suspicious and spammy accounts. But this will ultimately lead to healthy user growth over the long haul, Dorsey said:
We do believe that health is a long-term growth vector for us. Over the long term we do believe the work will ensure people find a place that they can contribute, they can participate in, and want to do that more and more every single day. So, health as a No. 1 priority we believe is -- ultimately will lead to growth.
When these three ideas -- Twitter's room for ad load growth, its use of deep learning to improve platform health, and how investments in platform health can help support long-term growth -- are viewed alongside the company's strong financial results, there appears to be a lot for Twitter shareholders to look forward to.
More From The Motley Fool
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook and Twitter. The Motley Fool has a disclosure policy.
