Get cash too. Its a big deal for the Energy Business and we have a very big morning on tap, carl. It will be just as the sun comes up. Yeah, guys were coming to you from a Conference Room called aviary at twitter headquarters. Dick costolo is with me. In a moment well talk about the quarter, talk about everything that happened in the course of that quarter and, of course, stock poised to open lower today as people are focusing on on that user growth. Well get to it with dick in just a minute. Yes. In fact, an important interview. Twitter reporting better than expected firstquarter results. Revenue more than doubled but as carl referenced stock down sharply after user growth short of wall street forecasts. Jim, were going to hear from the man himself and entertain many of the key questions investors have this morning. In speaking to a couple shareholders or former shareholders user Growth Continues to be at the center of concern. Weve been mentioning since the company went public which wasnt that long ago. Right. With dick costolo when he was on set that day when it went public behind us, but there is people want to know, what was the growth rate in users in terms of during the quarter, february to march, trying to understand that and model it to figure out their discounted cash flow models. The engagement numbers some say when you look at old users versus few users the same thats a positive. Where do you come down . Okay. There are people who are arguing this morning that the peak of the rate of growth, not the growth, because the growth is still up, the peak of the rate of growth may have occurred right before the underwriting. Whats funny is or ironic i should say, no one is laughing this morning, this is similar to the facebook quarter when facebook didnt get it right. I happen to be a big fan of facebook, they went back to the drawing board, but this is a carbon copy except the deal was done better. Although this is still the highest multiple stock out there. Right. In the internet arena. And i can tell you, carls out there, but one of the most disturbing three disturbing points in this Conference Call. One was we talked about seasonality. When right out of the shoot i dont want to hear about seasonality, the second eventually. I see no clear path for that at all. Its geared towards events and arent enough events to create a lot of twitter a lot of tweeting this quarter. I didnt know it was an oscar super bowl play. I learned that. And then finally the timelines, views versus monthly over month Monthly Average users, david this is the First Time Since the dotcom period that ive had to learn new metrics that im supposed to Value Companies by. Well, i brought a dotcom public and i tried to explain to people why eyeballs mattered. Didnt really work . The stock went from 63 to 1. This isnt going to do that. They have lots of cash from the underwriting. And they also have lots of users. They have significant Revenue Growth. But they havent even they said look, advertising, were not going remember theres a line in the Conference Call about how advertising we dont want to mess the site up. Zuckerberg has found a way people like the ads. Now this is a company that i think has much untapped value. Because if they get the site looking right and if they get people who dont tweet but make it their news service, but they didnt even talk about that, i would like them to get a do over. They need to doover this Conference Call. Not unlike what sandberg got to facebook. Maybe that can happen right now. Of course you need a doover. Better company than the call. Carl joining us from San Francisco. The lockup a concern for some people. Mentioned by jordan rohan. Given that. Lets let carl take it away and see if we can answer some of those questions. Carl . Guys, thanks very much. Good curtain razor on the quarter and twitter Ceo Dick Costolo joins us at twitter headquarters. Thanks for being here. A lot of things went right with the quarter. Revenue adjusted ebitda, the guidance for the year, but people are zeroed in on user growth and they want some wow. Yeah. How do you sum up how user growth was in the quarter . Yeah. Well, you know, date we opened, the day of our ipo, i was on your show, or your program, as my grandmother would have called it, and i said to you and jim, we have a lot of work to do. And we knew what that work was at the time and we set out a very clear plan for growth and how we wanted to attack growth. We talked about engaging new users more quickly, bridging the gap between awareness of twitter and engagement on twitter, et cetera. And we laid out a path and it started down that path and im happy with the work weve done and how that work has translated into growth in the First Quarter. Few things, one, the kinds of simplifying of the new user signup process to be much more mobile phone based and connecting to people you already know who are on the platform. Thats worked well for growth. Thats been a driver of growth. Two, the recommendations we send you when we see activity happening on the platform that we think might be relevant to you. Thats worked very well for growth. And then three, in the very early stages of starting to make sure we organized content for new users, started to work well. So as we continue to tie those threads together over the course of a year, and better organized content for new users when they jump into the platform so they get engaged right away, increase the value of each view that we show to make sure people are engaging with the views more, favorites and retweets were up again 26 in the First Quarter, so making sure we get the engagement rpms and engagement engine going so every time someone views twitter theyre more engaged with it, those things are working nicely. We have threads for each of those throughout the year and i think that it will be a combination of those changes that we make over the course of a year that will really result in a change in the curve. You see it as not a multimonth story a multiquarter story but when people look at timeline views per Monthly Average user down 8 year over year, you dont think people are beginning to find some alternatives some place else . No. In fact, engagement is well up on the platform. In fact, so timeline views per mau for our net new users were just as strong as our existing users in the previous quarter. That tells us that every net new user signing up is as engaged as our existing user. The reason youre seeing the year over year decline, we made a bunch of changes in the second half of last year to make sure that each timeline view, timeline view is just when you come to twitter, a list of tweets you see. We wanted to make each timeline view more engaging. We collapsed a bunch of things that were across multiple timeline views into a single view to make that single view more engaging. And timeline views multiplied by the engagements per timeline view are way up. So im really happy with engagement. I dont see any issue there. The quarter had the super bowl. It had the oscars. And the incredible Marketing Power of ellen selfie which i think well get a look at. You had the olympics and ncaa. Should you think the quarter should have shown more power because of those high profile, high television, highly tweetble events . The beauty of twitter is that every day in countries around the world, twitter is front and center and almost ubiquitous, everywhere in front of people every day. It doesnt take some special event to draw people into twitter. Yesterday, during adam silvers press conference, there were tweets on air under his press conference from players and other athletes and commentators about the punishment that was meated out and millions of tweets about that event while it was happening. So its not it doesnt we dont need moments to drive people into twitter. They see twitter and come to us every day. So the platform is already mainstream. We have people around the world 3. 3 billion views of the tweets about the oscars, 3. 3 billion of tweets just about the oscars, in the 48 hours after the oscars. If you compare that number because its a big number, to some of the Youtube Content networks with thousands of video channels, those content networks will get 3. 3 billion views in a month. We had that in 48 hours. The platform is already mainstream. Its just showing people the increased value that they receive when they log into the platform and create their own timeline. Weve had this discussion before about whether or not theres something about twitter that is archaic intimidating and alienating and youre telling me somehow mainstream is going to discover that its easier to use in the coming year . Well, theyre already consuming it all over the place on tv, in print, on websites and mobile sites around the world. Theyre seeing tweets every day and consuming them. What we want to do is improve that logged in experience for them and make that easier for them to engage with. Right. By bringing the content forward and pushing the scaff d scaffolding of twitter to the background. The lockup expiration, everybody is talking about that. You filed the ak that says you have no plan to sell your shares, jack dorsey, ed williams, who else is on board with that pact . Benchmark announced one of our early investors announced they have no plans to sell and frankly after speaking with most of our major investors that were with the Company Since prior to the ipo, many of those investors have declared that they have no intention to sell. So we feel great about that. Its frankly one of the reasons, probably the primary reason, we have decided and announced we wouldnt we have no current plans to have a secondary offering. Youve seen most of the other companies in our space have those fairly quickly on the heels of the ipo. We have had no plans to do that because most of our major shareholders have no desire for immediate lickety. Is there a timeline on the promise, the selling of the shares or the secondary . Theres no current plans. I would say visavis the timeline of selling specifically, when i do, when jack does, those will be in a accordance with a 10 b 51 plan and even under filing that theres another 90 days of a cooling off period before we would sell. On top of all this and the quarter, Alan Wert Zell the head of research at nbc, our shop, this week in the financial times. Your own people. I invite you into my home argues that social media in general, not just twitter, is not game changer and his general take is, if im social media, of course im going to promise you a tool that boosts ratings but so far the numbers dont show that. Dont webear that out. Whats your response . I have a different perspective. I kind of it snooshs heres look, when we developed our twitter and tv strategy it was because of a wealth of data that we had that showed us that there was a complimentary twoway relationship, not just that twitter made tv better and twitter drove tune in and agated attention to what was happening on tv but also that television drove engagement on twitter. Again we saw that just yesterday in the adam silver announcement. A wealth of data that showed us that. As we took our twitter and tv strategy to market there has been an evergrowing wealth of thirdparty research from fox research, from nielsen and others that show causal relationship between twitter and tune in to tv. In fact, the Nielsen Research showed specifically that there were three things that drove tv ratings, programs ratings, those were last years ratings, ad spent for promoting that program and twitterp. So hes wrong . I would say that we feel very good about the strategy since the thirdparty data backs it up and nbc is a great partner of ours and continues to work even more driving even more unique content into our platform and twitter reinforcing that content back to nbc. The focus on the twitter element on the tv element and the user growth element, i think has drawn attention away from mo pub. How do you make that easy for people to understand . Mo pub is our mobile ad exchange. Ill make it this simle. If youre an advertiser and you come to twitter we can get your ad in front of 1 billion mobile smartphone users 1 billion across ios and android. In q2 as we integrate that mobile ad exchange with our own twitter inventory, if youre an advertiser and you come to twitter, we can get your ad in front of over 1. 25 billion people using mobile phones. Its that simple. Do you feel the need to buy anything big . Are people pressuring you . People talk about it because theres been activity in this space. Were focused on strengthening our core product, twitter and vine i dont feel any particular compunction to go out and do something differences just because other people are doing that. We have a very clear focus on strengthening our core and focusing on three specific things, growth, operating leverage and operating efficiency and as we strengthen our core and service to growing our Core Products well be fine. Are valuations right now, im thinking whats app are they taking your breath away . Theyre significant. Hows that . Thats to the point. Yeah. But does it make you feel things you would want to buy are otherwise out of reach . I dont think so. We look at the landscape and have a consider aate approach t m a, the services we want to do with strengthening our core like the acquisition. Were in a period of growth names are under pressure now to show promise of things other than Revenue Growth. Yeah. Other than cash flow. Do you feel pressure to start putting some demonstrating some tree eps power in the traditional sense . I mentioned specifically im focused on three things, growth, operating efficiency and operatioperate ing leverage. That second and third are in service to steadily improving margins. Steadily improving margins. So as a High Growth Company what i want to make sure were doing is not starving the Growth Engine while constantly focusing internally on Getting Better and better at operating efficiency and operating leverage in service to margins. We did solicit questions on twitter, asktwtr. Good. Ill skip the first. The second one is you can ask me the first one. No. Is dick friends with zuckerberg on facebook . Im not friend with zuckerberg on facebook but i am friends with mark. I think mark is mark is just super insightful about thinking about the market and the industry and platforms in a different way that be other people do. He kind of looks at it from a different angle than other people do. I think thats i always find those conversations insightful. Could you ever see any Strategic Partnership with Cash Rich Companies such as apple, google and microsoft. We have them. Were embedded in ios with apple. Our partnerships with google and microsoft are growing so we already have those and those continue to grow. And finally, will punk ways ever be able to be a part of the hashtag . Like the apostrophe if you will. Yes. I put apostrophes in my own hashtags and back space over them. I dont think thats coming soon but something i do myself. You got a lot going on. We appreciate you having us in the house. Thanks for coming. Shedding light on the quarter. Dick costolo, the ceo of twitter. Jim and david, back to you guys. Thanks. Great interview. Thanks very much, carl. Better than the Conference Call, carl. This cleared up a lot of im not saying go buy it. I am saying this was better than the Conference Call. It was the doover i wanted to hear. It made me feel the last question that carl asked the most important question, never asked in the Conference Call, are you driving toward postibility given the fact theres been a giant selloff in the companies that really arent and he said yes, two of the three metrics are. This call made me more confident this interview, not the call. The call itself was a difficult one. The call was difficult. I went over it a couple times and i like twitter. I use twitter. So obviously i was in the camp of and dick costolo impress mess as a very good man. I wanted to hear about other modernization ways, hear a little bit more about the idea they want to be profitable and carls interview gave us that. Does it make me want to sell the stock anymore . Goes back initially to the underwriting price. But there are a lot of people goes back where are we 26 . 26. But it was a reassuring interview for those who think twitter has lost its way. You still think its going to go down another 11 points. Facebook is going to is selling percentage wise thats a lot. Facebook is selling at i could argue 22 times 2016 earnings. Yeah. This is selling at 100 times Monthly Average users over a timeline divided by paid views multiplied by uniques talking about how many people tweet and the oscars. Got it. Im going to watch that metric show. I am going to keep a close eye. Until the oscar comes back, im worried about the growth. World cup. Dont forget the grammies. They said the world cup will not generate why not . I dont know. Why not. Adam silver saved the day for the next quarter. Dont want to become like cnn where you need an event to get anybody to watch. This is a company thats driven by programming of others and the ive known Alan Wert Zell since im really old no offense, that makes you old too since 1996. His numbers he never says he only speaks when he has the data. That was called the emperor no close Conference Call question and they come back with fox says they like it. I dont know. I always know who i play for. But i know alan when we worked at abc together, there was no reason for Alan Wert Zell to say anything other than the fact that heres the facts. We talked twitter for a long time here. Weve got so many other things to talk about whether its ebay or ge. Well tweet those things and be on air with the twitter. I mentioned both those companies because were going to be talking to their ceos coming up on squawk on the street. That is right. Of co