Twitter : Q3' 2020 Earnings Transcript

Twitter Q3 2020 Earnings Report

SAN FRANCISCO, CALIFORNIA

October 29, 2020

PRESENTATION

Operator

Good day, ladies and gentlemen, and welcome to the Twitter Third Quarter 2020 Earnings Conference Call. (Operator Instructions)

I would now like to turn the call over to your host, Krista Bessinger, Vice President Investor Relations. Please go ahead.

Krist Bessinger Twitter, Inc. - VP, Investor Relations

Hi, everyone, and thanks for joining our Q3 earnings conference call. We have Jack and Ned with us today. We published our shareholder letter on our Investor Relations website and with the SEC about an hour ago and hope everyone had a chance to read it. We will keep our opening remarks brief so that we can dive right into your questions. As a reminder, we will take questions asked on Twitter, so please tweet us at @TwitterIR using the $TWTR.

During this call, we will make forward-looking statements, including statements about our business outlook and strategies. These comments are based on our predictions and expectations as of today. Our actual results could differ materially due to a number of risks and uncertainties, including the risk factors in our most recent 10-Q and upcoming 10-Q 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 in 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 Jack.

Jack Dorsey Twitter, Inc. - CEO

Hi, everyone. Thank you for joining us. We realize there's a ton of companies reporting today, and you're all probably pretty busy. So we want to optimize our time around your questions. So Ned is going to quickly cover a number of the key points from our shareholder letter and then we'll both get into your questions. Ned?

Ned segal Twitter, Inc. - CFO

Thanks, Jack. Good afternoon, everyone. As you can see from our results, our hard work positioned Twitter to deliver significant revenue improvement in Q3. We saw strength throughout the quarter, as advertisers around the world significantly increased their investment on Twitter, seeking to engage our much larger audience around their turn of events and increased or delayed product launches. Our revenue product improvements are driving better ROI as businesses accelerate their digital spend and the online delivery of products and services.

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In the last 3 weeks of Q3, ad revenue was up 19% year-over-year with fairly consistent daily growth rates during that period. That's a significant improvement from the 15% year over year decrease that we saw in the last 3 weeks of Q2 and perhaps a good demonstration of how we can perform when so many events and product launches, not all of which typically fall in that window, are driving more people and advertisers to Twitter.

As you know, we made revenue durability our highest priority this year, and we're beginning to see the early results. With the ad server rebuild complete, we're moving faster and delivering more. We made progress on our brand and direct response products in Q3 with updated ad formats, improved measurement and better prediction. We also continue to iterate on our revamped MAP offering and have decided to delay general availability into 2021 when we can integrate expected new industry standard mobile privacy requirements.

Audience and engagement trends were also positive in Q3. There are 42 million more mDAU than there were at this time last year. Remember, we saw a tremendous spike towards the tail end of Q1 due to COVID. Ongoing impacts from product improvements have allowed us to retain more of those new and reactivated accounts than we have in previous periods, resulting in 29% year over year increase in mDAU in Q3, which is up 1 million sequentially. To see such a big surge in March and to deliver value to these people on a daily basis, such that we are retaining them better, gives us increased confidence in our consumer product efforts and in our road map.

As we look ahead to Q4, there's a lot to navigate, and much of it is unique to 2020. On the positive side, October looks a lot like September, with events and product launches coming back. And we're benefiting from all of the hard work we've done to make Twitter a must buy for advertisers looking to launch new products and services and to connect with what's happening. The strength and timing of the holiday shopping season is also likely to play out differently this year than it has historically, with the buying season that may be accelerated and even more digital in terms of advertising and delivery of goods and services than ever before.

As we approach the U.S. election, however, it's hard to predict how advertiser behavior can play out. In Q2, many brands slowed or paused spend in reaction to U.S. civil unrest, only to increase spend relatively quickly thereafter in an effort to catch up. As we look ahead, the periods surrounding the U.S. election is somewhat uncertain, but we have no reason to believe that September's revenue trends can't continue or even improve outside of the election-related window.

We remain confident that our larger audience, coupled with ongoing revenue product improvements, new events and product launches and the tendency of advertisers to respond positively to the choices we've made as we've grown the service, can drive great outcomes over time.

Given improving business conditions, we also intend to continue investing in our most important work, and we expect total GAAP cost and expenses to grow closer to 20% year over year in Q4. Remember that was our intention for the full year before the pandemic. We expect stock-based compensation to be relatively flat sequentially, and we expect CapEx to remain over $250 million in Q4 as a result of our ongoing data center build-out.

We want to thank everyone at Twitter for their incredible dedication and resilience. We continue to see the value of our service, the incredible potential of our business and the importance of our purpose to serve the public conversation.

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Finally, as I'm sure you all saw, we announced our Analyst Day to be held on February 25, 2021. This is our first Analyst Day in many years, and we look forward to discussing our work in more detail. Don't worry, it will all be virtual.

With that, we're ready to take your questions.

QUESTIONS AND ANSWERS

Operator

(Operator Instructions) Your first question comes from Lloyd Walmsley from Deutsche Bank.

Lloyd Walmsley - Deutsche Bank

Two, if I can. First, thanks for some of the interesting data on direct response in the shareholder letter. I guess stepping back, as we kind of look to your ambitions with MAP and direct response, more broadly, can you talk about, I guess, the decision on the delayed rollout and then just why you guys think you're in a better position to execute now on MAP and DR versus how you guys attacked it previously?

And then I guess the second one would just be, can you give us any sense of how much of the strength in the quarter may have come from the boycott, elsewhere? And it sounds like from your commentary, you feel pretty good about the outlook, absent the election and other kind of idiosyncrasies with the holiday. But any sense for how much of that is perhaps a boycott or what how much spending is coming from new versus existing advertisers?

Jack Dorsey Twitter, Inc. - CEO

Great. Thanks, Lloyd. I'll kick it off. So when we think about the work we've been doing on our direct response road map, it's important to step back and understand how important it is. DR is the larger and faster-growing part of the digital advertising TAM. And although we've got website clicks and app install ads today, and that actually grew faster this quarter than overall ad bid, albeit against easier comps. But we know that there is work for us to do to move all the way down the funnel to give advertisers a chance to reach their customers and sell something to them on Twitter. And we want to stay focused on getting all the way through that road map over time.

When we think about the opportunities for Twitter, remember, we've talked in the past a bunch about where we feel like there's a lot of signal that we historically haven't leveraged that we have opportunity to put to use for the benefit of people on Twitter and for advertisers. You noticed that we re-prompted people over the summer to help them understand the benefits of personalization. The onboarding flow is different than it has been historically to help people understand the benefits of it. And some of the changes coming to the industry may very well level the playing field around personalization and the way the device IDs get to be used on iOS devices as a start in -- when Apple rolls it out early in the year.

When -- to the second part of your question on how much of the strength came from other things. It's hard to unpack different components of our strength from Q3. When we step back from that, we think larger audience, better revenue products, the events and product launches that brought people and advertisers to Twitter but also, I think, to your point, the decisions that we make, how we make them, how we communicate them, we think, are making it easier and easier for advertisers to choose Twitter with their next dollar than to put it somewhere else.

Operator

Your next question will come from Doug Anmuth from JPMorgan.

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Douglas Anmuth - JPMorgan

Was hoping you could provide an update just on early results that you're seeing just following the ad server rebuild, some of the improvements and benefits that you're getting over these first few months. And then we're seeing that ad load appears to be ramping perhaps meaningfully in the fourth quarter. Just curious how much of this was driven by increased advertiser count or just pure demand. And what does that mean for like-for-like pricing? And how do you think about ad load limits going forward?

Ned Segal Twitter, Inc. - CFO

Thanks, Doug. Let me start with a couple overarching comments. So advertisers spending at Twitter and, in general, continues to be really strong. And when we think about the ad load, it's not a term that you hear us talk about a lot because we still feel more demand constrained than supply constrained, both as we continue to improve our revenue products and deliver better relevance, better ad formats, as we think about parts of the surface area of Twitter that we haven't historically monetized as well and the opportunity to do a better job of that.

We worked hard this quarter and had some success around reducing click leakage and getting more impressions for advertisers around the really popular first view advertising formats. And so a lot of the stuff has driven success for advertisers but doesn't play out with more ad load, it just plays out with better usage of what people are seeing today. So that will move around from one season to another, from one geography to another, but we still feel more demand constrained than supply constrained.

The first part of your question was around the ad server rebuild. And we feel really good about the work that we finished there and how we can benefit from it in 2 different ways. The first is that we're able to bring the people who are working on some of that and take them to other teams. An example is the small and medium-sized business work that we've long talked about but haven't been able to prioritize yet. And we now have people working on the opportunity to help small businesses reach their customers in a more compelling way on Twitter than we have historically.

Second is that we're just able to test more things at the same time and move faster as a result. Our teams don't need to ask other teams to pause in order to see their tests go through. We're able to continue to attract and retain great engineers because they're able to work on new technology.

Operator

Your next question will come from Brian Nowak from Morgan Stanley.

Brian Nowak - Morgan Stanley

I have a question, Ned, maybe about the -- maybe it's related to the ad server, maybe it's just sort of even a bigger picture. Can you talk to us about sort of areas of low-hanging fruit improvements that you see from a data capture perspective? Talk to us about what's changed in the data that you capture about your users that you think is potentially helping overall targeting? And what areas do you still think you could improve from a data capture analytic perspective to really drive even better targeting of the ad units?

Ned Segal - Twitter, Inc. - CFO

Brian, I'll kick it off and Jack may add some thoughts there as this gets a little bit into consumer products and where some of the work that we've done there can help us around this.

So we've long said that there's a signal that we're not leveraging the way that we can. It couldn't be that somebody is in an event or topic-specific timeline, and we can show them an ad that's

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relevant to that event that we may not have known enough about to do that if they were in their own timeline or we may not have been able to help the advertiser understand that this is a great place to reach their customer because we didn't have the event-specific timeline. And we didn't have 70 million accounts following a topic that pointed them to those timelines.

So we feel like there's a lot that we historically just haven't used that has been there. And then there's also a more signal that we have access to today because of re-prompting people to help them understand the benefit of personalization because of the way that the onboarding flow works now, where people understand the benefits of it with more people who can see personalized ads. There just is more data available to us, and that helps us refine our models and find similarities so that we can show compelling ads to people as well. Jack, I'm not sure if there's anything you want to add?

Jack Dorsey Twitter, Inc. - CEO

Yes. I think the most exciting work that we're seeing is around topics and interest, and many of you have probably seen prompts in your home timeline to follow some interest now because we're getting better and better at recommending things that are going to be relevant to more people. As Ned said, we saw 70 million accounts follow Topics, which is up 40% quarter over quarter. And we now have over 5,000 topics and interest, which is over -- which is up 25% quarter over quarter.

All this gives us much stronger signal because it's much more direct intent. So not only does it help the experience for the individual, but also it should give a stronger signal into our business as well, but it provides a greater surface area for us to really improve so much about our offering.

Operator

Your next question will come from Richard Greenfield from LightShed.

Richard Greenfield - LightShed Partners

Really, I guess, for both of you, but it's probably more on the product side for Jack. 36 million DAUs in the U.S., it's great that obviously you're up from 26 million. So it's hard to quibble with the growth that you've seen over the last couple of years in US mDAUs. But 36 million -- and I hate to put you in the bucket of comparing you to Facebook or Snapchat or to others, but it is sort of crazy that there's over 300 million Americans, and you're at 36 million daily users. I'm sure that DAUs versus MAUs is probably still less than half.

I guess kind of just the high-level question of like what do you need to do to get to 50 million to 100 million mDAUs in the US? Like is it product changes? Is it education of consumers? Like how do you close that gap? Because it just seems like there's so many people that touch your service on a monthly basis. But don't use it every day. And obviously, it all feeds into a larger revenue opportunity, but I'm just curious like how you get that -- those user growth. And I know I'm complaining when you're up 29% year over year, but it still seems like that US number still is small.

Jack Dorsey Twitter, Inc. - CEO

Yes. I mean I think there's a number of opportunities that we're focused on. But I would point back to our work on topics and interest. And I think we have an opportunity to show people a much broader aspect of Twitter than just what they see with news and politics. One of the things that we're excited about and that we saw during the COVID quarantines and also during the election is now that we do have Topics to follow, people are coming for one reason and staying because they find relevant topics that are interesting to them.

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As we continue to expand those, as we continue to prompt those earlier in the experience such as onboarding, I think that helps us dramatically. And I think it just further shows like all the conversations that are possible on Twitter. So it's really a question of like how do we show more of the breadth and how do we get people to very niche interest in Topics, which tend to do extremely well, and how do we bring it earlier in the customer experience.

Richard Greenfield - LightShed Partners

Can you give us any sense of how many people actually have used Topics since you've rolled it out? I know it's still early.

Ned Segal Twitter, Inc. - CFO

I think that 70 number is a good thing to point you to, Rich, that 70 million accounts have taken the time to follow a topic. When we are still making the experience of finding Topics that are better, when we're still making the topics better and better, both the quantity of them and then the quality of the tweets that you see.

So for example, today, there are 65 cashtags that one can follow. Those really weren't out there just a couple of months ago, and we're watching how people interact with those, the dollar sign ticker, so that we could make the experience even better on those 65 and roll it out to more.

If you and I both follow a topic like NFL, because we're -- we have different follow graphs, we'd probably see different things because we follow the topic with you on the East Coast and me on the West Coast. And so these are great examples.

But I do think that there's a lot of opportunity, and those are great examples of what we can do to take that number. If you take out what, from 50 million to 70 million in 90 days, the opportunities to use this as a great way to help people see all the great things on Twitter and to not have to do the hard work to find new accounts...

Richard Greenfield - LightShed Partners

But I just know so many people are focused on DAUs. Is there any way to tie the people that use Topics? Do they spend more time? Can you prove they engage more regularly with Twitter when that number -- like that 50 million to 70 million has led to those people being more active on the service on a daily basis?

Ned Segal Twitter, Inc. - CFO

So this is something you want to watch for a while before you can feel really good about it. But our sense is that Topics are additive to the experience on Twitter. And there are lots of different ways to measure that. It's not just about how much time people spend. Because if Topics work well, it may mean that people spend less time on Twitter because they have a better experience finding what they're looking for. We want to be really careful that we're solving for the right things when we do this, but our sense is that Topics really do help people have a better experience on Twitter.

Operator

Your next question comes from Ross Sandler from Barclays.

Deepak Mathivanan - Barclays

This is Deepak on for Ross. Just a couple of questions. The first question was the 19% growth in the last 3 months -- last 3 weeks was pretty strong. But how do you see things kind of play out with fewer big sports events in 4Q? Do you think there is a possibility to lose some momentum

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from just having enough trial for the most part? Or is the record in brand advertising likely to continue to gain steam?

And then the second question is somewhat related, COVID-related uncertainty still persists and many markets are actually getting worse. Clearly, there was -- the impact on ad budgets were pretty significant in late 1Q and early 2Q. But do you think there is still opportunity for correlation with ad spend if COVID trends continue to get worse?

Ned Segal Twitter, Inc. - CFO

Deepak, good questions there. So first, let me talk about the fourth quarter. Remember, we were up 19% year over year in ads in the last 3 weeks of Q3, and we grew our ads revenue 44% sequentially in the third quarter. We had fairly consistent daily growth rates during that last 3 weeks of the quarter, which gives you a sense for how we can operate and deliver for advertisers when events and topics are coming back, when we've got a larger audience and when we're making it easy for advertisers to put their next dollar to work on Twitter as opposed to somewhere else.

Let me just talk about Q4, where, remember, October looks a lot like September in terms of events coming back and things that are sometimes delayed from previous periods. Product launches coming back, some of which were delayed and others in which were planned, but where you've also got this secular shift where more of it is happening online, both the advertising because of what's happening on linear TV and because people aren't in stadiums and the delivery of goods and services. And so all of that, I think, plays out to our benefit, and I think is why October has a similar setup at September.

November is a little harder to predict because of the election. But I think what we learned in November around the Black Lives Matter movement in the United States is that when advertisers do choose to pause or slow down because there's a more important discussion happening on our service but that when they come back, they often spend through that budget that they had set aside for Twitter because their objectives and their reach goals haven't changed.

And then you got December where you've got probably a holiday buying season that could play out earlier and different and more digital than they have in the past, which also hopefully creates a good setup for Twitter as well. So we'll work hard to deliver against all those opportunities, recognizing that November is a little harder to predict than the other periods are.

And the second part of your question around COVID. We want to focus really hard on the things that we can control. And what we can do around COVID and to the extent people find themselves or economies closing down a little more is we want to make sure that people can find what they're looking for on Twitter, whether it's around COVID or something else. We want to continue our focus on Topics and health because when we do that, just like that group of people that came to us in March when the world largely went to shelter in place, we proved that we could retain that cohort better than we had previous ones. And so we feel good about that as an indicator of what we might be able to do should things play out in the future where we're in the unfortunate situation where economies are shutting down again.

And in terms of advertiser sentiment, I think advertisers have learned a lot since March. They've thought about how they want to show up and adapt quickly to this environment. And there are a lot of things about the fourth quarter that are really important to them, and we expect them to continue to show up through any environment. But the way that they choose to do that and exactly how they do it, we all have to wait and see.

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Operator

Your next question comes from Michael Levine from Pivotal Research.

Michael Levine - Pivotal

Great revenue quarter. Question sort of specifically around sports. I know you talked about it in the letter. And I mean people have certainly been looking at the ratings declines. I mean are there lessons that you're learning from engaging with these advertisers that as you look into '21 and beyond, like or -- is it changing just the way they're thinking about you? So even if, let's say, we have normalcy and people are back in the stands next year, like is that something you think about from a comp perspective? Or do you just feel like the perception of Twitter as an ad platform is just going to be different as a result of this?

Ned Segal Twitter, Inc. - CFO

Michael, I do think the perception is different on many levels, a much larger audience, improved revenue products, but also the innovation that we partnered with a lot of these content partners to come up with, whether it's the showtime cam for the NFL and the fact that they're seeing more views of video on Twitter than on any other platform or the way we worked with major league baseball to get half innings of playoff games on the service through FOX, so that they could have a lead-in to get people to go watch it somewhere else. These are things that people come to Twitter for and where we work hard with these partners to differentiate ourselves given the public conversation that happens on the service.

And I don't -- the innovation may change from one period to another, but the partnership doesn't nor do these secular shifts to people buying more things online and advertising more online because they want to meet their customers where they are, whether they're on their sofa or they're able to get back to a stadium one day soon.

Krista Bessinger Twitter, Inc. - VP, Investor Relations

And we will take our next question from Twitter, comes from the account @RomanRubenstein. You note the $2 billion repurchase program has not been initiated as of Q3 due to COVID disruption and uncertainty, yet you admit that these considerations have eased. Doesn't this uncertainty represent a better opportunity to buy back undervalued shares now rather than in the future when Twitter is higher?

Ned Segal Twitter, Inc. - CFO

Thanks for the question Roman. So we think about a lot of factors when it comes to capital allocation and when to begin that share repurchase. And as you noted in the letter, we talked about how we have not purchased any shares yet and that the reason -- the principal reason for that has been that there's been a lot of uncertainty in the broader environment around us, and we want to make sure that we have the capital to continue to grow our team and invest in our business through any environment, whether that's through continuing to bring technology and talent to the company through acquisitions or through investing in servers for our new data center or other things.

You also pointed out one thing we said in the letter, which is that many of these considerations that have caused us to not repurchase shares yet have eased. When we think about buying back our stock, we consider our share price, we consider our capital structure and what the right amount of cash is on the balance sheet. We think about our needs over time. We think about the dilution from share issuance to employees and a handful of other things. And when we do that, it just hasn't made sense to start to buy back yet. And our plan is to talk in the quarter after we

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began our share repurchase. You'll hear about it on an earnings call, in the letter and in the filings, and we'll just keep you posted as we go.

Operator

Your next question comes from Heath Terry from Goldman Sachs.

Heath Terry - Goldman Sachs

Great. As we look at the sequential growth in mDAUs this quarter, I was wondering if you could kind of help us maybe disaggregate some of the moving parts within that. Were there any impacts this quarter from information quality efforts or sort of similar initiatives that you've taken in the past that have impacted user growth? Was there sort of fluctuation country to country that you would point out that's sort of worth considering when we look at a number that's relatively flat, but I'm guessing probably has a lot of movement beneath the surface?

Ned Segal Twitter, Inc. - CFO

Heath, let me first ground you the numbers since I know there's a lot going on this afternoon. So mDAU was 187 million, up 29%. It was broad-based, with double-digit growth in all of our top 10 markets. We grew DAU 20% year over year in the United States and 32% internationally. Remember, we saw a huge surge in audience towards the end of Q1 due to COVID. And that was a lot of new and reactivated accounts.

As much as we would all like to see that happen every quarter, and then maybe what some of you had modeled, it also may not be how things play out as a pretty unique time in the world. The great news is that we're doing a better job of retaining those new and reactivated accounts due to the ongoing product improvements that Jack went through earlier.

On the sequential increase, as I said, we'd all like to have that kind of surge all the time, but it's just not going to happen every quarter. We continue to have a healthy top of funnel in the third quarter. We're pleased with the ad backs that we're getting. And as the conversation around the pandemic, around topics and events, around politics and other things come and go, these numbers are going to vary. But we remain focused on the learning and validation of our strategy that's demonstrated by that better retention of that group that came to us in March.

Let's talk about Q4 for a second too Heath, as we look ahead, the fourth quarter is typically seasonally slower for us in terms of mDAU. But remember, with the increased activity around the US election, which does not happen -- than midterm is, and you think about all the great product work that we've done to make sure that we can help people when they do come to Twitter. And we feel like those are things that have the potential to benefit us in terms of mDAU growth in Q4 and beyond.

Operator

Your next question comes from Brent Thill from Jefferies.

James - Jefferies

This is James. Could you comment a little bit more on the MAP product delay? And specifically, when in 2021, you would anticipate making that more widely available? Do you think it's more of a first half of '21 or second half story? And then, I guess, more specifically, do you think it would have a material impact on revenue growth next year? Is it kind of something to look out maybe a couple of years?

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And then my second is just around Q4 holiday season. Kind of wondering how you think you're positioned this year compared to last to capture advertiser demand and whether you think some of the improvements you've made on the product and infrastructure side,give you an advantage this Q4 compared to last?

Ned Segal Twitter, Inc. - CFO

James, first on MAP. So remember, we've decided to delay into 2021 for a couple of reasons. The first is the learnings that we had from the pilots that we've done this year and that there's work we still want to iterate on. But the second is that Apple has delayed the IDFA changes that they're going to make to iOS 14 into Q1. And we need to wait and hear from them the specifics and think about how we want to adjust and advertisers and other ad platforms and others that are on the ecosystem will have to do the same. And so it's too early to predict what we hear from them, how we choose to react to it, how the rest of the ecosystem does, but that will be a key component of how this all plays out.

I do want to take a step back on MAP and remind you that although we'll have to wait until next year for the revamped version of the product, we continue to make improvements consistently here that we feel really good about.

I want to call out a couple of them. One is that, remember, we took away third-party measurement in the third quarter of last year for MAP advertisers. We now have hundreds of advertisers who have it. And with third-party measurement, they're spending 30% more. So we're not waiting for this fully revamped version to roll out important features. We are doing other improvements such as the Carousel data that we've got off that MAP format and some other things that we feel really good about underneath the surface that are driving results around MAP and causing advertisers to still invest more with us while we're waiting for that revamped product to come out sometime next year.

Your second question around Q4 and the work we've done, we feel really good about the work we've done to help advertisers deliver in what should be a Q4 holiday season, unlike others that we've seen historically. And I went through a little bit in detail earlier, but I know there's a lot going on today. But I won't belabor the point here.

Operator

Your next question will come from Mark Shmulik from Bernstein.

Mark Shmulik - Sanford C. Bernstein

With the new ad server, it sounds like there's some excitement from the engineering side. As we think ahead towards kind of the revenue product road map, is there any incremental color you can share on what other types of new revenue products you guys are thinking through and kind of the pace or cadence of when some of those might come into beta or online?

Ned Segal Twitter, Inc. - CFO

So we -- I continue to think through and work on some non-ad revenue opportunities, which are an important part of our revenue durability objective, which is the #1 company priority. There's nothing new to report today. You will see tests from us. And if you all picked up that we had a job posting for an engineer that was going to work on this, I suspect you'll find the test when they happen as well. This isn't something that I think about in terms of revenue for this year, but it is stuff that -- where you're going to see us working on and experimenting with things both for businesses and for consumers where we can improve their experience on Twitter and where we think there's a subscription opportunity for us.

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Commerce is another opportunity that we're excited about, where you'll see more from us over time. And there'll be others for us to talk about as well, but we want to get further down the path before we're prepared to talk more about them publicly.

Operator

Your next question comes from Justin Patterson from KeyBanc.

Justin Patterson - KeyBanc Capital Markets

Great. Another one on sports. You've spoken in the past about being the virtual stadium. Based on your early learnings from this period, how do you think about iterating on the product to drive user growth, engagement and conceivably capture some of the more offline advertising dollars typically associated with those channels?

Ned Segal Twitter, Inc. - CFO

Justin, we think the work that we've been doing has been a big reason why we've been able to capture some of those dollars that move away from linear TV when there are highlights, when there are interactions with players and other participants around sports on Twitter. These have been great opportunities for us with all the leagues as they come back and look for ways to engage their fans. But it's also true for movie launches, where you see watch parties on Twitter for when a new series starts on an over-the-top video service, and they do a watch party. These are both engagement opportunities for us to bring an audience together that otherwise wouldn't be able to interact. They are opportunities for our content partners and they're significant advertising opportunities as well.

A lot of these things both have pre-roll in front of them. But they also create ad opportunities around the timeline, around the specific events, where -- when we know more about what somebody cares about, when advertisers have the opportunity to connect directly with that customer around an event or topic that's bringing into Twitter, those are terrific advertising opportunities as well.

Krista Bessinger Twitter, Inc. - VP, Investor Relations

Great. And we'll take the next question from Twitter. It comes from the account of @TwitterGoldMatt the question is, "Can you speak to the trends in ad spend that you have observed thus far in October? Is it a continuation of September or any noticeable increases or decreases?"

Ned Segal Twitter, Inc. - CFO

Thanks for the question. We're really here to talk about the results from the third quarter as opposed to the month of October. But if I bring you back to some comments in the letter and what we shared upfront, the setup for October feels a lot like September on the surface. When you remember that there are lots of events, some of which normally happen in a different period, when you remember that we've got a much larger audience and that there are more product launches, some of which also have been delayed from previous periods that happened in October relative to the year ago period or to previous months in 2020.

And so I'd just point you to those comments and what we said in the letter also that, that plus 19% ads growth that we saw in September outside of the election period, we see no reason why that trend can't continue or even improve.

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Krista Bessinger Twitter, Inc. - VP, Investor Relations

Thank you, Ned. And there's no one else that we can see in the queue. So Ned, I'll turn it back over to you to close.

Ned Segal Twitter, Inc. - CFO

Okay. Thanks, Krista, and thank you all for joining us. We appreciate your interest in Twitter. We look forward to speaking with you next quarter when we report earnings, which will be on February 9. Until then, we'll see you on Twitter.

Operator

Ladies and gentlemen, thank you for participating in today's program. This concludes the program. You may all disconnect. Have a good day, everyone.

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