Earnings Reports

Google Ad

Social media company Twitter reported better than expected third quarter earnings Thursday beating on revenue and earnings sending the stock up 14% in a short pre-market.  Concern is about rising traffic aquisition costs and user retention remains however.

 

Social Media

Twitter Inc. (NASDAQ: $TWTR) Reported Earnings Before Open Thursday

$0.21 Beat $0.14 EPS Forecast and $758 million Beat $702 million Revenue Forecast

Earnings

Twitter reported earnings of 21 cents a share beating analyst estimates for 14 cents and was double that of a year ago. Total revenues grew 29% year-over-year to $758 million beating forecasts of $702 million.. Excluding approx. $7 million of revenues in last year’s third quarter from the fully-depreciated TellApart product, revenues grew 30%.

The strong revenue performance reflected better-than-expected growth in most products and regions.  On a GAAP basis, the company reported a net income of $789 million or $1.02 per share compared to a net loss of $21 million or $0.03 per share in the prior-year period. Excluding $683 million in deferred tax asset valuation allowances, net income totaled $106 million or $0.14 per share. Adjusted net income was $163 million or $0.21 per share.

 

Twitter Inc NYSE: $TWTR

Market Reaction Pre-market 30.57 +3.03 (+11.00%)

TWTR Earnings Q3 18

 

Highlights

  • Monthly active users of 326 million, up 9% from the year-ago period but below views for 330 million.
  • Advertising revenues grew 29% year-over-year with a 50% increase in total ad engagements.
  • Cost per engagement fell 14% from last year.
  • Owned and operated (O&O) advertising revenues grew 36% while non-O&O advertising revenues fell 31%.
  • Video ad formats were the fastest-growing ad format in the third quarter and comprised more than half the ad revenue.
  • Average daily active users (DAU) increased 9% year-over-year versus a 14% growth in the prior-year quarter 
  • The decrease in MAUs were primarily due to the removal of fake and malicious accounts as part of the company’s efforts to clear its platform of toxic content.
  • Policy changes due to the enactment of GDPR also contributed to the decline alongside other factors.
  • MAUs declined both on a year-over-year and sequential basis in the US and internationally.

Outlook

  • For the fourth quarter Twitter expects revenue in the range of $800 million to $871.8 million, up 14% at the midpoint from the year-ago period.
  • For the fourth quarter of 2018, Twitter expects adjusted EBITDA to be between $320 million and $340 million and adjusted EBITDA margin to be between 39% and 40%.Capital expenditures are expected to be in the range of $60 million and $85 million.  

What To Look in Twitter Inc. Earnings

What Analysts Will Be Watching

Twitter's traffic acquisition costs 

Traffic acquistion costs (TAC) have been rising, even more so after the Facebook scandal and $FB CEO hauled before congress  Alphabet management's response in the conference call on growing regulatory risk and data privacy issues will be closely analysed. 

Revenue Growth

Twitter's first-quarter year-over-year revenue growth rate accelerated to 21%m from a lowly 2% growth in Q4. This saw Twitter swung from a net loss of $62 million in the first quarter of 2017 to a profit of $61 million in the first quarter of 2018. No mean feat in a year where many saw the end of twitter First-quarter EPS and non-GAAP EPS of $0.08 and $0.16, respectively.

Daily Active User Growth

Twitter investors will be revited to $TWTR's daily active user growth. Twitter has seens six consecutive quarters of double-digit year-over-year growth in daily active users, some call it the 'Trump affect'.  However this key metric has decelerated for the last three quarters. Twitter's daily active users increased 10% year over year in Q1, this was down from 14% growth in the third quarter of 2017.  

Twitter Inc.  2Q Earnings Recap

$0.17 matching $0.17 EPS $711 million beating $696.23 million forecast in revenue 

Earnings

$TWTR reported a net income of $100 million or $0.13 per share for the quarter compared to a net loss of $116 million or $0.16 per share last year. Adjusted net income was $134 million or $0.17 per share. Total revenue of $711 million in Q2, up 24% year-over-year, and  a net margin of 14%.

Twitter Inc NYSE: $TWTR

Market Reaction > 36.00 −6.94 (-16.16%)

Highlights

  • Average monthly active users (MAUs) came in at 335 million for Q2 2018, up from 326 million in Q2 2017, but down slightly from 336 million in Q1 2018.
  • Average daily active users (DAU) rose 11% year-over-year.
  • Average U.S. MAUs were 68 million for Q2, flat with the year-earlier period and down from 69 million in Q1.
  • Average international MAUs were 267 million for Q2, versus 258 million in the same period of the previous year and 267 million in Q1.
  • Advertising revenue grew 23% year-over-year to $601 million
  • Total ad engagements saw a year-over-year growth of 81%.

TWTR Earnings Q2 18

Outlook

“Based on our current level of visibility, we expect the decline to be mid-single-digit millions of [monthly active users],”

  • For the third quarter, Twitter expects adjusted EBITDA to be $215 million to $235 million and adjusted EBITDA margin to be 33% to 34%. For the full year of 2018, the company expects capital expenditures to be $450 million to $500 million.

 Source: Deutsche Bank, Stiffel, TradersCommunity, Alpha Street

Log in to comment
Discuss this article in the forums (2 replies).