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Social media company Twitter reported better than expected first quarter earnings Tuesday beating on revenue and earnings sending the stock up 17% in a short market. Performance was boosted from marked rise in ad engagements and fall in cost per engagement.

Social Media

Twitter Inc. (NASDAQ: $TWTR) Reported Earnings AfterMiss Clsoe Wednesday Friday

$0.19 Beat $0.06 EPS Forecast and $936 million Beat $777 million Revenue Forecast

Earnings

Twitter announced third-quarter earnings that beat analyst estimates on both the top and bottom lines BUT missed on user growth. Earnings per share: 19 cents, adjusted beat 6 cents expected, according to Refinitiv survey of analysts Revenue was $936 million vs. $777 million expected, according to Refinitiv

Monetizable daily active users (mDAUs): 187 million vs. 195 million expected, according to FactSet

Twitter Inc NYSE: $TWTR

Market Reaction After Hours $43.50▼ 8.95 (-17.06%)

Highlights

  • Twitter grew its total mDAUs by just 1 million from last quarter to 187 million, falling shy of analysts’ expectations of 195 million mDAUs for the third quarter.
  • 187 million mDAUs in the quarter is still a 29% increase year over year.
  • Twitter ad revenue grew 15% year over year to $808 million, with total ad engagement growing 27% over the same period.
  • The return of live events and previously postponed product launches helped drive the increased advertising spending, CFO Ned Segal said in a statement in the company’s earnings release.

TWTR Earnings Q3 20

Outlook

The company warned that the upcoming U.S. presidential election makes advertiser behavior “hard to predict.”

Twitter wrote in the release. “The period surrounding the US 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.”

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 last year. Alphabet management's response on growing regulatory risk and data privacy issues will be closely analysed also.

Revenue Growth

Twitter's year-over-year revenue growth rate.

Daily Active User Growth

Twitter's daily active user growth. Twitter has seens 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. 

The shift to a new metric came after Twitter reported MAUs that fell short of analyst estimates for two straight quarters during its fiscal year 2018. Twitter previously blamed the shortfall in part on a July 2018 purge of “locked” accounts that was meant to get rid of bots and fake users, among other factors. Twitter said the 330 million average MAUs it reported for the first quarter was a decrease of 6 million year over year

Source: TradersCommunity, Alpha Street

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