Relief For Twitter With Modest Apple iOS 14.5 Impact & Positive Q4 Guidance

Social media company Twitter reported worse than expected third quarter earnings Tuesday with a net $537 million loss. However $TWTR revenue growth outpaced the increase in users. Apple’s iOS 14.5 privacy change impact on Q3 revenue compared with Q2 “remained modest.”

Social media company Twitter reported worse than expected third quarter earnings Tuesday with a net $537 million loss. However $TWTR revenue growth outpaced the increase in users. Apple’s iOS 14.5 privacy change impact on Q3 revenue compared with Q2 “remained modest.”

Social Media

Twitter Inc. (NASDAQ: $TWTR) Reported Earnings After Close Tuesday

($0.67) Missed $0.15 EPS Forecast and $1.28Billion Revenue Forecast as Expected

Earnings

Twitter announced a third-quarter net loss was $537 million, representing a net margin of -42% and diluted earnings per share of -67 cents. The loss includes a one-time litigation-related net charge of $766 million for Q3, related to the company’s agreement to settle a class-action lawsuit alleging Twitter and its executives provided misleading user-engagement info to investors. On average analysts had expected Twitter to post $1.28 billion in revenue and adjusted EPS of 15 cents, according to Refinitiv data.

TWTR reported Q3 revenue of $1.28 billion, up 37% year-over-year and in line with the Wall Street projection.

 

Twitter Inc NYSE: $TWTR

Market Reaction After Hours $63.80▲ 2.37 (▲3.86%)

Highlights

  • Average monetizable DAUs reached 211 million in the quarter, up 13% year over year, a net gain of 5 million in the period.
  • Average U.S. mDAUs were 37 million for Q3, flat with the prior quarter.
  • In the U.S., where mDAU grew by a net 1 million year-over-year, revenue was up 45% to $742 million.
  • Twitter’s stock-based compensation expense in Q3 rose 42% year over year, to $164 million.
  • The company forecast Q4 stock-based compensation expense to be about $175 million.

 

TWTR Earnings Q3 21

Outlook

In its letter to shareholders, Twitter said Apple’s iOS 14.5 privacy change, which requires user opt-in for ad tracking, had an increased impact on Q3 revenue compared with Q2 but that it “remained modest.” “It is still too early for Twitter to assess the long-term impact of Apple’s privacy-related iOS changes, but the Q3 revenue impact was lower than expected, and we have incorporated an ongoing modest impact into our Q4 guidance,” the company said.

For the fourth quarter, Twitter expects revenue to be between $1.5 billion and $1.6 billion and operating income to be between $130 million and $180 million

What Analysts Watch on Twitter

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.  However this key metric has decelerated for the last three quarters. 

Source: TradersCommunity, Alpha Street

One thought on “Relief For Twitter With Modest Apple iOS 14.5 Impact & Positive Q4 Guidance”

  1. TradersCom says:

    Twitter CEO Jack Dorsey is stepping down as chief of the social media company.

    Dorsey, 45, was serving as both the CEO of Twitter and Square, his digital payments company.
    Parag Agrawal, the company’s chief technology officer, will take over the helm.

    TWTR
    +2.33 (+4.95%)

    Twitter CEO Jack Dorsey is stepping down as chief of the social media company, effective immediately. Parag Agrawal, the company’s chief technology officer, will take over the helm, the company said Monday.

    Dorsey, 45, was serving as both the CEO of Twitter and Square, his digital payments company. Dorsey will remain a member of the Board until his term expires at the 2022 meeting of stockholders, the company said.

    “I’ve decided to leave Twitter because I believe the company is ready to move on from its founders,” Dorsey said in a statement.

    Agrawal will have to meet Twitter’s aggressive internal goals. The company said earlier this year it aims to have 315 million monetizable daily active users by the end of 2023 and to at least double its annual revenue in that year.

    Dorsey faced an ousting last year when Twitter stakeholder Elliott Management had sought to replace him. Elliott Management founder and billionaire investor Paul Singer had wondered whether Dorsey should run both of the public companies, calling for him to step down as CEO of one of them, before the investment firm reached a deal with the company’s management.

    Dorsey, who co-founded the social media giant in 2006, served as CEO until 2008 before being pushed out of the role. He returned to Twitter as boss in 2015 after former CEO Dick Costolo stepped down.

    Shares have jumped 85% since Dorsey took over as CEO Oct 5. 2015. Meantime, Square shares have surged 1,566% since its Nov. 19, 2015 initial public offering.

    Twitter did not respond to a request for comment.

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