Twitter Earnings Beat Views, But Stagnant Users Hit Stock

28 July, 2017, 00:07 | Author: Elaine Woods
  • Twitter shares tumble after user growth disappoints

Twitter's average monthly active users was 328 million in the second quarter ended June 30, the same number which the company reported in the previous quarter. That's the main takeaway from the social network's latest quarterly earnings report Thursday, in which the company reported the same number of users worldwide as it had three months ago.

To be fair, the company is still more or less being gauged on the growth of its monthly active users.

The micro-blogging firm reported adjusted earnings of 8 cents per share, which was ahead of consensus at 5 cents per share on $573.9 million in revenue, which also beat consensus at $537.5 million in revenue.

Daily active users, toward which management has recently been trying to shift investor attention, were up 12% year over year.

Net losses widened to $116 million from $107 million a year earlier, the report said. While Twitter may struggle to create a quality consumer experience for its content, there's little doubt that many companies see a lot of business value in mining it.

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Beginning this quarter, Twitter is changing how it calculates its non-GAAP provision for income taxes in accordance with the SEC guidance on non-GAAP financial measures. Average daily active users were up 12pc year over year. "It's not a recipe for a stock you want to buy".

Twitter's efforts obviously aren't enough to attract new users, said Gartner analyst Brian Blau, who added that Twitter does continue to have a loyal audience, which has been key to its survival. For the third quarter, it projects adjusted EBITDA of $130 million to $150 million with a margin of 25% to 26%.

"We achieved greater operating efficiency". Better worldwide ad execution, and maybe somewhat better ad targeting - CEO Jack Dorsey mentioned in the shareholder letter that ad engagement rates have improved - seem to be helping.

Twitter is facing competition not only from Facebook, but also messaging app Snapchat. In part from these numbers, Twitter shares opened trading Thursday down around 13 percent at $17.39 per share. Revenue growth for the company has largely been stagnant for the past few years and for the rest of 2017, Twitter said that it doesn't expect to see improvements in revenue growth rate.

One of Twitter's biggest gambles to spur higher user engagement has been its increased investments in live and streaming video content.

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