- Last quarter, Twitter reported 255 million monthly active users, up 5.8 percent from the previous quarter but not enough to satisfy investors.
- Reuters
Twitter has shown it can generate money from advertising. It has doubled revenue for the past five quarters and analysts don’t expect the three months through June to have been any different. Analysts on average expect second-quarter revenue of $283.07 million, up from $139.3 million during the same period a year earlier, according to Thomson Reuters.
But with continued losses – analysts expect a loss of about 1 cent a share – Wall Street is fixated on Twitter’s user growth to gauge the service’s viability as a business. After two disappointing quarters, analysts aren’t expecting a spurt in the latest three-month period. On the conservative end, RBC Capital Markets analyst Mark Mahaney expects Twitter to have added just 8 million users in the quarter while Cantor Fitzgerald forecasts it will have gained 15 million, hitting 270 million monthly active users.
Either way, expect Twitter to spend just as much time, if not more, talking about its nonusers as it will about those who actually log into the service.
Twitter’s earnings report comes after the close of New York trading, and the company will hold a conference call for analysts at 5 p.m. ET. Here are some key themes to watch:
New Measurements: Wall Street doesn’t think Twitter’s user base is big enough. So Twitter plans to start quantifying its other audience: the people who don’t sign into Twitter but are still exposed to its content. Meet the logged-out audience.
As The Wall Street Journal reported earlier this month, Twitter is planning to introduce as many as four new metrics to illustrate the service’s reach beyond the more than quarter-billion people who log in at least once a month. Twitter was supposed to unveil the new metrics during Tuesday’s earnings report, but the big reveal appears to be postponed. If that’s the case, expect Chief Executive Dick Costolo to still offer up new numbers around the reach of Twitter conversations about specific events, similar to how he devoted attention to the number of impressions about Oscar-related tweets during the last earnings call.
But in order for the big new numbers to matter, Twitter will need to address how it plans to serve targeted ads to an audience it will know far less about compared to its logged-in users. Twitter enables advertisers to target users based on interests the user has exhibited on the service such as which accounts they follow and what they’ve tweeted.
Back to the Basics: At the end of the day, the number of users who log into Twitter at least once a month will still be one of the most important metrics by which the company will be judged. Monthly active users reached 255 million in the March quarter, a 5.8% increase from the previous three months, falling slightly short of analyst expectations.
The company has continued to introduce new features to make it easier for people to create an account and get more out of the service right away, increasing the chances they might return. For the World Cup, for example, Twitter streamlined the sign-up process so that new users could immediately start tracking news from and about their favorite teams. It also allowed users to keep up with specific matches in real time by creating a channel of sorts—a compilation of Twitter accounts that included a mix of journalists, players and analysts relevant to a particular match. While certain aspects of the feature need improvement, such as foreign language barriers, it showed how Twitter might help users find the most interesting Twitter content.
Still, Twitter’s unique mobile visitors in the U.S. grew 34% in the second quarter compared with the same period a year ago, a marked slowdown from the 50% growth seen in the first quarter, according to a report from RBC Capital Markets citing comScore data.
Engagement: Twitter’s product enhancements aren’t only aimed at gaining more users, but to keep them active on the platform. It hopes product tweaks such as the introduction of gifs and real-time alerts will compel users to interact with tweets and each other through actions such as favoriting, retweeting and replying. Such activity helps advertisers learn more about users and their interests. And the longer they are logged in, the greater the opportunity to serve them ads.
In the second quarter, the number of minutes visitors spent on the service dropped 1.7% from the March quarter to 228 minutes per unique U.S. visitor, according to RBC.
The company also booked a few small but interesting advertising-related acquisitions in the three-month period, including TapCommerce, a firm that specialist in targeting consumers after they have downloaded an app.
Look for signs about how these purchases will play into Twitter’s broader long-term advertising strategy, anchored by MoPub, the advertising exchange it bought in October 2013.
Executive Shuffle: The second quarter saw a slew of executive changes at Twitter. Operating chief Ali Rowghani, a veteran executive and trusted lieutenant to Costolo, stepped down. CFO Mike Gupta was replaced by Anthony Noto, the Goldman Sachs GS -0.20% banker who helped take the company public, and the head of engineering was also swapped out with an internal promotion. While the stock price responded positively at the time of the announcements, investors will look for further changes to the executive cast.
No comments:
Post a Comment