What To Expect From Twitter’s Q3 Results

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TWTR
Twitter

Twitter (NYSE:TWTR) is scheduled to report its Q3 2016 earnings Thursday, October 27th. Twitter’s struggle to grow its active user base has been the primary investor concern for the past five quarters and its present management (led by Jack Dorsey) has not been able to assuage these concerns. This lack of user growth has continued for so long because the company has neither been able to adequately define its purpose and identity nor make its platform easy to understand. In addition, Twitter has failed to adequately check abuse by trolls, driving many users to permanently leave the platform.

In the upcoming Q3 earnings conference, we expect the Twitter management to throw more color on its strategy to tide over the aforementioned issues as well as the its thoughts on a potential sale of the company in the near future. We also expect management to shed light on its revenue expectations from live streaming and Periscope going forward.

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Q2 2016 Recap

In Q2 2016, Twitter’s average monthly active users (MAUs) grew just 3% year over year and 1% quarter over quarter to 313 million. The company’s total revenue increased 20% year over year to $602 million on the back of 18% growth in advertising revenue and 35% growth in its data licensing business. It posted adjusted earnings of 13 cents per share, which was 3 cents higher than the analyst consensus estimate for that quarter.twtr4

Lacklustre Q3 Guidance

For Q3 2016, Twitter expects revenue of $590-$610 million, which is significantly short of Reuters’ compiled consensus estimate of $678 million. The company cited subdued advertiser demand for the same. Owing to the lackluster results so far and weak Q3 guidance, Twitter’s stock price is down about 18% year to date.twtr5 Have more questions about Twitter? Please refer to our complete analysis for Twitter

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