For Q3 2021, Revenue totaled $1.28 billion, an increase of 37% y-o-y. Advertising revenue was $1.14 billion, up by 41% y-o-y. US revenue totaled $742 million, up by 45% y-o-y. International revenue was $542 million, up 28% y-o-y. Q3 operating loss was $743 million (operating margin -58%) includes a one-time litigation-related net charge of $766 million, as well as ongoing investments.
IT software and Services industries are suffering from a fall in demand for software and web services as consumers are focusing solely on essentials and not discretionary products. That said, the industry has seen companies with a portfolio of software as well as services aimed at remote collaboration benefit due to the growing number of people globally. Many companies are also operating with employees working remotely from their own home. The company had a strong start to the year in Q1 before the effects of COVID-19 began spreading more broadly, resulting in widespread economic disruption and a significant decrease in global advertising spend March onwards.
Below we highlight key drivers of Twitter's value that present opportunities for upside or downside to its current Trefis price estimate.
Twitter is an online platform for self-expression and real-time conversation. The updates and messages posted by users are termed as 'tweets,' and are limited to 140 characters. This essentially enables a quick exchange of information, while maintaining the conciseness and relevance of the messages. The company had 330 million average monthly active users at the end of 2018.
Twitter earns revenue through advertising and data licensing, with the advertising business accounting for a majority of its revenues. The company charges advertisers and marketers for promoting their tweets and Twitter accounts.
We believe that the United States business is the primary source of value for Twitter because:
The U.S. accounted for approximately 57% of Twitter's revenues in 2019. Although the international business is growing, the monetization level remains much higher for the U.S.
Revenue per U.S. user stood at $66 for the U.S. in 2019, almost five times the corresponding figure for the international segment. We notice a similar discrepancy for Facebook as well, which is a much more mature and profitable company. As there are structural reasons for this disparity, ad monetization in the U.S. may remain significantly higher for the foreseeable future. The average ad pricing in international markets is lower due to lack of purchasing power. In addition to this, the online advertising is still picking up in many of the emerging markets such as India and Brazil.
The online advertising market is growing, and mobile is going to be the forefront of this growth in the coming years. Google has long dominated this market but Facebook, LinkedIn, and now Twitter, are beginning to tap the opportunity.
Global mobile advertising share in the global online ad market is growing rapidly. This plays right into Twitter's hands as the company earns more than 85% of its revenues from the mobile platform.
We think the company has a long way to go in terms of selling its ad inventory, and this is why the number of ads is growing. Additionally, it appears that currently there is oversupply which explains the decline in the average ad pricing.
Twitter is expanding its sales presence across the globe. In addition, it is also enhancing the reach of its self-service advertising platform (which primarily caters to small and medium-sized businesses) across additional markets and we expect these initiatives to propel sales growth in the coming quarters.
As nationalism continues to impact how communications shape though processes, Twitter is likely to continue becoming an increasing important aspect of news dissemination and consequently shaping opinion. Twitter's ability to mold sentiment is likely to keep the stock an important market constituent.