Twitter’s Stock Tanks On Revenue Decline, Weak MAU Growth

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TWTR: Twitter logo
TWTR
Twitter

Twitter (NYSE:TWTR) once again failed to report growth across its user base and revenues in Q2. As a result of its disappointing results, the stock price declined by 15% in aftermarket trading. The key takeaways from the results are as follows:

  • The company’s total revenue declined by 5% year-over-year (y-o-y) to $574 million, as U.S. advertising revenue declined by 14% y-o-y to $269 million. As a result, total advertising revenues declined by 8% to $489 million.
  • Twitter’s adjusted EBITDA increased marginally on the back of a decline in R&D and marketing costs due to a lower headcount. However, its net loss widened to $116.5 million in the quarter.
  • In terms of users, Twitter’s average monthly active users (MAUs) grew 5% y-o-y to 328 million in Q2 2017. However, on a sequential basis, the company’s U.S. MAUs actually declined by 2% to 68 million. It was largely the lack of user growth that drove the company’s stock lower after the release.
  • On the bright side, advertising metrics continued to report improvement as total ad engagements increased 95% year-over-year, driven by a shift in mix toward video ad impressions, higher click through rates, better targeting, and ad relevance. Average Cost Per Engagement decreased 53% year-over-year, reflecting a higher mix of video ad engagements.
  • In Q2, Twitter delivered more than 1,200 hours of live video from its existing and new content partners. The company announced 40 live-streaming partnerships, including two 24×7 networks and 10 international deals during the quarter. The company continues to strengthen its content portfolio and has announced the launch of a sports network called Stadium. It is also planning to launch a 24/7 global news network in partnership with Bloomberg.
  • Video consumption has been growing tremendously over the past few quarters on Periscope as well as on the Twitter platform with the launch of auto-play videos. It will be interesting to see if this also translates into higher advertising revenue growth going forward.

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