Will Revenue Growth From The International Segment Drive Twitter’s Top Line?

December 24th, 2019 by Trefis Team
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TWTR: Twitter logo
TWTR
Twitter

Yes, the International segment is expected to contribute nearly two-thirds of the $300 million Twitter (NYSE:TWTR) is expected to add to the top line in the year 2019. Twitter’s International business is expected to contribute $1.6 billion to Twitter’s 2019 revenues, making up 48.3% of Twitter’s $3.3 billion in expected revenues for 2019. The International segment’s total revenue is expected to be 6% lower than that from the US business. Twitter is expected to add $788 million in revenue between 2016 to 2019, out of which the International segment is expected to provide $638 million, that is 80.3% of the total expected increase. This revenue growth has been key to Twitter’s 53% price appreciation since 2016, further helped by increasing margins. We discuss Twitter’s valuation analysis in full, separately.

Below we discuss Twitter’s business model, followed by sections that review past performance and 2019 expectations for Twitter’s revenue drivers and competitive comparisons of its advertising revenue with Facebook and Snapchat.

You can look at our interactive dashboard analysis ~ Twitter’s Revenues: How Does Twitter Make Money? ~ for more details.

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Twitter Business Model:

What does Twitter offer:

  • Twitter, is a global platform for public self-expression and conversation in real time. The company allows a user to consume, create, distribute, and discover content. From breaking news and entertainment, to sports, politics, and everyday interests, Twitter shows every side of the story.
  • Twitter is available in more than 40 languages around the world and can be accessed via twitter.com, Twitter owned and operated mobile applications (e.g. Twitter for iPhone and Twitter for Android), and SMS.

Has 2 major Operating Segments:

  • Advertising Services: The company generates most of their advertising revenue by selling Promoted Products. These products include:
    • Promoted tweets to be delivered to intended users.
    • Promoted Accounts for advertisers to grow a community of users who are interested in their business, products, or services.
    • Promoted Trends appear at the top of the list of trending topics or timeline for an entire day in a particular country or on a global basis.
  • Data Licensing and Other: They generate data licensing and other revenue by (i) offering data products and data licenses that allow their data partners to access, search, and analyze historical and real-time data on the platform, and (ii) providing mobile advertising exchange services through their MoPub exchange.

What Are The Alternatives?

  • Major competitors are companies like Facebook, Alphabet, Microsoft, Snap, TikTok, and Verizon media group.

What Is The Basis of Competition?

  • The industry is characterized by rapid technological change, frequent product innovation, and continuously evolving user, advertiser, content partner, platform partner, and developer preferences and expectations. Significant competition comes from companies that provide tools to facilitate communications and the sharing of information, enable marketers to display advertising, and other online ad networks, exchanges, and platforms. For how its revenue compares to its peers please visit our interactive dashboard – Twitter Revenue.

 

Revenue growth expected in 2019 is primarily from growth in the International segment. For more information about number of users and average revenue per user please visit our interactive dashboard – Twitter Revenue 

  • Total revenue has seen a fluctuating growth over the years with revenue seeing a fall in 2017. Revenue grew from $2.5 billion in 2016 to $3 billion in 2018. Trefis estimates further growth of about 9% and Revenue to reach $3.3 billion in 2019.
  • US revenue has seen a fluctuating growth over the years with revenue per user seeing a fall in 2017. Revenue grew from $1.56 billion in 2016 to $1.64 billion in 2018. Trefis estimates further growth of about 4.4% and Revenue to reach $1.72 billion in 2019.
  • International business has seen a positive revenue growth over the years with growth in both active users and revenue per user. Revenue grew from $0.96 billion in 2016 to $1.4 billion in 2018. Trefis estimates further growth of about 14.5% and Revenue to reach $1.6 billion in 2019.

 

 

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