By Adam Fraser
Twitter has released its Q3 2016 results to the stock market.
Nothing spectacular but a solid set of results, with moderate growth in revenue and users, and an announcement around job cuts to drive better future financial performance. The stock market liked what it saw with shares increasing around 5% when the results were announced.
If you want to dive into all of the detail, you can check the financials, investor presentation (also broadcast via Periscope!), shareholder letter and investor conference call. If you want the key highlights here are 10 key takeaways:
- Monthly active user (MAU) numbers grew slightly to 317m from v 313m last quarter (up 1.3%) and 307m a year ago (3.3% growth); the steady growth is encouraging but the pace remains insignificant compared to other social networks – Facebook continues to grow in the tens of millions while Twitter crawls in single digits
- 21% of Twitter’s MAUs (67m) are based in the USA; user numbers in the USA are broadly flat with most of the growth coming internationally
- Attempts to drive greater engagement and more regular usage on the platform are working, with Daily Active Users growing at 7% on prior year v 5% last quarter and 3% in Q1
- Mobile MAUs were 83% of users, indicating Twitter sits in between Facebook ( 90%+ mobile users) and LinkedIn (approx 60% mobile users) for mobile penetration
- Revenue at $616m was 2.3% up on the prior quarter of US$710m and 8.3% higher than a year ago; this exceeded market expectations and the shareholder letter detailed a number of areas where the ad platform was working better
- The breakdown of revenue for the quarter was broadly consistent with recent periods, with just under 90% of revenue coming from advertising and circa 10% coming from data licensing/other (the ‘big data’ aspect has huge potential for Twitter). Video ads are the most popular and effective form of ads on the platform
- Total ad engagements grew 91% year-over-year
- Twitter made a loss of US$103m for the quarter but also discloses “adjusted EBITDA” which showed a profit of US$181m after adjusting for stock based compensation, depreciation and amortisation. Twitter ended the quarter with US$3.6bn in cash.
- Live streaming video represents a key strategic growth area for the business; audience numbers for Thursday Night NFL games (3m viewers) and the Presidential debates (3.3m viewers) have been encouraging; Twitter has signed more than a dozen live streaming partnerships with the Melbourne Cup this week streamed in Australia for the first time
- Making it easier for new users to sign up and understand the platform remains a key focus: to this end, the service is being refined in 4 key areas being onboarding, home timeline, notifications and tweeting
With steady growth, cost rationalisation (9% of the workforce will be cut) to stabilise financial performance and some exciting developments in streaming video, this was a reasonable set of results from Twitter. However with underlying losses and the continuing strength in other social networks (Facebook and Snapchat in particular) leading to fierce completion for ad spend, challenges remain for the network everyone loves to talk about. Jack’s influence has been a positive one since he came back as CEO a year ago, but the takeover rumours will continue with overall performance (and the market cap) at these levels.