By Adam Fraser
Twitter has delivered its Q4 2017 results and, for the first time in its history, has delivered a profit.
As ever with Twitter, it remains a patchy set of numbers with the most obvious negative the flat user numbers at 330m. Despite getting unprecedented levels of earned media via the President of the USA, the numbers continue to indicate that anyone on the planet who wants to be on Twitter is already there. The continuing growth in users at Facebook, Instagram and WhatsApp must be a source of huge frustration to the board and management of Twitter.
The headline profit clearly impressed the market, with the share price rallying 25% on the day of the announcement.
If you want to dive into all of the detail, you can check the financials, investor presentation, shareholder letter and investor conference call. If you want the key highlights here are 10 key takeaways:
- Monthly active user (MAU) numbers were 330m, flat from the prior quarter and an increase from 318m a year ago (3.8% growth).
- 21% of Twitter’s MAUs (68m) are based in the USA, down 1m on the prior quarter, with small user growth coming internationally (262m v 261m in the prior quarter).
- Attempts to drive greater engagement and more regular usage on the platform continue to work, with Daily Active Users (DAU) growing at 12% on prior year v 14% last quarter and 11% a year ago. Interestingly, the company does not reveal the absolute number of DAUs and actively refused again to release this in the face of formal queries.
- Ad metrics were encouraging – in Q4, the Twitter ads platform team made optimisations to ad serving logic that resulted in a 26% increase in ad engagement rates and an 18% increase in return for advertisers.
- Video remained Twitter’s largest ad format and grew as a percent of total revenue in Q4, reflecting strength in Video Website Cards, Video App Cards, InStream Sponsorships, and In-Stream Video Ads.
- Revenue was up significantly at $730m v $590m in the prior quarter and, $717m a year ago. The revenue trends were clearly the highlight of the quarter.
- The breakdown of revenue for the quarter showed 88% of revenue coming from advertising and 12% coming from data licensing/other.
- Twitter made a GAAP profit of $91m vs a loss of US$21m for the quarter; it also discloses “adjusted EBITDA which showed a profit of US$308m after adjusting for stock-based compensation, depreciation and amortisation. Twitter ended the quarter with US$4.4bn in cash so despite the frequent “Twitter is dying” headlines, the business is solidly funded.
- Live video remains a key focus. During Q4, Twitter announced approximately 22 new live-streaming, highlight, and VOD partnerships, including nine international deals. In total, the platform streamed approximately 1,140 live events throughout the quarter, with 60% of those reaching a global audience. In addition, 28 million live user-generated streams were broadcast in Q4 across both Twitter and Periscope.
- New ad products continue to be developed – in Q4, Twitter launched a new Promoted Tweet composer that simplifies the process of creating new Promoted Tweets. Also in Q4, Twitter entered into public betas in the US, UK, and Japan with a new subscription advertising product, Twitter Promote Mode (TPM), which helps small businesses reach more people without the work of having to create ads or manage campaigns.
.@adamf2014 does a great job here interviewing @RishiPDave the CMO of @DnBUS on marketing integration and customer experience and leveraging data, metrics and marketing tech to drive customer experience: https://t.co/gPbKWhBdcj via @EchoJunction (DNB is a client) pic.twitter.com/vK7V4Eo9DY
— Lee Odden (@leeodden) January 22, 2018
By Adam Fraser
Twitter has delivered it’s Q3 2017 results and its another set of patchy results.
User growth was moderately encouraging, adding 4m users after adjusting for a prior quarter calculation error of 2m users (the company admitted it has misstated user numbers since the end of 2014 – never a good look). However, the company again posted a loss, and the dramatic growth evident at Facebook and Instagram, quarter after quarter, remains elusive for Twitter – even in a world where the US President is very publicly using the platform regularly. Revenue actually declined by 4% compared to the same quarter a year ago.
Having baked in a lot of bad news, the share price actually rallied on the results announcement, based on expectations of profitability in the coming quarters.
If you want to dive into all of the detail, you can check the financials, investor presentation, shareholder letter and investor conference call. If you want the key highlights here are the 10 key takeaways:
- Monthly active user (MAU) numbers were 330m, from 326m last quarter (1.2% growth) and 317m a year ago (4.1% growth).
- 21% of Twitter’s MAUs (69m) are based in the USA; this is an increase from 68m in the prior quarter, noting most of the user growth is coming internationally (261m v 258m in the prior quarter).
- Attempts to drive greater engagement and more regular usage of the platform are working, with Daily Active Users growing at 14% on prior year v 12% last quarter and 7% a year ago (interestingly the company does not reveal the absolute number of DAUs and actively refused again to release this in the face of formal queries).
- Ad metrics were encouraging: cost per engagement declined by 54% and overall ad engagements increased by 99% on a year-over-year basis. CTRs on a year-over-year basis are up across all major ad types.
- Historically, a significant Achilles heel for Twitter has been trolls and abuse on the platform. The company noted they had further refined their machine-learning algorithms in order to better identify and act on accounts demonstrating abusive behaviours. The company also noted, “we’ll be taking a more aggressive stance on our abuse rules and on how we enforce them”.
- Revenue at $590m was up 3.0% on the prior quarter of US$573m and, more significantly, 4.2% lower than a year ago when ad revenue was $545m. The revenue trends are clearly not convincing.
- The breakdown of revenue for the quarter showed 85% of revenue coming from advertising and 15% (consistent with the prior quarter) coming from data licensing/other (the ‘big data’ aspect still offers great potential for Twitter).
- Twitter made a loss of US$21m for the quarter (its smallest ever reported quarterly loss) but also discloses “adjusted EBITDA which showed a profit of US$207m after adjusting for stock-based compensation, depreciation and amortisation Twitter ended the quarter with US$4.3bn in cash so despite the frequent “Twitter is dying” headlines, the business is solidly funded.
- Live video remains a key focus. In Q3 Twitter announced approximately 30 live-streaming partnerships, including 10 international deals and two with leading consumer brands (Converse and Tommy Hilfiger). In Q3, Twitter streamed more than 830 events.
- Twitter streamed 96 million hours of live user-generated content via Periscope in the quarter.
Jack Dorsey, Twitter’s CEO said, “This quarter we made progress in three key areas of our business; we grew our audience and engagement, made progress on a return to revenue growth, and achieved record profitability”.
Jack has certainly had a positive impact since returning as CEO, delivering a tighter strategy and a more communicative approach to market updates. The absence of strong monthly user growth remains a key negative (especially in the context of the massive earned media from the US President), whilst continuing quarterly losses are always a concern. Twitter has undoubted public utility and societal importance – whether this means it can remain long term as a viable, independent listed company is a more difficult question.