By Adam Fraser
Twitter has delivered its Q2 2017 results, and the green shoots of hope evident last quarter seem to have disappeared pretty quickly.
Whilst the financial results have always been weak, most significantly, monthly user numbers plateaued after increasing by an encouraging 9m users in the prior quarter. The market didn’t like what it saw, however, with the share price declining by around 13% on release of the results.
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 stable at 328m in line with the last quarter and 313m a year ago (5.3% growth); this is the biggest concern for analysts. Despite the President of the USA using Twitter as his primary means of communication,
- 21% of Twitter’s MAUs (68m) are based in the USA; this is an increase from 67m in the prior quarter, noting most of the user growth is coming internationally
- Attempts to drive greater engagement and more regular usage on the platform are working, with Daily Active Users growing at 12% on prior year v 14% last quarter and 7% in Q3 (interestingly the company does not reveal the absolute number of DAUs and actively refused again to release this in the face of formal queries).
- Total ad engagements increased 95% year-over-year, driven by a continuing mix shift toward video ad impressions as well as higher click-through rates, as a result of better targeting and ad relevance
- Historically, a significant Achilles heel for Twitter has been trolls and abuse on the platform. The company noted it had continued to make meaningful progress in this area. now taking action on 10X the number of abusive accounts every day compared to the same time last year. This very important.
- Revenue at $573m was up 4.6% from the prior quarter of US$548m and, more significantly, 4.8% lower than a year ago when ad revenue was $602m. The revenue trends are not convincing
- The breakdown of revenue for the quarter showed 85% of revenue coming from advertising and 15% (versus 14% in the prior quarter) coming from data licensing/other (the ‘big data’ aspect has huge potential for Twitter).
- Twitter made a loss of US116m for the quarter but also discloses “adjusted EBITDA which showed a profit of US$178m after adjusting for stock based compensation, depreciation and amortisation Twitter ended the quarter with US$4.1bn in cash so despite the regular “Twitter is dying” headlines we see, the business is solidly funded.
- Live video remains a key focus. In Q2 Twitter announced approximately 40 live-streaming partnerships, including two 24×7 networks and 10 international deals, extending their total live streaming content deals to well over 200 premium content partners across Live video and Amplify
- Video remained Twitter’s largest and fastest-growing ad format in Q2, reflecting strength in their First View ad format and in pre roll and mid-roll In-Stream Video Ads. Twitter also made a very strong debut at the 2017 Digital Content NewFronts
Jack Dorsey, Twitter’s CEO said “We’re strengthening our execution, which gives us confidence that our product improvements will continue to contribute to meaningful increases in daily active usage. We’re also encouraged by the progress we’re making executing against our top revenue generating priorities as we focus on making Twitter the best place to see and share what’s happening, where you can see every side and perspective.”
Jack has had a positive impact since returning as CEO, delivering a tighter strategy and a more communicative approach to market updates. The absence of monthly user growth is the key negative (especially in the context of the massive earned media from the US President’s ongoing use), whilst of course large, continuing quarterly losses. Whether Twitter can convert its undoubted public utility and societal importance into a viable profitable business still remains to be seen.