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Twitter continues struggle with lower-than-expected Q1 revenue

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Twitter continues struggle with lower-than-expected Q1 revenue

Even as TwitterInc. added 5 million monthly active users in the first quarter, thecompany's stock took a sharp dive in after-hours trading April 26, following newsthat the company posted lower-than-expected first-quarter revenue.

The company's first-quarter revenue came in at $594.5 million,up 36% from $435.9 million a year ago, but down from the company's range of $595 million to $610 million.

For the quarter, the company narrowed its net loss to $79.7 million,or 12 cents per share, from a year-earlier loss of $162.4 million, or 25 cents pershare. The company reported non-GAAP net income of $102.7 million, or 15 cents pershare, up from $46.5 million, or 7 cents per share, in the year-earlier period.

The S&P Global Market Intelligence consensus estimate forthe first quarter was 10 cents per share on a normalized basis and a loss of 17cents per share on a GAAP basis. For revenue, the consensusestimate was $607.5 million.

Despite missing the mark, executives remained optimistic aboutTwitter's future, citing the rebound in the number of monthly active users. Thecompany reported 310 million monthly active users for the quarter, up 3% year overyear and compared to 305 million in the fourth quarter of 2015. In reporting MAU,the company does not include SMS Fast Followers.

Executives also touted the company's growth in live video, withmany analysts inquiring about the company's plans to leverage its recent with the National Football Leagueto stream 10 Thursday Night Football games. Twitter COO Adam Bain noted the company'sprioritization of premium live content for sports as well as entertainment and news.

"[During the three hour telecast of Thursday Night Football],we have millions of users looking at tweets about that game and they are creatingtens of millions of impressions that we know are very valuable to them and veryvaluable to our partners," Bain said on the call.

Fielding a question about monetizing Periscope and Vine — largelyseen as untapped ad potential for the company — CEO Jack Dorsey said the companyhas already monetized them to a certain extent.

"We actually are monetizing Periscope and Vine by bringingthat creative canvas into Twitter and allowing marketers to bring that canvas intoTwitter," he said, adding that marketers can create targeted campaigns andlook at measurements. There are also plans to expand promoted videos on Periscopeby extending it to the Android platform.

Analysts and others were also curious about Twitter's positionsince Facebook Inc. beganpushing its own live videoformat so heavily. Dorsey responded by pointing out the company has been in thebusiness of doing live since it began. He noted Twitter's speed in disseminatinginformation and its ability to quickly reach an audience.

Mobile continues to be the dominant factor for Twitter as itdrove 88% of total advertising revenue and mobile users made up 83% of total MAU.

The company continued to see strong growth in total advertisingrevenue, which clocked in at $531 million and saw 37% year-over-year growth comparedto the 2015 first quarter. The company recorded a 208% year-over-year ad engagementgrowth compared to the previous quarter, driven by auto-play video, increased adload and improved click through rate for select ad formats.

Looking into the second quarter, the company projected revenueto be between $590 million and $610 million, with adjusted EBITDA of $145 millionto $155 million. Stock-based compensation expense is expected to be in the rangeof $165 million to $175 million

For the 2016 fiscal year, the company continues to expect capitalexpenditures of $300 million to $425 million and adjusted EBITDA margin of 25% to27%.

Twitter's stock was down about 13% in after-hours trading afterthe company announced its first-quarter results.