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Twitter (TWTR) Q1 Loss Narrower Than Expected, Revenues Beat
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Twitter, Inc. shares are up over 9% in pre-market trading following its first-quarter 2017 earnings report. Twitter’s adjusted loss per share of 5 cents was narrower than the Zacks Consensus Estimate of a loss of 16 cents per share. Revenues of $548.3 million beat the Zacks Consensus Estimate of $512.1 million.
Plus, Twitter’s user growth was relatively impressive in the first quarter. Monthly average users (MAUs) increased from 319 million to 328 million this quarter, up 2.8% sequentially. Year over year, MAUs increased 6%. Daily average users (DAUs) were up 14% year over year.
As for Twitter’s live efforts, the company said it streamed over 800 hours of live video, encompassing some 450 odd events with 45 million unique viewers.
However, on a year-over-year basis, revenues were down 7.8%. Advertising revenues were down 11% in the quarter to $474 million.
Quarterly Numbers in Details
The company posted non-GAAP earnings of 11 cents per share, down from 15 cents reported in the prior-year quarter.
In ad metrics, there was a 139% year-over-year surge in ad engagements but cost per ad engagement was down 63%, given the shift to auto-play video, which has lower cost-per-view compared to click-to-play.
Data licensing and other revenues increased 17% to $74 million.
Twitter earned nearly 38% of its revenues from international markets. International revenues rose 2% year over year to $208 million in the reported quarter while the U.S. revenues decreased 13% year over year to $341 million.
The company reported 6% decrease in adjusted EBITDA to $170 million. Adjusted EBITDA margin was 31%, up from 30.4% in the year-ago quarter.
Twitter reported an operating loss of $40.3 million, which compared favourably with a loss of $59.1 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
At the end of Mar 31, 2017, cash and cash equivalents (short-term investments) were $3.94 billion compared with $3.77 billion at the end of Dec 31, 2016. For the quarter, cash flow from operations was $203.5 million and adjusted free cash flow was $126.1 million.
Outlook
For 2017, stock-based compensation is expected to decrease in a range of 20%–25% year over year while capex will be in a band of $300–$400 million. Expenses are expected to be flat to down 5% year over year.
For the current quarter, adjusted EBITDA is expected to be in a range of $95–$115 million while EBITDA margin is expected to be in a band of 21%–21.5%.
Our Take
Twitter has been a social phenomenon but somehow hasn’t been able to leverage that success to boost user growth.
At 328 million users, Twitter falls way behind other social media services like Facebook Inc. , which has over 1.8 billion users. Even Facebook’s subsidiary, Instagram has over 600 million users. The complex nature of the service is often considered a major hindrance to user growth.
Though the company is working hard to bring about a turnaround, its efforts are yet to yield the desired results. Currently, the company is focusing on Live video content, a flurry of live streaming deals, user friendly changes, measures to curb the trolling menace, divestment of non-core operations as well as layoffs. But all these are yet to move the needle for Twitter.
At present, Twitter carries a Zacks Rank #3 (Hold). In the past one year, shares of Twitter were down 17.41% as against a 10.20% rise in the Zacks Internet Software industry.
Stocks to Consider
A couple of better-ranked stocks in the wider technology space include Instructure Inc (INST - Free Report) and MeetMe, Inc. . While Instructure sports a Zacks Rank #1 (Strong Buy), MeetMe carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the trailing four quarters, Instructure and MeetMe yielded positive average earnings surprises of 11.51% and 36.07%, respectively.
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Twitter (TWTR) Q1 Loss Narrower Than Expected, Revenues Beat
Twitter, Inc. shares are up over 9% in pre-market trading following its first-quarter 2017 earnings report. Twitter’s adjusted loss per share of 5 cents was narrower than the Zacks Consensus Estimate of a loss of 16 cents per share. Revenues of $548.3 million beat the Zacks Consensus Estimate of $512.1 million.
Plus, Twitter’s user growth was relatively impressive in the first quarter. Monthly average users (MAUs) increased from 319 million to 328 million this quarter, up 2.8% sequentially. Year over year, MAUs increased 6%. Daily average users (DAUs) were up 14% year over year.
As for Twitter’s live efforts, the company said it streamed over 800 hours of live video, encompassing some 450 odd events with 45 million unique viewers.
However, on a year-over-year basis, revenues were down 7.8%. Advertising revenues were down 11% in the quarter to $474 million.
Quarterly Numbers in Details
The company posted non-GAAP earnings of 11 cents per share, down from 15 cents reported in the prior-year quarter.
Twitter, Inc. Price, Consensus and EPS Surprise
Twitter, Inc. Price, Consensus and EPS Surprise | Twitter, Inc. Quote
In ad metrics, there was a 139% year-over-year surge in ad engagements but cost per ad engagement was down 63%, given the shift to auto-play video, which has lower cost-per-view compared to click-to-play.
Data licensing and other revenues increased 17% to $74 million.
Twitter earned nearly 38% of its revenues from international markets. International revenues rose 2% year over year to $208 million in the reported quarter while the U.S. revenues decreased 13% year over year to $341 million.
The company reported 6% decrease in adjusted EBITDA to $170 million. Adjusted EBITDA margin was 31%, up from 30.4% in the year-ago quarter.
Twitter reported an operating loss of $40.3 million, which compared favourably with a loss of $59.1 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
At the end of Mar 31, 2017, cash and cash equivalents (short-term investments) were $3.94 billion compared with $3.77 billion at the end of Dec 31, 2016. For the quarter, cash flow from operations was $203.5 million and adjusted free cash flow was $126.1 million.
Outlook
For 2017, stock-based compensation is expected to decrease in a range of 20%–25% year over year while capex will be in a band of $300–$400 million. Expenses are expected to be flat to down 5% year over year.
For the current quarter, adjusted EBITDA is expected to be in a range of $95–$115 million while EBITDA margin is expected to be in a band of 21%–21.5%.
Our Take
Twitter has been a social phenomenon but somehow hasn’t been able to leverage that success to boost user growth.
At 328 million users, Twitter falls way behind other social media services like Facebook Inc. , which has over 1.8 billion users. Even Facebook’s subsidiary, Instagram has over 600 million users. The complex nature of the service is often considered a major hindrance to user growth.
Though the company is working hard to bring about a turnaround, its efforts are yet to yield the desired results. Currently, the company is focusing on Live video content, a flurry of live streaming deals, user friendly changes, measures to curb the trolling menace, divestment of non-core operations as well as layoffs. But all these are yet to move the needle for Twitter.
At present, Twitter carries a Zacks Rank #3 (Hold). In the past one year, shares of Twitter were down 17.41% as against a 10.20% rise in the Zacks Internet Software industry.
Stocks to Consider
A couple of better-ranked stocks in the wider technology space include Instructure Inc (INST - Free Report) and MeetMe, Inc. . While Instructure sports a Zacks Rank #1 (Strong Buy), MeetMe carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the trailing four quarters, Instructure and MeetMe yielded positive average earnings surprises of 11.51% and 36.07%, respectively.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>