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Twitter's (TWTR) User Growth & Engagement to Aid Q2 Earnings
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Twitter is set to report second-quarter 2018 results on Jul 27. The company beat the Zack Consensus Estimate in all the trailing four quarters, delivering an average positive surprise of 48.93%.
In the last reported quarter, Twitter posted non-GAAP earnings of 16 cents per share, which came ahead of the Zacks Consensus Estimate of 12 cents and were much higher than 7 cents reported in the year-ago quarter.
Revenues of $665 million increased 21% from the year-ago quarter and beat the consensus mark of $609.3 million. Twitter’s adjusted monthly average users (MAUs) totaled 336 million, up 3% on a year-over-year basis and 1.8% sequentially.
The Zacks Consensus Estimate for second-quarter revenues is currently pegged at $700.02 million, while that for earnings stands at 17 cents per share.
Twitter’s strength in video advertising, coupled with focus on live video streaming, is likely to be a major top-line growth driver in the to-be reported quarter. The company’s strategy of introducing attractive features has made the platform more engaging.
We note that the rollout of the 280-character limit for tweets (double from the legacy 140 limit) and introduction of Threads have made tweeting easier and more expressive. These have also resulted in an uptick in tweet impressions.
Twitter’s latest tweak in timeline to highlight major news events, other than its current focus on sports-based news, will likely increase user engagement on the platform and stoke growth.
Moreover, the company has also been focusing on "live" activities to turn around its fortunes. Live streaming has resulted in an increase in user engagement. The company streamed 1,300 live events in the last reported quarter and secured 30 new live partnerships.
Security Focus to Boost Brand Image
Further, Twitter’s focus on enhancing security and credibility of the platform is noteworthy. The company has been introducing stricter regulations to create a safer environment and repair brand image.
Twitter has introduced rules, under which advertisers running political ads have to provide evidence that they stay in the United States. Additionally, federal election campaign identification will have to be provided by candidates and committees. Moreover, the company announced its support for Honest Ads Act in a bid to make its platform more transparent and viable.
Twitter has also come up with a verification process for opening new accounts on the platform. An audit is also being undertaken to ensure the authenticity of every account created on the platform.
The acquisition of Smyte will help the company combat abuse and bullying, which are the most obvious and pressing areas of concern for the social media platform in recent times.
We believe the company’s recent efforts to fight against bots and trolls will help it build trust and repair brand image, thereby improving user engagement.
For the second quarter, the Zacks Consensus Estimate for monthly average users (MAUs) is pegged at 338 million.
Higher Ad Revenues to Boost the Top Line
Twitter’s ability to attract advertising revenues amid significant competition from the likes of Facebook , Snap’s (SNAP - Free Report) messaging app Snapchat and Google is a key factor propelling its growth.
As video ads generate more revenues than text-based substitutes, Twitter is trying to incorporate more video-oriented content to earn higher advertising revenues. Strength in Video Website Cards, Video App Cards, In-Stream Sponsorships and In-Stream Video Ads is encouraging.
Moreover, Twitter has gained significant traction in international markets like Japan and China. In the last reported quarter, international ad revenues increased 28% year over year to $287 million on the back of strong growth in the Asia Pacific region.
Notably, Japan, being the second-largest revenue generator, grew 61% year over year and contributed 18% of total revenues.
For the second quarter, the Zacks Consensus Estimate for advertising revenues stands at $601 million.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.
Twitter has a Zacks Rank #1 and an Earnings ESP of +7.06%, which indicates a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
A Stock to Consider
Here is a stock you may consider, as our proven model shows that it has the right combination of elements to post an earnings beat this quarter.
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Twitter's (TWTR) User Growth & Engagement to Aid Q2 Earnings
Twitter is set to report second-quarter 2018 results on Jul 27. The company beat the Zack Consensus Estimate in all the trailing four quarters, delivering an average positive surprise of 48.93%.
In the last reported quarter, Twitter posted non-GAAP earnings of 16 cents per share, which came ahead of the Zacks Consensus Estimate of 12 cents and were much higher than 7 cents reported in the year-ago quarter.
Revenues of $665 million increased 21% from the year-ago quarter and beat the consensus mark of $609.3 million. Twitter’s adjusted monthly average users (MAUs) totaled 336 million, up 3% on a year-over-year basis and 1.8% sequentially.
The Zacks Consensus Estimate for second-quarter revenues is currently pegged at $700.02 million, while that for earnings stands at 17 cents per share.
Twitter, Inc. Price and EPS Surprise
Twitter, Inc. Price and EPS Surprise | Twitter, Inc. Quote
Engaging Features to Drive User Growth
Twitter’s strength in video advertising, coupled with focus on live video streaming, is likely to be a major top-line growth driver in the to-be reported quarter. The company’s strategy of introducing attractive features has made the platform more engaging.
We note that the rollout of the 280-character limit for tweets (double from the legacy 140 limit) and introduction of Threads have made tweeting easier and more expressive. These have also resulted in an uptick in tweet impressions.
Twitter’s latest tweak in timeline to highlight major news events, other than its current focus on sports-based news, will likely increase user engagement on the platform and stoke growth.
Moreover, the company has also been focusing on "live" activities to turn around its fortunes. Live streaming has resulted in an increase in user engagement. The company streamed 1,300 live events in the last reported quarter and secured 30 new live partnerships.
Security Focus to Boost Brand Image
Further, Twitter’s focus on enhancing security and credibility of the platform is noteworthy. The company has been introducing stricter regulations to create a safer environment and repair brand image.
Twitter has introduced rules, under which advertisers running political ads have to provide evidence that they stay in the United States. Additionally, federal election campaign identification will have to be provided by candidates and committees. Moreover, the company announced its support for Honest Ads Act in a bid to make its platform more transparent and viable.
Twitter has also come up with a verification process for opening new accounts on the platform. An audit is also being undertaken to ensure the authenticity of every account created on the platform.
The acquisition of Smyte will help the company combat abuse and bullying, which are the most obvious and pressing areas of concern for the social media platform in recent times.
We believe the company’s recent efforts to fight against bots and trolls will help it build trust and repair brand image, thereby improving user engagement.
For the second quarter, the Zacks Consensus Estimate for monthly average users (MAUs) is pegged at 338 million.
Higher Ad Revenues to Boost the Top Line
Twitter’s ability to attract advertising revenues amid significant competition from the likes of Facebook , Snap’s (SNAP - Free Report) messaging app Snapchat and Google is a key factor propelling its growth.
As video ads generate more revenues than text-based substitutes, Twitter is trying to incorporate more video-oriented content to earn higher advertising revenues. Strength in Video Website Cards, Video App Cards, In-Stream Sponsorships and In-Stream Video Ads is encouraging.
Moreover, Twitter has gained significant traction in international markets like Japan and China. In the last reported quarter, international ad revenues increased 28% year over year to $287 million on the back of strong growth in the Asia Pacific region.
Notably, Japan, being the second-largest revenue generator, grew 61% year over year and contributed 18% of total revenues.
For the second quarter, the Zacks Consensus Estimate for advertising revenues stands at $601 million.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.
Twitter has a Zacks Rank #1 and an Earnings ESP of +7.06%, which indicates a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
A Stock to Consider
Here is a stock you may consider, as our proven model shows that it has the right combination of elements to post an earnings beat this quarter.
Upland Software (UPLD - Free Report) , expected to report on Aug 9, has an Earnings ESP of +0.93% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>