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Twitter (TWTR) Q3 Earnings Beat, MAU Continues to Decline
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Twitter delivered third-quarter 2018 non-GAAP earnings of 21 cents per, outpacing the Zacks Consensus Estimate by 7 cents. It also soared 110% from the year-ago quarter figure of 10 cents.
Revenues of $758.1 million increased 28.6% from the year-ago quarter and comfortably surpassed the consensus mark of $704 million. Excluding almost $7-million impact of the winding down of the TellApart business, revenues surged almost 30%. FIFA World Cup contributed almost $20 million to revenues.
In third-quarter 2018, Twitter’s adjusted monthly average users (MAUs) totaled 326 million, down from 330 million in the year-ago quarter and 9 million sequentially. The decrease can be attributed to factors including GDPR, the company’s decision of not considering paid SMS carriers across select markets and technical issues.
Notably, Twitter reported that “spammy and suspicious accounts” accounted for less than 5% of MAU in the reported quarter. On the back of concerted “health efforts” to minimize suspicious new accounts, the company witnessed a quarter-over-quarter decline of 20% in successful sign-ups.
Improving detection techniques and enhancing the use of APIs is anticipated to pave the way for an environment enabling healthy public conversation on Twitter.
U.S. MAUs of 67 million decreased 1 million sequentially and 2 million on a year-over-year basis. International MAUs of 259 million increased by 4 million from the year-ago quarter and 8 million on a sequential basis.
Average Daily Active Users (DAUs) were up 9% year over year.
Advertising revenues increased 29% year over year to $649.8 million. Owned-and-operated advertising revenues surged 36% to $617 million.
Ad engagements increased 50% year over year. Click through rates (“CTR”) grew on a year-over-year basis across the majority of ad types as ad relevance continues to improve. Cost per ad engagement was down 14%.
Video ads accounted for more than half of ad revenues and remained Twitter’s fastest-growing ad format. Strength was witnessed in Video Website Cards and Video App Cards during the reported quarter.
Twitter signed 11 new live-streaming, highlight, Amplify, and video-on-demand agreements (out of which eight are from international markets) in the third quarter including Activision Blizzard and Adidas. Notably, live-streaming events are available in more than 40 languages.
Data licensing and other revenues rose 25% from the year-ago quarter to $108.3 million, driven by strength in Data and Enterprise solutions (“DES”). Revenue contribution from MoPub was notable.
Revenues by Geography
U.S. revenues (around 55.8% of revenues) increased 28% year over year to $423 million. Advertising revenues from the United States totaled $348 million, up 32% year over year, driven by broad-based advertiser demand.
International revenues (44.2% of revenues) rose 30% year over year to $335 million in the reported quarter. International ad revenues increased 26% year over year to $302 million on the back of strong growth across all regions.
Notably, revenues in Japan, the second largest revenue generator, grew 44% year over year to $130 million.
Margin Details
Twitter incurred non-GAAP total costs and expenses of $570 million, increasing 22% on a year-over-year basis. Traffic acquisition costs (TAC) were approximately $15 million, down 35% due to the TellApart deprecation.
Adjusted EBITDA increased 42.5% to $295 million. Adjusted EBITDA margin expanded 400 basis points year over year to 39%.
Guidance
For the current quarter, Twitter anticipates adjusted EBITDA in the range of $320-$340 million while EBITDA margin is likely to be in the band of 39-40%. Moreover, capital expenditure is expected in the range of $60-$85 million.
Moreover, the company continues to grow its headcount toward its year-end target of 10-15%. Management anticipates operating expenses to continue to rise in the fourth quarter.
Twitter expects adjusted EBITDA margin expansion to continue in 2018.
Long-term earnings growth rate for Cadence and Vishay Intertechnology is projected to be 12% and 9.2%, respectively.
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Twitter (TWTR) Q3 Earnings Beat, MAU Continues to Decline
Twitter delivered third-quarter 2018 non-GAAP earnings of 21 cents per, outpacing the Zacks Consensus Estimate by 7 cents. It also soared 110% from the year-ago quarter figure of 10 cents.
Revenues of $758.1 million increased 28.6% from the year-ago quarter and comfortably surpassed the consensus mark of $704 million. Excluding almost $7-million impact of the winding down of the TellApart business, revenues surged almost 30%. FIFA World Cup contributed almost $20 million to revenues.
In third-quarter 2018, Twitter’s adjusted monthly average users (MAUs) totaled 326 million, down from 330 million in the year-ago quarter and 9 million sequentially. The decrease can be attributed to factors including GDPR, the company’s decision of not considering paid SMS carriers across select markets and technical issues.
Notably, Twitter reported that “spammy and suspicious accounts” accounted for less than 5% of MAU in the reported quarter. On the back of concerted “health efforts” to minimize suspicious new accounts, the company witnessed a quarter-over-quarter decline of 20% in successful sign-ups.
Improving detection techniques and enhancing the use of APIs is anticipated to pave the way for an environment enabling healthy public conversation on Twitter.
U.S. MAUs of 67 million decreased 1 million sequentially and 2 million on a year-over-year basis. International MAUs of 259 million increased by 4 million from the year-ago quarter and 8 million on a sequential basis.
Average Daily Active Users (DAUs) were up 9% year over year.
Twitter, Inc. Revenue (TTM)
Twitter, Inc. Revenue (TTM) | Twitter, Inc. Quote
Quarter Highlights
Advertising revenues increased 29% year over year to $649.8 million. Owned-and-operated advertising revenues surged 36% to $617 million.
Ad engagements increased 50% year over year. Click through rates (“CTR”) grew on a year-over-year basis across the majority of ad types as ad relevance continues to improve. Cost per ad engagement was down 14%.
Video ads accounted for more than half of ad revenues and remained Twitter’s fastest-growing ad format. Strength was witnessed in Video Website Cards and Video App Cards during the reported quarter.
Twitter signed 11 new live-streaming, highlight, Amplify, and video-on-demand agreements (out of which eight are from international markets) in the third quarter including Activision Blizzard and Adidas. Notably, live-streaming events are available in more than 40 languages.
Data licensing and other revenues rose 25% from the year-ago quarter to $108.3 million, driven by strength in Data and Enterprise solutions (“DES”). Revenue contribution from MoPub was notable.
Revenues by Geography
U.S. revenues (around 55.8% of revenues) increased 28% year over year to $423 million. Advertising revenues from the United States totaled $348 million, up 32% year over year, driven by broad-based advertiser demand.
International revenues (44.2% of revenues) rose 30% year over year to $335 million in the reported quarter. International ad revenues increased 26% year over year to $302 million on the back of strong growth across all regions.
Notably, revenues in Japan, the second largest revenue generator, grew 44% year over year to $130 million.
Margin Details
Twitter incurred non-GAAP total costs and expenses of $570 million, increasing 22% on a year-over-year basis. Traffic acquisition costs (TAC) were approximately $15 million, down 35% due to the TellApart deprecation.
Adjusted EBITDA increased 42.5% to $295 million. Adjusted EBITDA margin expanded 400 basis points year over year to 39%.
Guidance
For the current quarter, Twitter anticipates adjusted EBITDA in the range of $320-$340 million while EBITDA margin is likely to be in the band of 39-40%. Moreover, capital expenditure is expected in the range of $60-$85 million.
Moreover, the company continues to grow its headcount toward its year-end target of 10-15%. Management anticipates operating expenses to continue to rise in the fourth quarter.
Twitter expects adjusted EBITDA margin expansion to continue in 2018.
Twitter, Inc. Price, Consensus and EPS Surprise
Twitter, Inc. Price, Consensus and EPS Surprise | Twitter, Inc. Quote
Zacks Rank & Other Stocks to Consider
Twitter sports a Zacks Rank #1 (Strong Buy).
A couple of other top-ranked stocks in the broader technology sector include Cadence Design Systems (CDNS - Free Report) and Vishay Intertechnology (VSH - Free Report) both sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Cadence and Vishay Intertechnology is projected to be 12% and 9.2%, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>