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Twitter (TWTR) Q2 Earnings & Revenues Fall Y/Y, Ad Demand Tepid
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Twitter reported second-quarter 2022 adjusted loss of 8 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 6 cents per share. The company had reported earnings of 20 cents per share in the year-ago quarter.
Revenues declined 1% year over year to $1.18 billion and lagged the Zacks Consensus Estimate by 10.6%, reflecting advertising industry headwinds associated with the macroenvironment as well as the uncertainty related to the pending acquisition of Twitter by an affiliate of Elon Musk.
Advertising revenues increased 2% year over year to $1.08 billion. Subscription and other revenues reached $101 million, down 27% year over year but up 5% year over year, after excluding MoPub.
Average monetizable daily active users (mDAU) rose 16.6% year over year and 3.8% sequentially to 237.8 million. The increase was driven by ongoing product improvements and global conversation around current events.
The average U.S. mDAU was 41.5 million, up 14.7% on a year-over-year basis and 6.4% on a quarter-over-quarter basis. The average international mDAU was 189.4 million, rising 17% year over year and 3.6% sequentially.
Operating Details
Twitter’s total costs and expenses were $1.52 billion, up 31% on a year-over-year basis. Costs related to the pending acquisition of Twitter were approximately $33 million in second-quarter 2022. Severance-related costs were over $19 million in the reported quarter.
Research and development expenses jumped 51.7% to $454.9 million, primarily due to higher personnel-related costs.
Sales and marketing expenses increased 2.1% to $308.3 million, primarily due to higher marketing expenses, personnel-related costs and sales commissions.
General and administrative expenses surged 53.1% year over year to $216.6 million, primarily due to higher personnel-related costs and professional fees.
Adjusted EBITDA decreased 67.5% year over year to $111.7 million.
Operating loss was $344 million, representing a (29%) operating margin, compared to operating income of $30 million or a 3% operating margin, in the same period last year.
Balance Sheet
As of Jun 30, 2022, Twitter had $6.12 billion in cash, cash equivalents and short-term investments. The company had $6.26 billion in cash, cash equivalents and short-term investments as of Mar 31, 2022.
Net cash from operating activities in the reported quarter was $30 million compared with $126 million in the previous quarter.
In the second quarter, adjusted free cash outflow was $123.9 million compared with free cash outflow of $35 million in the previous quarter.
Post Quarter Development
Twitter has been in the spotlight since Elon Musk announced his plans to buy the social media platform. In April, Twitter announced that Elon Musk bought a 9.2% stake in the company, making him the largest shareholder. However, on Jul 12, Elon Musk backed out from the $44 billion takeover deal, causing volatility to return to shares.
Twitter has filed a lawsuit against Elon Musk, stating that he is obligated to complete his acquisition and has put the company in financial jeopardy. Twitter is preparing to hold a stockholder vote on the deal as early as mid-August and Elon Musk is required to close the transaction within the following two days.
Zacks Rank & Stocks to Consider
Currently, Twitter has a Zacks Rank #3 (Hold).
Twitter shares are down 8.6% in the year-to-date period, underperforming the Zacks Computer & Technology sector’s decline of 38.9%.
Image: Bigstock
Twitter (TWTR) Q2 Earnings & Revenues Fall Y/Y, Ad Demand Tepid
Twitter reported second-quarter 2022 adjusted loss of 8 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 6 cents per share. The company had reported earnings of 20 cents per share in the year-ago quarter.
Revenues declined 1% year over year to $1.18 billion and lagged the Zacks Consensus Estimate by 10.6%, reflecting advertising industry headwinds associated with the macroenvironment as well as the uncertainty related to the pending acquisition of Twitter by an affiliate of Elon Musk.
Advertising revenues increased 2% year over year to $1.08 billion. Subscription and other revenues reached $101 million, down 27% year over year but up 5% year over year, after excluding MoPub.
Twitter, Inc. Price, Consensus and EPS Surprise
Twitter, Inc. price-consensus-eps-surprise-chart | Twitter, Inc. Quote
User Details
Average monetizable daily active users (mDAU) rose 16.6% year over year and 3.8% sequentially to 237.8 million. The increase was driven by ongoing product improvements and global conversation around current events.
The average U.S. mDAU was 41.5 million, up 14.7% on a year-over-year basis and 6.4% on a quarter-over-quarter basis. The average international mDAU was 189.4 million, rising 17% year over year and 3.6% sequentially.
Operating Details
Twitter’s total costs and expenses were $1.52 billion, up 31% on a year-over-year basis. Costs related to the pending acquisition of Twitter were approximately $33 million in second-quarter 2022. Severance-related costs were over $19 million in the reported quarter.
Research and development expenses jumped 51.7% to $454.9 million, primarily due to higher personnel-related costs.
Sales and marketing expenses increased 2.1% to $308.3 million, primarily due to higher marketing expenses, personnel-related costs and sales commissions.
General and administrative expenses surged 53.1% year over year to $216.6 million, primarily due to higher personnel-related costs and professional fees.
Adjusted EBITDA decreased 67.5% year over year to $111.7 million.
Operating loss was $344 million, representing a (29%) operating margin, compared to operating income of $30 million or a 3% operating margin, in the same period last year.
Balance Sheet
As of Jun 30, 2022, Twitter had $6.12 billion in cash, cash equivalents and short-term investments. The company had $6.26 billion in cash, cash equivalents and short-term investments as of Mar 31, 2022.
Net cash from operating activities in the reported quarter was $30 million compared with $126 million in the previous quarter.
In the second quarter, adjusted free cash outflow was $123.9 million compared with free cash outflow of $35 million in the previous quarter.
Post Quarter Development
Twitter has been in the spotlight since Elon Musk announced his plans to buy the social media platform. In April, Twitter announced that Elon Musk bought a 9.2% stake in the company, making him the largest shareholder. However, on Jul 12, Elon Musk backed out from the $44 billion takeover deal, causing volatility to return to shares.
Twitter has filed a lawsuit against Elon Musk, stating that he is obligated to complete his acquisition and has put the company in financial jeopardy. Twitter is preparing to hold a stockholder vote on the deal as early as mid-August and Elon Musk is required to close the transaction within the following two days.
Zacks Rank & Stocks to Consider
Currently, Twitter has a Zacks Rank #3 (Hold).
Twitter shares are down 8.6% in the year-to-date period, underperforming the Zacks Computer & Technology sector’s decline of 38.9%.
Some better-ranked stocks in the Computer and Technology sector include Agilysys (AGYS - Free Report) , Fastly (FSLY - Free Report) and Aspen Technology (AZPN - Free Report) , each carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Agilysys, Fastly and Aspen Technology are scheduled to report their quarterly results on Jul 26, Aug 3 and Aug 8, respectively.
The Zacks Consensus Estimate for Agilysis’ second-quarter 2022 earnings is pegged at 18 cents per share, unchanged in the past 30 days.
The Zacks Consensus Estimate for Fastly’s second-quarter 2022 earnings is pegged at a loss of 16 cents per share, down 1 cent over the past 30 days.
The Zacks Consensus Estimate for Aspen Technology’s second-quarter 2022 earnings is pegged at $2.20 per share, down 2.3% over the past 30 days.