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Twitter (TWTR) Q4 Earnings and Revenues Surpass Estimates
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Twitter reported fourth-quarter 2017 non-GAAP earnings per share of 19 cents, which came ahead of the Zacks Consensus Estimate of 14 cents and increased 72.7% year over year.
Revenues of $732 million increased 2% from the year-ago quarter and beat the consensus mark of $690 million.
The year-over-year increase in revenues was impressive, given the continuous decline in revenues in the first three quarters of 2017.
However, revenues for fiscal 2017 decreased 3% year over year to $2.4 billion, mostly due to winding of the TellApart business.
In fourth-quarter 2017, Twitter’s adjusted monthly average users (MAUs) totaled 330 million, flat sequentially but up 4% on a year-over-year basis. The increase was driven by a 2% rise in U.S. MAUs and 4% increase in international MAUs. However, on a sequential basis, U.S. MAUs decreased 1 million.
Daily average users (DAUs) were up 12% year over year, driven by double-digit growth in five out of top 10 global markets.
Quarterly Numbers in Details
Advertising revenues were up a marginal 1% in the quarter to $644 million. Ad engagements increased 75% year over year. However, cost per ad engagement was down 42%, given the shift to auto-play video, which has a lower cost-per-view compared to click-to-play.
Video ads continue to be the key driver backed by strength in Video Website Cards, Video App Cards, In-Stream Sponsorships, and In-Stream Video Ads. By channel, brand marketing continues to be the primary contributor to the company’s revenues.
Data licensing and other revenues increased 10% to $87 million, driven by data and enterprise solutions (DES). New tiered product and channel strategy helped it win new enterprise deals in fourth quarter.
Twitter earned nearly 44.5% of its revenues from international markets. International revenues increased 17% year over year to $326 million in the reported quarter while U.S. revenues decreased 8% year over year to $406 million.
The company believes that continued strength in Asia Pacific coupled with improvement in certain EMEA markets backed growth in international markets. Notably, Japan grew 34% year over year and generated 15% of total revenues.
In the quarter, total expenses declined 14% year over year to $511 million. Twitter’s adjusted EBITDA rose 43% to $308 million and adjusted EBITDA margin was 42%. For the first time, the company achieved its long-term EBITDA margin target range of 40-45%.
The company reported a pre-tax income of $93.5 million against a pre-tax loss of $162.2 million in the year-ago quarter.
As of Dec 31, 2017, cash and cash equivalents (short-term investments) were $4.4 billion compared with $4.3 billion at the end of Sep 30, 2017. For the quarter, cash flow from operations was $198.1 million and adjusted free cash flow was $135.3 million.
Outlook
For the current quarter, adjusted EBITDA is expected to be in the range of $185–$205 million while EBITDA margin is likely to be in a band of 33–34%.
For fiscal 2018, Twitter expects capital expenditures to be in the range of $375-$450 million.
Long-term earnings growth rate for Micron, Lam Research and The Trade Desk is projected to be 10%, 14.9% and 25%, respectively.
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Twitter (TWTR) Q4 Earnings and Revenues Surpass Estimates
Twitter reported fourth-quarter 2017 non-GAAP earnings per share of 19 cents, which came ahead of the Zacks Consensus Estimate of 14 cents and increased 72.7% year over year.
Revenues of $732 million increased 2% from the year-ago quarter and beat the consensus mark of $690 million.
The year-over-year increase in revenues was impressive, given the continuous decline in revenues in the first three quarters of 2017.
However, revenues for fiscal 2017 decreased 3% year over year to $2.4 billion, mostly due to winding of the TellApart business.
In fourth-quarter 2017, Twitter’s adjusted monthly average users (MAUs) totaled 330 million, flat sequentially but up 4% on a year-over-year basis. The increase was driven by a 2% rise in U.S. MAUs and 4% increase in international MAUs. However, on a sequential basis, U.S. MAUs decreased 1 million.
Daily average users (DAUs) were up 12% year over year, driven by double-digit growth in five out of top 10 global markets.
Quarterly Numbers in Details
Advertising revenues were up a marginal 1% in the quarter to $644 million. Ad engagements increased 75% year over year. However, cost per ad engagement was down 42%, given the shift to auto-play video, which has a lower cost-per-view compared to click-to-play.
Video ads continue to be the key driver backed by strength in Video Website Cards, Video App Cards, In-Stream Sponsorships, and In-Stream Video Ads. By channel, brand marketing continues to be the primary contributor to the company’s revenues.
Data licensing and other revenues increased 10% to $87 million, driven by data and enterprise solutions (DES). New tiered product and channel strategy helped it win new enterprise deals in fourth quarter.
Twitter earned nearly 44.5% of its revenues from international markets. International revenues increased 17% year over year to $326 million in the reported quarter while U.S. revenues decreased 8% year over year to $406 million.
The company believes that continued strength in Asia Pacific coupled with improvement in certain EMEA markets backed growth in international markets. Notably, Japan grew 34% year over year and generated 15% of total revenues.
In the quarter, total expenses declined 14% year over year to $511 million. Twitter’s adjusted EBITDA rose 43% to $308 million and adjusted EBITDA margin was 42%. For the first time, the company achieved its long-term EBITDA margin target range of 40-45%.
The company reported a pre-tax income of $93.5 million against a pre-tax loss of $162.2 million in the year-ago quarter.
Twitter, Inc. Price, Consensus and EPS Surprise
Twitter, Inc. Price, Consensus and EPS Surprise | Twitter, Inc. Quote
Balance Sheet & Cash Flow
As of Dec 31, 2017, cash and cash equivalents (short-term investments) were $4.4 billion compared with $4.3 billion at the end of Sep 30, 2017. For the quarter, cash flow from operations was $198.1 million and adjusted free cash flow was $135.3 million.
Outlook
For the current quarter, adjusted EBITDA is expected to be in the range of $185–$205 million while EBITDA margin is likely to be in a band of 33–34%.
For fiscal 2018, Twitter expects capital expenditures to be in the range of $375-$450 million.
Zacks Rank and Stocks to Consider
Twitter carries a Zacks Rank #2 (Buy).
Better-ranked stocks in the broader technology sector are Micron Technology Inc. (MU - Free Report) , Lam Research Corporation (LRCX - Free Report) and The Trade Desk Inc. (TTD - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Micron, Lam Research and The Trade Desk is projected to be 10%, 14.9% and 25%, respectively.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>