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Twitter (TWTR) to Report Q4 Earnings: What's in the Cards?

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Twitter (TWTR - Free Report) is set to report fourth-quarter 2019 results on Feb 6.

The company expects fourth-quarter 2019 total revenues between $940 million and $1.01 billion. The Zacks Consensus Estimate for revenues stands at $997.4 million, indicating an increase of 9.7% from the year-ago quarter’s reported figure.

Meanwhile, the consensus mark for fourth-quarter earnings has been steady at 28 cents over the past 30 days, implying a decline of 9.7% from the year-ago quarter’s reported figure.

Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in the last-reported quarter, the average positive surprise being 17.8%.

Twitter, Inc. Price and EPS Surprise


Twitter, Inc. Price and EPS Surprise

Twitter, Inc. price-eps-surprise | Twitter, Inc. Quote

Let’s see how things are shaping up for the upcoming announcement.

Factors to Consider

Twitter’s first-quarter top line is expected to have been negatively impacted by glitches in its ad platform and higher-than-expected seasonality apart from stiff competition from the likes of Facebook, Google and Amazon for ad-dollars.

Nevertheless, the company’s initiatives to add features and focus on tackling abuse issues are expected to have helped it expand the monetized user base in the to-be-reported quarter.

Global availability of author-moderated replies during the quarter is likely to have reduced abuse on the platform. Twitter’s improved ability to proactively identify and remove abusive content from the platform is a notable development in this regard.

The company also launched the Twitter Privacy Center to provide more clarity around what Twitter is doing to protect the information users sharing with it.

Moreover, the launch of Topics during the quarter is expected to have improved user engagement. Notably, Topic suggestions appear in a user’s timeline and search bar based on what the user usually looks up and follows on Twitter.

Notably, average monetizable daily active users (mDAU) totaled 145 million in the third quarter compared with 124 million in the year-ago quarter and 139 million in the previous quarter.

The company has also unveiled policies to ban political ads, which are expected to boost trustworthiness of the platform. However, this is expected to have hurt advertising revenues in the to-be-reported quarter.

Nonetheless, continued strong demand for video ad products like Video Website Cards and in-stream pre-roll is likely to have contributed to the top line.

The Zacks Consensus Estimate for advertising revenues is pegged at $865 million, indicating growth of 9.4% from the year-ago quarter’s reported figure.

What Our Model Says

According to the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of a positive earnings surprise. But that’s not the case here.

Twitter has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Perion Network (PERI - Free Report) has an Earnings ESP of +22.58% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.    

Bruker Corporation (BRKR - Free Report) has an Earnings ESP of +0.86% and a Zacks Rank #2.

CDW Corporation (CDW - Free Report) has an Earnings ESP of +2.34% and a Zacks Rank #2.

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