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Friday, July 27, 2018

Twitter (TWTR) reported earnings on Fri 27 July 2018 (b/o)

** charts before earnings **


** charts after earnings **


Twitter beats by $0.01, beats on revs; guides Q3 Adj-EBITDA below estimates, cautions on MAUs 
  • Reports Q2 (Jun) earnings of $0.17 per share, excluding non-recurring items, $0.01 better thanthe Capital IQ Consensus of $0.16; revenues rose 23.8% year/year to $710.54 mln vs the $697.35 mln Capital IQ Consensus.
  • Adjusted EBITDA for Q2 was $265 million, or 37% of total revenue, vs. estimates for $261 mln. The co continues to expect full year adjusted EBITDA margin expansion in 2018 due to the significant margin expansion they delivered in the first half of the year. As the co continues to grow its headcount toward the year-end target of 10-15%, the co expects operating expense base to continue to grow in Q3 and again in Q4.
  • Overall growth in engagement was driven by a combination of organic growth, marketing, and product improvements. DAU grew 11% year-over-year in Q2, with double-digit growth in five out of the co's top 10 global markets, demonstrating another quarter of broad-based growth. Average MAUs were 335 million for Q2, an increase of 9 million year-over-year and a decrease of 1 million quarter-over-quarter, reflecting impact from decisions the co has made to prioritize the health of the platform, to not move to paid SMS carrier relationships in certain markets and, to a lesser extent, GDPR. In aggregate, these factors reduced MAU by more than 3 million in Q2. Average US MAUs were 68 million for Q2, compared to 68 million in the same period of the previous year and compared to 69 million in the previous quarter. Average international MAUs were 267 million for Q2, compared to 258 million in the same period of the previous year and compared to 267 million in the previous quarter. The co's DAU/MAU ratio remains well below 50%.
  • Additional Commentary:
    • As we began 2018, we made deliberate decisions to allocate product and engineering resources that had previously been focused on product improvements designed to deliver growth in audience and engagement to projects related to preparing for GDPR and broader platform health. This prioritization impacts growth in the near term, but we are confident that this is in the best long-term interest of the platform and will enable long-term growth as we improve the health of the public conversation on Twitter and over time reallocate teams from GDPR to other priorities and hire additional product and engineering resources.
    • We may also choose to not move to paid SMS carrier relationships in certain markets where we believe we can deliver a better Twitter experience with Twitter or Twitter Lite. While the magnitude of any potential future impact is difficult to predict, DAU will not be affected because DAU only includes accounts on our owned and operated services such as the Twitter app and
    • As a result of our health work, decisions not to renew or move to paid SMS carrier relationships in certain markets, and our decision to allocate resources towards GDPR and health, MAU could decline on a sequential basis in Q3. Based on our current level of visibility, we expect the decline to be mid-single-digit millions of MAU. As a reminder, DAU growth continues to be the best measure of our success in driving the use of Twitter as a daily utility.
  • Sees Q3 Adj-EBITDA of $215-235 mln vs. estimates for ~$268 mln; Adjusted EBITDA margin to be between 33% and 34%

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