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Is Twitter Ready For A Great Climb?

August 06, 2014 | About:
Suravi Thacker

Suravi Thacker

1 followers

Twitter (TWTR) seems to be facing a lot of competitive pressure from social networking site Facebook (FB), which has been performing quite better than the former. This was once again affirmed when both the companies reported its second quarter results recently. Although both the companies did well, Facebook outperformed Twitter. Let us take a look.

A glimpse of the performance

Twitter’s revenue for the quarter surged 124% to $312 million. Also, this was higher than the analysts’ expectations of $283 million. Also, the company’s MAU increased 6.3% to 271 million, higher than the estimate of 256.6 million. Also, Timeline Views rose 15% to 173 billion views, over the prior year’s quarter.

One of the biggest strengths of Twitter had been advertising. Advertising revenue, which makes 90% of the top line, grew 129% to $277 million, over last year. However, price of ads has been on a decline. In fact, ad revenue per MAU is $0.91 for Twitter and is $1.91 for Facebook. This shows the huge gap between the two rivals.

The bright spot

Further, Mobile advertising has become very popular these days and makes 81% of total advertising revenue of Twitter. A host of efforts is put into this category in order to take advantage of consumers’ shift to mobile. Therefore, it launched Twitter’s mobile app-install ad, which helped in earning more from travel, gaming and e-commerce business. Further, it made a number of acquisitions to strengthen this segment.

It acquired MoPub in October 2013. MoPub is an advertising exchange, which helped the company strengthen its mobile advertising business. It also bought TapCommerce, which specializes in targeting potential customers after they have downloaded the app, this quarter so that it can reach out to potential customers easily.

An increase in the number of users has been always a boon to such companies and Twitter did it by adding 3 million customers this quarter. Also, its monthly active users climbed 6% to 255 million this quarter. A key driver this time was the FIFA World Cup, which led to higher customer engagement. In fact, there were changes made to the interface so that it is easier for people to log in to Twitter and get World Cup updates. A record of 672 million tweets was sent during the World Cup tournament 2014.

Even Facebook benefitted from this event and this was clearly evident from its recently reported numbers. Its revenue jumped 66% to $2.9 billion, over last year. Also, its MAUs rose 82% and mobile engagement increased to 61.1% from 57.3% last year.

However, both the companies witnessed its highest growth in the Asia Pacific region. Facebook registered a growth of 75% in the region as its daily active users rose 26%. Similarly, Twitter posted an increase of 33% in Asia Pacific region. Further, it expects the region to make one-third of its total revenue by the end of this year.

Final words

Therefore, it seems that Twitter is doing pretty well. It is witnessing a continuous increase in its key metrics, including the top line and the bottom line. Moreover, it raised its guidance for the year to a revenue range of $1.31 billion to $1.33 billion. This shows that the company is optimistic about its future. Further, its efforts in the mobile advertising segment and the growing Asia Pacific market makes me believe in Twitter’s growth prospects.


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