1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Articles (1316) 

Twitter Posts A Decent Top-Line Though Bottom-line Remains Weak

August 19, 2014 | About:

Twitter (NYSE:TWTR) posted its second-quarter earnings on July 29, beating analysts’ estimates by posting record revenue figures in the quarter. There was growth visible in the social network’s user base which showed a tremendous rise during the quarter. However, the profits were low and still remain a concern for the management.

Let’s get into the number mix to have a better insight of the company financials and to judge the overall performance of Twitter.

Monthly active user count increase

During the second quarter, Twitter added 16 million active users. Though this number is in no way comparable to the 40 million users added to Facebook’s (NASDAQ:FB) account in its second quarter, it was the highest rise in total within the past five quarters of Twitter. In percentage terms, the user growth witnessed in this quarter was nearly 6.3%, building on the 5.8% and 3.87% growth in the past two quarters.

As of June 30, the average monthly active users (MAUs) were 271 million, an increase of 24% year over year. Indeed, the new product experiences launched during the World Cup that included real-time scoring, push notifications, event and match timelines and a voting ballot feature aided in improving the visits to Twitter on a daily basis.

Revenue shows steep incline

Twitter’s CEO, Dick Costolo commented during the earnings call, “We had a very strong first quarter. Revenue growth accelerated on a year over year basis fueled by increased engagement and user growth. We also continue to rapidly increase our reach and scale.”

Revenue for the quarter increased by a whopping 124% to $312.2 million from $139.3 million reported a year ago. This sharp rise in the revenue was driven by a rise in advertising revenue which showed a boost of around 129% year over year reaching $277 million. Nearly 81% of the advertising revenue was achieved through mobile ads in the quarter. Also interestingly, both the ad and overall revenue numbers beat analysts’ estimate of about $260 million and $283.1 million for the quarter

The data licensing and other revenue totaled $35 million, up 90% from that reported a year earlier driven by acquisitions such as the recent acquisition of data partner Gnip.

As international monthly active user count improved cumulatively to 211 million after this quarter, it led to a rise in international revenue which spiked 168% to total $102 million in the quarter. Remarkably, the international revenue contributed around 33% to the overall revenue earned during the second quarter.

Still not profit making

Using generally accepted accounting principles (GAAP), the social network site has actually lost $145 million in the quarter, which translates to $0.24 per share. This GAAP net loss included $158 million of stock-based compensation expense. The operating expenses were $44 million spent on property and equipment purchase during the quarter.

Howover, the earnings per share has fared better than last year’s similar quarter. The profit per share stood at ($0.24) for the quarter when compared to ($0.32) in the year ago period. However, the non GAAP EPS was positive at $0.02 for the second quarter compared to ($0.12) a year ago.

Also the cash balance as of June 30 was approximately $2.1 billion, a 5% decline from that held in the similar quarter of the previous year.

Final word

Twitter has to adapt its management strategies to win more customer base to gain market share in the social networking kingdom where it’s still trailing far behind Facebook. Also the company needs to churn our profits to benefit the investors in the long-run. As per ad analysis firm e-Marketer, Twitter accounts for about 2.4% of the total mobile ad market. Therefore, to catch up further with Facebook it has to concentrate in earning solid profits besides generating robust sales. Let’s stay tuned and keep watching Twitter’s forthcoming moves.

About the author:

We are a group of analysts exploring and analyzing different domains of business and writing reviews based on information available in public domain web portals. We do not hold any stock or investment position in any of the companies that we write for.

Rating: 0.0/5 (0 votes)


Please leave your comment:

Performances of the stocks mentioned by reports.droy

User Generated Screeners

rael2222TOP TOP 3
Saab HoldingsSaab other
ky_chuiProfile 1
mjspencermmm screen
browntroutFwd PE <=9, Gross Margin >= 25
gelayor65All Stocks With Blackrock Heav
jan.ellsbergerHernhag rev5
jan.ellsbergerHernhag rev4
jan.ellsbergerHernhag rev3
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat