Twitter (TWTR) is scheduled to report results of its second fiscal quarter after the market close on Thursday, July 22, with a conference call scheduled for 6:00 pm ET. What to watch:
1. USER METRICS: Twitter's monetizable daily active usage, or mDAU, is a closely watched measure of its popularity and growth potential. Last quarter, the company reported global monetizable daily active usage increased 4% sequentially to 199M and 20% year-over-year, while the company's U.S. base rose 1% sequentially to 38M, an increase of 13% year-over-year. “People turn to Twitter to see and talk about what’s happening, and we are helping them find their interests more quickly while making it easier to follow and participate in conversations,” said Jack Dorsey, Twitter’s CEO, at the time. “Average monetizable DAU reached 199 million, up 20% year over year and up 7 million sequentially, driven by ongoing product improvements and global conversation around current events.”
2. AD REVENUE: In Q1, the company reported ad revenue of 899M, up 32% year-over-year or 30% on a constant currency basis. The company also reported total ad engagements rose 11% year-over-year and cost per engagement increased 19% year-over year. “Q1 was a solid start to 2021, with total revenue of $1.04 billion up 28% year-over-year, reflecting accelerating year-over-year growth in MAP revenue and brand advertising that improved throughout the quarter,” said Ned Segal, Twitter’s CFO, at the time. “Advertisers continue to benefit from updated ad formats, improved measurement, and new brand safety controls, contributing to 32% year-over-year growth in ad revenue in Q1.”
3. GUIDANCE: Along with Q1 earnings, Twitter guided to Q2 revenue between $980M and $1.08B and GAAP operating loss to be between $170M and $120M. Revenue consensus which was $1.06B at the time of earnings has remained in place.
4. ACQUISITIONS: Twitter plans to acquire the subscription service Scroll, Mike Park, Twitter's vice president for product, said in a May blog post announcing the deal. Park said: "People come to Twitter every day to discover and read about what's happening. Publishers, journalists, and writers drive this conversation, keeping the world informed and igniting discussions around the news, issues, and topics we collectively care about. If Twitter is where so much of this conversation lives, it should be easier and simpler to read the content that drives it." Park added: "We plan to include Scroll as part of an upcoming subscription offering we're currently exploring. As a Twitter subscriber, picture getting access to premium features where you can easily read articles from your favorite news outlet or a writer's newsletter from Revue, with a portion of your subscription going to the publishers and writers creating the content."
5. NEW FEATURES, INITIATIVES, PARTNERSHIPS: In April, Nielsen and Twitter announced the expanded integration of Nielsen's audience measurement and outcomes cross-media solutions into Twitter's video ad platform. Additionally in April, the company announced it is building a team in Ghana to establish a presence in Africa and launched its Responsible Machine Learning initiative as part of efforts to improve ML algorithms. The company also announced it April it was testing a new profile type called Professional Profiles for businesses, non-profits, publishers and creators. In May, Twitter announced it was making improvements to offensive tweet warnings and launched a direct message search bar for Android. The company also began rolling out a new verification application process in May. In June, the company announced the debut of Birdwatch fact checking in tweets and launched subscription offering ‘Blue’ in Australia and Canada.
6. ANALYST VIEW: In July, JPMorgan analyst Doug Anmuth said he continues to like both Twitter and Snap (SNAP) but he prefers the former's stock into next week's earnings results. Twitter remains one of his top picks overall based on the "sharp" advertising revenue acceleration near-term, "solid" engagement with product improvements, and activist pressure driving operational discipline. Into the Q2 print Anmuth does not believe Twitter shares are well-owned, adding "healthy skepticism around execution remains." He thinks Snap shares are generally better owned than those of Twitter, but remains constructive on Snap into the print, expecting upside to the high end of revenue guidance. Both stocks remain Overweight rated by Anmuth. Meanwhile, Jefferies analyst Brent Thill raised the firm's price target on Twitter to $70 from $62 and keeps a Hold rating on the shares ahead of earnings season from the digital ads group. He expects revenue beats "across the board," but with the digital ad peer group up 27% year-to-date he favors selectivity and would own Facebook (FB) and Alphabet (GOOG, GOOGL), Thill tells investors. While he favors Snap over Twitter for the long term, he likes Twitter's near-term set-up given returning brand spend and positive channel checks, Thill said. He keeps a Buy rating and $81 price target on Snap shares.
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