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Twitter Q2 earnings call a mixed bag — revenues up by 20%, user-base continues to stagnate

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Times continue to be tough for twitter. The micro-blogging site today announced its latest earnings report, and showed once again, that both — its user-base and revenues, continue to be a dwindling affair.

Twitter reported a total revenue of $602 million this quarter, which is a 20 per cent growth from the $595 million it made the previous quarter. While revenues are on a high, it has again seen a huge spike in net losses amounting to $107 million. This figure had previously narrowed to $79 million in the previous quarter.

This could be attributed to the content and brand partnerships to live-stream NFL and Wimbledon on the platform. Also, Twitter is now stepping foot into the VR and AI world with acquisition of startups like Magic Pony and IXOMOXI.

While the revenues of the company are up by 20%, it has missed market estimates on sales and non-GAAP EPS. This quarter added a non-GAAP net income of only $93 million, and the non-GAAP diluted earnings per share(EPS) has fallen to 13 cents per share, as compare to 15 cents in the last one.

The most pressing concern however, continues to remain Twitter’s user growth, which continues to remain  stagnant even this quarter. The company added 3 million new users to its platform in the most recent quarter, up just 1% from the previous one. The total number of monthly active users visiting the platform now adds upto 313 million, which is only 3 million more than the previous three-month period.

On taking a closer in-depth look at the revenues, we notice that a major chunk of money earned by the micro-blogging service comes from advertising. This quarter saw a 20 per cent increase in advertising revenue, amounting to a massive $585 million. Also, more than 89 per cent of the same is attributed to mobile advertising. Mobile also accounted for over 82% of total MAUs on the platform.

In the official earning call release, Twitter adds that,

We saw continued increases in engagement, and sequential growth in both monthly active and daily active usage. This growth was driven by marketing initiatives, organic growth and product improvements, including better relevance in both the enhanced timeline and push notifications.

Since the engagements on the platform peaked this quarter, the cost per engagement fell 64 per cent for an year-on-year basis.

Twitter has been around for over 10 years, but it still stands on a very shaky ground and takes baby steps into transforming it’s platform. The market analysts believed that return of co-founder Jack Dorsey at the helm of the company would be a positive and refreshing change, but as you can see above — it has pretty damm slow. Dorsey, who is now ready to step into his second year as CEO has introduced some major changes to make Twitter appeal to a larger audience.

Dorsey commented on this quarter’s earning call saying that,

We’ve made a lot of progress on our priorities this quarter. We are confident in our product roadmap, and we are seeing the direct benefit of our recent product changes in increased engagement and usage. We remain focused on improving our service to make it fast, simple and easy to use, like the ability to watch live-streaming video events unfold and the commentary around them.

The micro-blogging service has recently re-iterated it’s message on what the platform is all about and the tagline that perfectly sums up the micro-blogging service is – “Twitter is what’s happening now.” Whether it’s breaking news, entertainment, sports, or other everyday topics, seeing what’s happening and watching live events unfold with the conversations around them, Twitter is the first spot to visit to know it all. The company has laid out five key objectives for its growth in the coming years – refining our core service, live-streaming video, creators and influencers, safety, and developers.

Twitter has recently adopted an algorithmic timeline, very much like Facebook, which shows you relevant tweets at top when you return to the platform. It has made several changes to its confusing 140-character limited tweet features, wherein photos and mentions will no longer count towards the total character limit. It has also introduced Moments to highlight the best news on the platform, while curbing harrestment issues as well.

This past quarter, however, Twitter has also diverted it’s focus towards businesses and added a couple new services to it arsenal in the form of Engage and Dashboard. But, still the uaer growth and revenues have been almost stagnant and don’t seem to be picking up pace anytime soon. It all now depends on Dorsey’s bold outlook, who is trying to revive his brain-child and transform it into becoming a leading social network again.

A hands-on guy fascinated by new apps, technologies and enterprise products.

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