Stunted user growth wrecks Twit­ter earn­ings

Financial Mirror (Cyprus) - - FRONT PAGE -

Twit­ter, Inc. (NYSE: TWTR) re­ported its third-quar­ter earn­ings after the mar­ket closed on Mon­day as $0.01 in earn­ings per share and $361 mln in rev­enue against Thom­son Reuters con­sen­sus es­ti­mates of $0.01 in earn­ings per share and $351.35 mln in rev­enue.

The company has guid­ance for the fourth quar­ter of $440-450 mln in rev­enue. The con­sen­sus earn­ings es­ti­mate for rev­enue in the fourth quar­ter is $448.18 mln. On the 2014 full year, Twit­ter ex­pects rev­enues of $1.36-1.37 bln against a con­sen­sus es­ti­mate of $1.36 bln. Net in­come for the third quar­ter was $6.97 mln com­pared to a net loss in the third quar­ter of the pre­vi­ous year of $17.2 mln.

Av­er­age Monthly Ac­tive Users (MAUs) to­talled 284 mln for the third quar­ter which was an in­crease of 23% year over year. The av­er­age mo­bile MAUs rep­re­sented about 80% of all MAUs.

Se­quen­tial growth in monthly users slowed from 6.3% in the sec­ond quar­ter to 4.8% in the third quar­ter. The 284 mln MAUS was to­ward the low end of the an­a­lysts’ es­ti­mate of 280 to 288 mln.

Time­line views reached 181 bln for the third quar­ter, record­ing an in­crease of 14% year over year. Ad­ver­tis­ing rev­enue per thou­sand time­line views reached $1.77 which was an in­crease of 83% from last year.

Rev­enues were dis­trib­uted over th­ese seg­ments: ad­ver­tis­ing rev­enue to­talled at $320 mln and mo­bile ad­ver­tis­ing rev­enue made up 85% of it; data li­cens­ing and other rev­enue to­talled $41 mln, an in­crease of 171% from the pre­vi­ous year; in­ter­na­tional rev­enue to­talled at $121 mln, 34% of to­tal rev­enue and an in­crease of 176% from the pre­vi­ous year.

Brand Keys ranked Twit­ter in the top 20 brand loy­alty lead­ers. This list spanned 65 prod­uct cat­e­gories and 721 brands. The list noted that out of the top 20 stocks, only one was not a tech company.

“We had another very strong fi­nan­cial quar­ter. I’m con­fi­dent in our abil­ity to build the largest daily au­di­ence in the world, over time, by strength­en­ing the core, re­duc­ing bar­ri­ers to con­sump­tion and build­ing new apps and ser­vices,” said Dick Cos­tolo, CEO of Twit­ter.

Cit­i­group ini­ti­ated cov­er­age on Twit­ter with a Neu­tral rat­ing and a $53 price tar­get, on Oc­to­ber 21. Twit­ter was raised to Over­weight from Neu­tral and the price tar­get was set at $64 (ver­sus a $50.06 clos­ing price) at J.P. Mor­gan, on Oc­to­ber 2. The call was based on a belief that Twit­ter will con­tinue to add new users and that it will be able to mon­e­tise the shift to­ward mo­bile ad­ver­tis­ing.

Shares of Twit­ter closed on Mon­day down 2.7% at $48.56. Fol­low­ing the earn­ings re­port, the ini­tial re­ac­tion in the after-hours mar­ket has been neg­a­tive and shares were down over 9% at $44.12.

The company’s stock has a con­sen­sus an­a­lyst price tar­get of $54.82 and a post-IPO trad­ing range of $29.51 to $74.73. It has a mar­ket cap of around $29 bln.

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