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Twitter (TWTR) Q2 Earnings Beat, User Base Down Sequentially
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Twitter reported second-quarter 2018 non-GAAP earnings of 17 cents per share, which was in line with the Zacks Consensus Estimate, but much better than 8 cents reported in the year-ago quarter.
Revenues of $711 million increased 24% from the year-ago quarter and beat the consensus mark of $700 million. Excluding almost $14-million impact of the winding down of the TellApart business, revenues surged 27%. FIFA World Cup contributed almost $30 million to revenues.
In second-quarter 2018, Twitter’s adjusted monthly average users (MAUs) totaled 335 million, up from 326 million in the year-ago quarter but down 1 million sequentially.
U.S. MAUs of 68 million decreased 1 million sequentially but remained flat on a year-over-year basis. International MAUs of 267 million increased by 9 million from the year-ago quarter but remained flat sequentially.
Average Daily Active Users (DAUs) were up 11% year over year, driven by double-digit growth in five out of the top 10 global markets.
Advertising revenues increased 23% year over year to $601.1 million. Owned-and-operated advertising revenues soared 29% to $564 million.
Ad engagements increased 81% year over year. Clickthrough rates (CTR) grew on a year-over-year basis across the majority of ad types as ad relevance continues to improve. Cost per ad engagement was down 32%.
Video ads accounted for more than half of ad revenues and remained Twitter’s fastest-growing ad format. Strength was witnessed in Video Website Cards, Video App Cards, In-Stream pre-roll and mid-roll ads during the quarter.
Twitter signed 50 new live-streaming, highlight, Amplify, and video-on-demand agreements in the second quarter, including ESPN, NBCUniversal and Viacom .
Data licensing and other revenues rose 29% to $109.5 million, driven by strength in Data and Enterprise solutions (DES).
U.S. revenues (52% of revenues) increased 10% year over year to $366.7 million. Advertising revenues from the United States totaled $293 million, up 9% year over year.
International revenues (48% of revenues) soared 44% year over year to $343.9 million in the reported quarter. International ad revenues increased 40% year over year to $308 million on the back of strong growth in the Asia-Pacific region. Management attributed this to video growth in Japan and performance of ad products in China export market.
Notably, revenues in Japan, the second largest revenue generator, grew 65% year over year to $122 million.
Twitter incurred non-GAAP expenses of $546.8 million, which increased 12.8% on a year-over-year basis. Traffic acquisition costs (TAC) were approximately $16 million, down 39% due to the TellApart deprecation.
Adjusted EBITDA increased 48.9% to $264.8 million. Adjusted EBITDA margin expanded 600 basis points year over year to 37%.
Outlook
Twitter believes the growth rate of international ad revenues will continue to outpace the U.S. ad revenues in the near term.
For the current quarter, adjusted EBITDA is expected in the range of $215-$235 million while EBITDA margin is likely to be in the band of 33-34%.
Moreover, the company continues to grow its headcount toward its year-end target of 10-15%. Management expects operating expenses to continue to rise in the third and fourth quarter.
Twitter still expects adjusted EBITDA margin to expand in 2018. Moreover, capital expenditure is expected in the range of $450-$500 million.
Vishay is set to report results on Aug 7, while Upland is scheduled to report on Aug 8.
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Twitter (TWTR) Q2 Earnings Beat, User Base Down Sequentially
Twitter reported second-quarter 2018 non-GAAP earnings of 17 cents per share, which was in line with the Zacks Consensus Estimate, but much better than 8 cents reported in the year-ago quarter.
Revenues of $711 million increased 24% from the year-ago quarter and beat the consensus mark of $700 million. Excluding almost $14-million impact of the winding down of the TellApart business, revenues surged 27%. FIFA World Cup contributed almost $30 million to revenues.
In second-quarter 2018, Twitter’s adjusted monthly average users (MAUs) totaled 335 million, up from 326 million in the year-ago quarter but down 1 million sequentially.
U.S. MAUs of 68 million decreased 1 million sequentially but remained flat on a year-over-year basis. International MAUs of 267 million increased by 9 million from the year-ago quarter but remained flat sequentially.
Average Daily Active Users (DAUs) were up 11% year over year, driven by double-digit growth in five out of the top 10 global markets.
Twitter, Inc. Price, Consensus and EPS Surprise
Twitter, Inc. Price, Consensus and EPS Surprise | Twitter, Inc. Quote
Quarter Details
Advertising revenues increased 23% year over year to $601.1 million. Owned-and-operated advertising revenues soared 29% to $564 million.
Ad engagements increased 81% year over year. Clickthrough rates (CTR) grew on a year-over-year basis across the majority of ad types as ad relevance continues to improve. Cost per ad engagement was down 32%.
Video ads accounted for more than half of ad revenues and remained Twitter’s fastest-growing ad format. Strength was witnessed in Video Website Cards, Video App Cards, In-Stream pre-roll and mid-roll ads during the quarter.
Twitter signed 50 new live-streaming, highlight, Amplify, and video-on-demand agreements in the second quarter, including ESPN, NBCUniversal and Viacom .
Data licensing and other revenues rose 29% to $109.5 million, driven by strength in Data and Enterprise solutions (DES).
U.S. revenues (52% of revenues) increased 10% year over year to $366.7 million. Advertising revenues from the United States totaled $293 million, up 9% year over year.
International revenues (48% of revenues) soared 44% year over year to $343.9 million in the reported quarter. International ad revenues increased 40% year over year to $308 million on the back of strong growth in the Asia-Pacific region. Management attributed this to video growth in Japan and performance of ad products in China export market.
Notably, revenues in Japan, the second largest revenue generator, grew 65% year over year to $122 million.
Twitter incurred non-GAAP expenses of $546.8 million, which increased 12.8% on a year-over-year basis. Traffic acquisition costs (TAC) were approximately $16 million, down 39% due to the TellApart deprecation.
Adjusted EBITDA increased 48.9% to $264.8 million. Adjusted EBITDA margin expanded 600 basis points year over year to 37%.
Outlook
Twitter believes the growth rate of international ad revenues will continue to outpace the U.S. ad revenues in the near term.
For the current quarter, adjusted EBITDA is expected in the range of $215-$235 million while EBITDA margin is likely to be in the band of 33-34%.
Moreover, the company continues to grow its headcount toward its year-end target of 10-15%. Management expects operating expenses to continue to rise in the third and fourth quarter.
Twitter still expects adjusted EBITDA margin to expand in 2018. Moreover, capital expenditure is expected in the range of $450-$500 million.
Zacks Rank and Other Stocks to Consider
Twitter sports a Zacks Rank #1 (Strong Buy).
Vishay Intertechnology (VSH - Free Report) and Upland Software (UPLD - Free Report) are stocks worth considering in the broader computer & technology sector. Both stocks sport the same Zacks Rank as Twitter. You can see the complete list of today’s Zacks Rank #1 stocks here.
Vishay is set to report results on Aug 7, while Upland is scheduled to report on Aug 8.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>