Twitter Crushes Analyst Expectations but Gives Lower Revenue Guidance for Next Quarter

Twitter beats revenue expectation of $776.1 Mn by reporting $787 Mn for the first quarter of 2019.

Popular US social networking service, Twitter saw its stock soaring 15.6% after it released its earnings results for the first quarter of 2019. As per the results, the company comfortably surpassed the expectations of analysts in the first quarter. It announced that the first quarter was the last one for which it reported its monthly active users (MAUs). From the next quarter onward, it will begin reporting monetizable daily active users (mDAUs), which according to the company will reflect its audience in a better way. Earnings in the first quarter helped the company to add $4.1 Bn to its market capitalization, pushing it to $30.5 Bn.

Jack Dorsey, CEO of Twitter, said that the prototype app Twttr is showing promising results. “Generally, most of the users that have been testing Twttr have shown preference for the prototype app over Twitter, i.e. the main production app. So it has shown that our company is heading in the right direction. However, before our company feels confident of putting it in production, we still have some work to do,” said Dorsey (source).

Q1 2019 MAUs excluding SMS Users: 330 Mn, beating the expected 318 Mn

Q1 2019 Revenue: $787 Mn, beating the expected $776.1 Mn

Q1 2019 Adjusted Earnings: 37 cents per share, beating the expected 15 cents per share

For the first quarter of 2019, Twitter reported 28 Mn average mDAUs in the US. A year ago, this metric was slightly lower, i.e. 26 Mn. Globally, mDAUs reached 105 Mn on average in the first quarter. In the same quarter of the previous year, this metric was also lower, i.e. 94 Mn. So the average mDAUs reported for the first quarter were 134 Mn, which is a higher metric compared to the year-ago quarter’s 120 Mn. The number of mDAUs had reached 126 Mn in the fourth quarter of 2018.

Twitter planned to shift to a new metric after the number of its MAUs dropped below the expectations of analysts for two consecutive quarters in the last fiscal year. Previously, the company mentioned the removal of locked accounts in July 2018 as a reason for the drop in MAUs. The accounts were purged to clean up the social networking platform by means of removing fake users and bots. MAUs reported for the first quarter reflect a Y-o-Y drop of 6 Mn.

Twitter’s stock did not perform well when the company had announced light guidance for the first quarter of 2019. This was after the company had reported its results for the fourth quarter of 2018. Nevertheless, over a period of past 12 months, the stock is still up approximately 10%. As for the second quarter of 2019, the company expects revenue to stay between $770 Mn and $830 Mn, which is lower than the analyst expectation of $783.9 Mn to $853.6 Mn.