Q2 2016 – Twitter Earnings Call Summary

Twitter

Below are my key takeaways from the Twitter Q2 2016 Earnings Call on July 26:

Summary:

Jack Dorsey, CEO, said “What makes our audience growth this quarter notable is we can see directly the link between the product changes we made and our growth.”

Revenue in the quarter grew 20% YoY to $602MM, with advertising making up 89% at $535MM and data licensing and other revenue making up the other $67MM.  Mobile ads made up 89% of all advertising dollars.

Total US revenue was $361MM (60% of total), an increase of 12% over Q2 2015. International grew by 33% YoY to $241MM.

US ad revenue was up 9% YoY to $313MM, but down 9% sequentially.  International ad revenue grew 34% YoY to $222M and 18% from the previous quarter.

Globally, average monthly active users (MAUs) were 313MM, an increase of 3% YoY. MAUs for the US were 66MM, up only 1% from last year.  International MAUs were 247MM in the quarter, up 4% YoY.

Below are 5 key areas of focus for Twitter’s long term strategy and their Q2 executions:

  1. Refine Core Service: Product improvements are seeing good results.  A new Connect tab provides better recommendations, so you’re following more relevant accounts.  The launch of #Stickers allows users to decorate their photos with accessories, emojis and other props.
  2. Live Streaming: Periscope users are no longer limited to 24 hours of live streaming and launched Highlights, which automatically creates a short trailer of each Periscope replay. Acquired a London-based machine learning company called Magic Pony, which helps stream high quality video at lower bandwidth.  Streamed 3 live events: Wimbledon and both political conventions (though technically in Q3)
  3. Creators and Influencers: Tapping on a video in the timeline, now brings it to full screen.  Launched Twitter Engage, an iOS app that provides real-time data and insight from your twitter audience.  Increased video length from 30 to 140 seconds.
  4. Safety: Launched a comment moderation system on Periscope and improved blocking unwanted interactions on Twitter.
  5. Developers: Nearly doubled the number of developers using Fabric, Twitter’s mobile development platform.

Financial Metrics:

  • Total Revenue: $602MM
    • Q2 2015: $502MM
    • Q1 2016: $595MM
  • Total Net Loss: -$107MM
    • Q2 2015: $-137MM
    • Q1 2016: -$80MM
  • Total Adjusted EBITDA: $175MM
    • Q2 2015: $120MM
    • Q1 2016: $180MM
  • Total Net Income: $93MM
    • Q2 2015: $49MM
    • Q1 2016: $103MM
  • Free Cash Flow: $154MM
    • Q2 2015: -$8MM
    • Q1 2016: $99MM
  • Advertising Revenue: $535MM
    • Q2 2015: $452MM
    • Q1 2016: $513MM
  • Data Licensing Revenue: $67MM
    • Q2 2015: $50MM
    • Q1 2016: $64MM
  • US Ad Revenue: $313MM
    • Q2 2015: $286MM
    • Q1 2016: $343MM
  • International Ad Revenue: $222MM
    • Q2 2015: $166MM
    • Q1 2016: $188MM

Other Key Metrics:

  • Global Monthly Active Users: 313MM, +3% YoY
    • Q2 2015: 304MM
    • Q1 2016: 310MM
  • US Monthly Active Users: 66MM, +1% YoY
    • Q2 2015: 65MM
    • Q1 2016: 65MM
  • International Active Users: 247MM, +4% YoY
    • Q2 2015: 239MM
    • Q1 2016: 245MM
  • Total Ad Engagements +226% YoY
  • Cost Per Engagement -64% YoY

List of Key Properties:

Forward Thinking:

  • Live-Streaming Video: will partner with Bloomberg TV, Campus Insiders, MLB, NBA, NHL and NFL later in the year
  • Upcoming improvements: @names in replies and media attachments (e.g. photos, GIFs and videos) will no longer count toward your 140 character count3

Links to Company Website:

Please comment below if there are data points from Twitter you’d like me to include in their next Earnings Call Summary.

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