The Q3 Earnings Season – Twitter

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By: Ahura Chalki

Twitter’s (TWTR) third-quarter report of 2019 will be published later today, 24 October 2019. The company expects third-quarter 2019 total revenues between $815 million and $875 million. The Zacks Consensus Estimate for revenues stands at $876.3 million, indicating an increase of 15.6% from the year-ago quarter’s reported figure. Meanwhile, the consensus mark for third-quarter earnings has been steady at 20 cents over the past 30 days.

Twitter is an online platform created in March 2006 by Jack Dorsey, Noah Glass, Biz Stone, and Evan Willams. It is a platform for microblogging and social networking in which users post and interact with messages known as “tweets”. A simple search in “Similar web” shows that the majority of users, 26.87%, are in the US 14.19% in Japan, 6.6% in the UK 4.10% in Brazil and just 3.36% in Canada.

Company statistics say that Twitter boasts 330 million monthly active users (as of 2019 Q1). Of these, more than 40 percent, or more specifically, 134 million, use the service on a daily basis. Twitter grew its daily user base in Q2 at its fastest rate in nearly two years. In the second quarter of 2019, Twitter’s average monetizable daily active user base was 139 million, up 5 million sequentially and up 14% compared with 122 million in the same period a year ago. Just in the US, the average was 29 million, compared with 26 million in the same period of the previous year and compared with 28 million in the previous quarter.

Since 2015 Twitter has been a hotbed of debates and news covering the politics of the United States. During the 2016 US presidential election, Twitter was the largest source of breaking news on the day, with 40 million election-related tweets sent by 10:00 p.m. (Eastern Time).

Despite audience growth woes and revenue struggles, Twitter is still one of the leading social networks worldwide and a popular marketing channel. As of August 2016, Twitter ranked second only behind Facebook in terms of the adoption rate of B2C marketers in the United States.

In Q1 of 2019, the company’s revenue totaled $787 million, an increase of 18% year-over-year. It also saw an 11% year-over-year growth in monetizable daily active users during this period.

In Q2, the company reported revenue of $841 million, an increase of 18% year-over-year. Net income was $1.1 billion, which included a significant one-time income-tax benefit. Adjusted net income was $37 million (or 5 cents per share). In the below chart, provided by Yahoo Finance, you can see the revenue and EPS reports of past quarters in more detail.

How does Twitter make money?

Twitter mostly earns from advertising.. In the fiscal year of 2018, the company reported advertising revenue of $2.61 billion, more than 86% of its total revenue, which was a 24% increase from what the social media site earned in 2017. Data licensing had about 14% of revenue in the same yearand this revenue totaled $425 million, an increase of 27% compared to 2017.

Technical overview:

S1

S2

S3

R1

R2

R3

37.00

35.00

31.65

40.98

43.83

45.90

 

It is certainly not just the Twitter Q3 report which will move this asset price lower or higher; there are other important indicators as well, like overall stock market sentiment and so on, however, positive and negative reports will help determine the long term trend.. Better than expected data could help the asset reach its 2019 high (September 9) at $45.90 in the mid-term, above its first and second resistance levels, mentioned above. On the flipside, there are two key and important support levels at its 50 and 200 weekly EMA, which are sitting at $37.00 and $31.65 respectively. Technically, OBV and EMA20 in the lower part of the chart remain in a downtrend. The Higher High (HH) in the main chart is not confirmed in the OBV since the second high in OBV is lower than the previous high, and while it is higher in the price movement in main chart, the OBV line is back under EMA20 as well.


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