Microblogging company Twitter Inc (NYSE:TWTR) will release its fiscal third-quarter results on Monday, Oct.27 after the market close. The stock has rallied more than 30% in the last three months. The company has crushed the estimates in each of the last three quarters since going public in November last year. Wall Street estimates for the third-quarter are well above the company’s guidance. All these things suggest that investors and analysts are expecting a strong third-quarter.
User metrics will be watched closely
However, Twitter Inc (NYSE:TWTR)’s user metrics has been a matter of concern for many investors. The microblogging company has been improving its service by adding more new features. So, when the company added 16 million new users in Q2, as opposed to the consensus estimate of 10-12 million, investors wondered whether it was driven by improved service or FIFA World Cup.
Sterne Agee analysts Arvind Bhatia and Brett Strauser said in a research note that they expected the company to add 14 million new monthly active users (MAUs) during the quarter. That’s a 5% QoQ increase from 271 million in Q2 to 285 million at the end of September quarter. Total timeline views are expected to rise 15% YoY to 183 billion. Analysts expect Timeline Views per MAU to rise only 0.5% sequentially to 642.
Twitter’s ad revenue is expected to double
Wall Street forecasts Q3 revenue of $351 million with $53 million in EBITDA. By comparison, Sterne Agee calls for $345 million in revenue and $48 million in EBITDA. However, Bhatia and Strauser argue that Twitter can easily beat the consensus estimate, which is even higher than Sterne Agee’s estimate. They are looking for ad revenue per thousand timeline views of $1.69, up 6% from $1.60 in the second quarter.
Sterne Agee analysts expect Twitter Inc (NYSE:TWTR)’s ad revenue to skyrocket 102% YoY to $309 million. Data licensing revenue is expected to jump 136% YoY to $36 million. Adjusted EBITDA margin is expected to decline from 17.3% in the second-quarter to 13.8% in the three-month period ending September. Twitter is targeting long-term EBITDA margin of 35%-40%, so investors will be looking for improvements.
Twitter Inc (NYSE:TWTR) shares fell 0.71% to $49.59 at 11:16 AM EDT on Monday. Sterne Agee has a Neutral rating on the stock.