Twitter Inc reported results which disappointed investors and sent shares plunging as much as 14% in after hours trading. However, the micro blogging site is making a come back and shares are only down 3% after hours (although they are down far more YTD and over the past year or so). Before the call, Cantor opined: While we expect TWTR to report ad revenue growth among the fastest in the group on Wed, 2/10, much attention will be on MAU growth — or lack thereof — and on engagement, the net impact from the launch of new products/tweaks like Moments, and updates on the strategy post changes of several key executives. While we’re maintaining a BUY rating given the company’s differentiated offering, mass audience, attractive revenue growth profile and potential for a take-out, we recognize that the sentiment around user growth is currently negative and that the quarter’s results are likely to be too muted to change that short term.
Alas that was not to be the case – the key Twitter Inc MAU numbers were disappointing.
As UBS analysts note:
Twitter reported Q4 2015 revenues of $710mm (compared to our est. and Street est. of $710mm) for revenue growth of 48% YoY (incl. a ~500bps drag from F/X on YoY growth). Advertising revenue was $641mm (vs. our est. of $ 649mm) for growth of 48% YoY. Mobile advertising revenue was 86% of total advertising revenue. Data Licensing revenue was $70mm (above our est. of $61mm) for growth of 48% YoY. Adj. EBITDA: Twitter reported adjusted EBITDA of $191mm (compared to our est. of $186mm and Street est. of $175mm) for growth of 35%. Adj. EPS was $0.16 (vs. our est. of $0.16 and Street est. of $0.12).
User Growth Lower Than Expected; Q1 Rev Guidance Below Consensus Twitter’s MAUs (incl. SMS Fast Followers) in Q4 were 320mm or net adds of 0mm (vs. our est. of 324mm or net adds of 4mm) for growth of 10% YoY. Excluding SMS Fast Followers, MAUs were 305mm, down 2mm QoQ – however, MAUs returned to Q3 levels in Jan. Q1 Guidance: Twitter guided for $595-$610mm in revs (vs. our est. of $609mm and Street est. of $633mm) and $150-$160mm in Adj. EBITDA (vs. our est. of $147mm and Street est. of $149mm) – we expect drivers of the updated guidance to be discussed on the earnings call.
On the conference call Twitter Inc CEO Jack Dorsey stated:
We spent the last six months structuring the organization and our leadership team to move with greater agility and focus, reviewing the state of our service and strategy, learning from what we’ve shipped, and developing a stronger point of view about what we are and what we want to be. In January, we gathered our entire global leadership team to align and commit to a plan for 2016.
We’re focused now on what Twitter does best, live. Twitter is live. Live commentary, live conversations, and live connections. Whether it’s breaking news, entertainment, sports, or everyday topics, hearing about and watching the live event unfold is the fastest way to understand the power of Twitter.
Twitter has always been considered a second screen for what’s happening in the world and we believe we can become the first screen for everything that’s happening right now. And by doing so, we believe we can build the planet’s largest daily connected audience. A connected audience is one that watches together and can talk with one another in realtime. It’s what Twitter has provided fore close to ten years now and it’s what we will continue to drive in the future.
We have five priorities in 2016 to serve this focus. Number one, we’re going to refine our core service and make everything more intuitive. Number two, we’re going to invest in being a leader in live streaming video, building off our lead with Periscope.
Three, we’re going to give creators and influencers the best tools to build and connect with their audiences. Four, we’re going to invest in making Twitter safer so everyone can feel more empowered to speak freely. And finally fifth, we will support developers to build and grow their businesses with Twitter. Each is critical to strengthening our platform and audience around live.
