Twitter Inc (TWTR) Earnings Preview: Did Political Talk Boost User Numbers?

Twitter Inc (TWTR) is scheduled to release its fourth quarter earnings report on Thursday before opening bell, and analysts are expecting non-GAAP earnings of 12 cents per share on $740.1 million in revenue. In the same quarter a year ago, the social media firm reported adjusted earnings per share of 16 cents. Of course with any social media firm, but especially with Twitter Inc (TWTR), user numbers and engagement will probably weigh most heavily on the stock following Thursday’s report.

Checks suggest Twitter (TWTR) lost users

According to Cantor Fitzgerald analyst Youssef Squali, their checks suggest that Twitter’s unique visitors or viewers in the U.S. fell 5.3% sequentially but rose 2.7% year over year. He’s estimating 319 million total active users. ComScore data suggests that time spent on the micro-blogging platform fell 22.7% sequentially and 12.2% year over year to 19.6 billion minutes. Uniques fell 4.3$ sequentially and 5.2% year over year, he added, and time spent fell 6.4% sequentially and 23% year over year to 5.8 billion minutes.

Squali warned that this engagement data suggests downside risk to his user estimates and demonstrate that the turnaround is still not complete. However, he also described the correlation between comScore traffic data and Twitter’s data as “limited.”

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Wedbush analyst Michael Pachter believes Twitter Inc (TWTR) benefitted from political conversations during the fourth quarter and is looking for a 1.5% increase in sequential monthly active user growth in the U.S. and an increase of 0.8% outside the country. He believes that if Twitter did show higher sequential user growth domestically, politics was the main catalyst, although management might not say so. On a year over year basis, he expects about a 5% increase in users.

Twitter (TWTR) banks on live-streaming

Squali expects the fourth quarter to shed the first light on the success of the NFL Thursday Night Football live-streaming deal and Twitter’s overall new content strategy. He doesn’t expect the company to fully break out the deal and the company’s other live-streamed events, but he is looking for “qualitative commentary” on whether any of the events were successful.

He also expects to hear about whether there will be any more of such events this year. He notes that media reports suggested that the NFL deal cost Twitter about $10 million for 10 games, and the company monetized 15 slots of about 100 per game for about $67,000 per ad slot.

Pachter notes that live-streaming does provide a way for the company to bring in new users for its features, but he feels that conversion of current users is still “minimal.” He also feels that the company has failed to make its platform easier for the “average Internet user” to use, despite the many changes it has made.

On the topic of a buyout, he doesn’t see any “clear-cut potential buyer,” although Squali feels that if the company can’t reverse the sluggish growth trends or demonstrate a clear path to re-acceleration, “the chance of a take-out increases materially.”

In terms of guidance, Squali expects Twitter Inc (TWTR)’s guide to be roughly in line with the consensus numbers. The Street is looking for $629.2 million in revenue and $191.4 million in EBITDA for the first quarter.

Shares of Twitter Inc (TWTR) rose by as much as 1.39% to $17.86 during regular trading hours on Monday.