Twitter Earnings Preview: Will It Go Mainstream?

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Twitter Inc (NYSE:TWTR) should be releasing more information on its progress along with its latest earnings report tomorrow. Analysts at Morgan Stanley expect the company’s revenue to be ahead of guidance and consensus estimates, which suggest losses of 3 cents per share on $241 million in revenue, which would be a 111% increase year over year. They also want to hear more about Twitter’s recent acquisition of MoPub and expect investors will want to see signs that Twitter is becoming more of a mainstream platform rather than the niche platform it has been.

What to expect in Twitter’s earnings

In a report dated April 24, 2014, Morgan Stanley analyst Jordan Monahan and the rest of the tea expect Twitter Inc (NYSE:TWTR) to report revenue of $247 million. The company guided for revenue of $235 million, which would be a 106% year over year increase. They expect Twitter’s advertising revenue to be $224 million, a 123% growth rate year over year. They believe the U.S. will make up 68%, while international ad revenue will grow 98% year over year. They’re looking for licensing revenue of $23 million, which would be a 65% growth rate year over year.

The Morgan Stanley team wants to see worldwide ad revenue per thousand timeline views of $1.37, which is an 86% growth rate year over year. They’re looking for total timeline views of 164 billion, which is a 20% year over year increase. They expect U.S. ad revenue per thousand timeline views to be $3.46, which would be an increase of 77% over the same quarter a year ago. They project 44 billion U.S. timeline views, which is an increase of 11% and 27% of the total timeline views.

In EBITDA, they’re expecting $24 million, a 105% increase and a 9.8% margin. Again, those numbers are heading of Twitter Inc (NYSE:TWTR)’s guidance of $19 million and consensus estimates of $13 million. They’re predicting 256 million global monthly active users—a 25% increase year over year and 6% increase sequentially. They believe 57 million of them would be in the U.S., which is a 19% year over year increase and a 5% increase quarter over quarter.

What Twitter management could say

The Morgan Stanley team expects Twitter Inc (NYSE:TWTR) management to talk about improvements in user experiences which are designed to speed up growth in monthly active users. They also want to hear about plans to improve engagement and “become more mainstream.” They also believe management will talk about their new efforts in mobile advertising, which Twitter recently moved forward by making MoPub available through its ad buying platform. In addition, they note hat the company has announced a number of ad products which could help Twitter improve user targeting capabilities and increase revenue.

Specifically, the analysts want to know how Twitter Inc (NYSE:TWTR)’s new ad formats will likely offer an entry point for the company into TV ad budgets. They have an Underperform rating and $36 per share price target on Twitter.


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