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Twitter Inc (TWTR) Looks Better Positioned Now, Could Beat Estimates

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Shares of Twitter Inc (NYSE:TWTR) declined more than 6% today as investors consider what next week’s earnings report will bring and the next expiration of the company’s share lock-up, which is now less than two weeks ago. In a report dated April 25, 2014, Sterne Agee analysts Arvind Bhatia and Brett Strauser provided a preview of what investors can expect in Tuesday’s report.

Twitter could beat consensus estimates

The analysts said they believe a number of changes which have happened recently will make Twitter Inc (NYSE:TWTR) better positioned moving forward. Specifically, they pointed to the micro-blogging company’s acquisitions of Cover, Gnip, Mesagraph and SecondSync. They also note that Twitter has added a few new senior executives to its ranks.

They believe there is a good chance Twitter Inc (NYSE:TWTR) will beat consensus estimates when it reports, so their estimates are ahead of Wall Street’s.

What to expect in Twitter’s report

Wall Street is expecting Twitter Inc (NYSE:TWTR) to report revenue of $241 million and EBITDA of $18 million. The Sterne Agee team’s estimates are ahead of those numbers, coming in at $248 million for revenue and $31 million in EBITDA.

They’re expecting Twitter Inc (NYSE:TWTR) to report a 5% sequential increase in monthly average users, which would be a 25% year over year increase, bringing it to 254 million from 241 million at the end of the fourth quarter. They expect 57 million of those users to be in the U.S., which is a 6% sequential and 19% year over year increase, and 197 million of them to be international, which is a 5% sequential and 26% year over year increase.

The analysts expect total timeline views to rise 6% sequentially and 15% year over year to 156.78 billion. They want to see 617 views per monthly active user in the U.S., which is a 1% sequential increase. They’re looking for 575 timeline views per monthly active international user. That’s also a 1% sequential increase. Both numbers would also be an improvement from the 5% U.S. and 7% international sequential decline Twitter Inc (NYSE:TWTR) reported in the previous quarter.

 Slight revenue decline expected

The Sterne Agee team expects Twitter Inc (NYSE:TWTR) to report $1.44 in advertising revenue per thousand timeline views. That’s a 3% sequential decline. They’re expecting advertising revenue to be $225 million, a 3% sequential increase and a 124% year over year increase. They project $23 million in data licensing revenue, which is flat sequentially but 66% increase year over year. The result would be an overall sequential revenue increase of 2% and year over year increase of 117%.

They’re looking for Twitter Inc (NYSE:TWTR) to report EBITDA margins of 12.5%, which is a decline from 18.4% in the previous quarter but up from 10.3% in the same quarter a year ago. They note that the micro-blogging company’s long-term target is between 35% and 40%, so investors will want to see progress in that direction.

The analysts maintained their Neutral rating on Twitter Inc (NYSE:TWTR) going into next week’s earnings report.

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