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Twitter (TWTR) Q2 Earnings Up Y/Y, User Growth Aids Revenues

Zacks Equity Research

Twitter TWTR reported second-quarter 2019 non-GAAP earnings of $1.58 per share, much higher than 17 cents reported in the year-ago quarter.

The earnings figure included non-GAAP benefit from income taxes of $1.08 billion, owing to the establishment of deferred tax assets from intra-entity transfers of intangible assets.

Excluding benefit from deferred tax asset worth $1.08 billion, adjusted earnings were 5 cents compared with 8 cents reported in the year-ago quarter.

Revenues increased 18% year over year to $841.4 million. On a constant-currency (cc) basis, revenues grew 20%.

Twitter, Inc. Price


The Zacks Consensus Estimate for earnings and revenues was pegged at 18 cents and $841 million, respectively.

User Details

Average monetizable daily active users (mDAU) were 139 million in the reported quarter compared with 122 million in the year-ago quarter and 134 million in the previous quarter.

Average U.S. mDAU were 29 million compared with 26 million in the year-ago quarter and 28 million in the previous quarter. Moreover, average international mDAU was 110 million compared with 96 million in the year-ago quarter and 105 million in the previous quarter.

Twitter has been focusing on reducing abuse on its platform. Initiatives, including detection of rule violations and improvement in safety of users, have been prioritized.

CEO Jack Dorsey stated that these efforts resulted in an 18% drop in reports of spammy or suspicious behavior across all Tweet detail pages.

Revenue Details

U.S. revenues (54% of revenues) increased 24% year over year to $455.2 million. International revenues (46% of revenues) were up 12% to $386.2 million. At cc, revenues grew 16%.

Advertising revenues increased 21% to $727.1 million. At cc, advertising revenues grew 23%.

U.S. advertising revenues totaled $378.5 million, up 29% year over year. International ad revenues grew 13% to $348.6 million.

Ad engagements increased 20% year over year. However, cost per ad engagement stayed flat year over year.

Data licensing and other revenues increased 4% from the year-ago quarter to $114.3 million.

Twitter’s total costs and expenses were $766 million, up 21% on a year-over-year basis.

Adjusted EBITDA increased 7.9% to $285.7 million. GAAP operating income increased 4.9% from the year-ago quarter to $75.7 million.

Guidance

For third-quarter 2019, total revenues are expected between $815 million and $875 million. The Zacks Consensus Estimate for revenues is currently pegged at $821 million.

Moreover, operating income is expected between $45 million and $80 million.

For fiscal 2019, management expects GAAP operating expenses to increase roughly 20% year over year.

Capital expenditures are still expected between $550 million and $600 million.

Zacks Rank & Stocks to Consider

Currently, Twitter has a Zacks Rank #3 (Hold).

Lattice Semiconductor LSCC, Alteryx AYX and Rosetta Stone RST are some better-ranked stocks in the broader computer and technology sector. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

While Lattice Semiconductor and Alteryx are set to report quarterly results on Jul 30 and 31, respectively, Rosetta Stone is scheduled to report on Aug 6.

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