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Twitter (TWTR) to Report Q2 Earnings: What's in the Cards?

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Twitter TWTR is set to report second-quarter 2021 results on Jul 22.

For the second quarter of 2021, the company expects total revenues to be between $980 million and $1.08 billion. The Zacks Consensus Estimate for revenues stands at $1.06 billion, indicating growth of 54.5% from the year-ago quarter reported figure.

Meanwhile, the consensus mark for second-quarter earnings has remained steady at 7 cents per share over the past 30 days, indicating growth of 105.04% from the year-ago quarter.

Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average negative surprise being 1648.09%.

Twitter, Inc. Price and EPS Surprise

Twitter, Inc. Price and EPS Surprise
Twitter, Inc. Price and EPS Surprise

Twitter, Inc. price-eps-surprise | Twitter, Inc. Quote

Factors to Consider

Twitter’s ad revenues are expected to have recovered in the second quarter, driven by an upswing in advertiser sentiment for digital ads, following the coronavirus-induced sluggishness and improved demand for Twitter’s solutions, fueled by resumption of more events and product launches.

The Zacks Consensus Estimate for advertising revenues is pegged at $922 million, indicating growth of 64.1% from the year-ago quarter’s reported figure.

Additionally, the company’s initiatives to add features and focus on tackling abuse issues are expected to have helped it expand monetized user base in the to-be-reported quarter.

In the to-be-reported quarter, Twitter introduced a feature to let hosts charge admission to their live audio chat rooms in its Spaces feature, in an attempt to attract more content creators. Twitter Spaces is currently available for iOS and Android apps besides mobile and desktop browsing.

Moreover, Twitter started seeking applications from users who wanted to be the first to test new content subscription and ticketing features, as the social platform works to build more ways for users to earn money.

Twitter users started to apply to get first access to Super Follows, which let them sell exclusive content to paying subscribers, and Ticketed Spaces, to charge for entry into audio chat rooms they host on the platform.

In the first quarter of 2021, average monetizable DAU (mDAU) grew 20% year over year to 199 million, driven by global conversation around current events and ongoing product improvements.

Twitter’s improved ability to proactively identify and remove abusive content from the platform has been a notable development in this regard.

The company opened free access to its new application programming interface (API) software for academic researchers during the first quarter, enabling them to study public conversations on its platform but did not provide data from suspended accounts as part of the product. This is expected to have boosted trustworthiness of the platform in the to-be reported quarter.

Further, steady demand for video ad products like Video Website Cards and in-stream pre-roll is likely to have contributed to the top line.

On Apr 8, Twitter announced the expanded integration of Nielsen's audience measurement and outcomes cross-media solutions into its video ad platform.

However, rising expenses due to an increase in investments are expected to have weighed on profit margins.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Twitter has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

TE Connectivity Ltd. TEL has an Earnings ESP of +0.79% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Garmin Ltd. GRMN has an Earnings ESP of +4.54% and a Zacks Rank of 2, currently.

Carrier Global Corporation CARR has an Earnings ESP of +6.44% and a Zacks Rank of 2, currently.


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