Twitter Posts Q1 Earnings Beat On Surge In Video Advertising Revenue
-
Loading... - Tristan Lahm
- 07 May 2021
- 1236 Views
- 0 Like
- 0 Comment
Twitter's video-advertising push bolstered a top- and bottom-line beat on Wednesday morning, when the firm reported its second quarter of positive net income.
The San Francisco social media giant reported non-GAAP earnings of $123 million, or 16 cents per share, compared to analyst estimates of 11 cents per share. The firm's GAAP net income totaled $61 million in the quarter. For the same period in 2017, Twitter reported a GAAP loss of $62 million.
Video is now the fastest-growing advertising format on Twitter, accounting for more than half of the firm's advertising revenue. In the first quarter, total revenue hit $665 million, up 21.4% from a year ago and shattering average analyst expectations calling for about $605 million. Advertising remains, by far, Twitter's largest top-line draw, claiming $575 million in first-quarter revenue.
"The first quarter was a strong start to the year," said Jack Dorsey, Twitter CEO, in a statement released alongside earnings. "We grew our audience and engagement, marking another quarter of double digit year-over-year [daily active user] growth, and continued our work to make it easier to follow topics, interests, and events on Twitter."
Twitter shares were climbing as much as 6.5% in pre-market trading, recouping losses after falling 2.4% on Tuesday to $30.47.
In light of Facebook's massive data privacy issues, analysts on Twitter's post-earnings conference call were concerned of the firm's own data privacy and security. Data licensing has proved a valuable, high-margin revenue stream for Twitter, growing 20% in the first quarter and adding $90 million to the firm's top line.
But Dorsey emphasized on the call that the firm continues to feel good about the revenue stream.
"We're different than our peers in that Twitter is public, and all our data is out in the public," Dorsey said Wednesday morning. "Our data business just organizes that in real time to make it easier for brands, researchers and organizations to utilize it."
Revenue Growth Outpacing User Growth
Data privacy wasn't the only hot topic on the earnings call. Several analysts touched on Twitter's daily active user (DAU) metric, for which the firm releases growth figures. DAU growth in the quarter was 10% year over year. It's the smallest percent gain on that front since the third quarter of 2016. Twitter also reported 336 million active monthly users, up from about 330 million last quarter.
Wednesday's figures reveal a divergence between revenue growth and DAU growth, a development that may challenge the reliance on such usage metrics to forecast revenue growth. Executives on the call said Twitter's revenue could continue to grow faster than its audience, due in part to expanded advertising offerings that Dorsey and Chief Financial Officer Ned Segal said are sparking up increased demand.
