Twitter +26.5% AH on Q2 beat, strong guidance, MAU growth


Twitter (NYSE:TWTR) expects Q3 revenue of $330M-$340M, above a $323.7M consensus. Full-year revenue guidance is at $1.31B-$1.33B, above a $1.27B consensus. Full-year adjusted EBITDA guidance has been hiked to $210M-$230M from $180M-$205M.

Monthly active users (closely watched) +6% Q/Q and +24% Y/Y in Q2 to 271M, and generally better than expected; Q1's Q/Q growth was also 6%. Mobile MAUs +7% Q/Q and +29% Y/Y to 211M. Timeline views +10% Q/Q and +15% Y/Y to 173B; Q/Q growth picked up from Q1's 6%.

Ad revenue (89% of total revenue) +129% Y/Y, up from Q1's 125% clip. Data licensing/other revenue +90% vs. +76% in Q1. Mobile was 81% of ad revenue vs. 80% in Q1 and 75% in Q4. Ad revenue per 1K Timeline views rose to $1.60 from $1.44 in Q1.

Though still far below U.S. monetization, international monetization (possibly boosted by the World Cup) improved in Q2: International revenue +168% Y/Y and now 33% of revenue, up from 28% in Q1 and 27% in Q4.

GAAP R&D spend totaled $177.1M, sales/marketing $140.3M, and G&A $44.7M. Total costs/expenses rose to $462.1M from $178.2M a year ago; Y/Y comps are skewed by $158.4M in stock compensation expenses (up from $22.6M a year ago).

The 7 analysts that have upgraded Twitter since early May can take a victory lap.

Q2 results, PR

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Comments (30)
  • sunwindgeo
    , contributor
    Comments (856) | Send Message
     
    Anyone else think that this huge rush upward is crazy?
    Also, earnings came very late for those of us using the usual sources. But its 2 cents a share, not 22 people. It's still under 5m users. 6% growth is nice, but can they actually increase it?
    29 Jul 2014, 04:24 PM Reply Like
  • rreeuwijk
    , contributor
    Comments (285) | Send Message
     
    I guess a massive short squeeze....

     

    $1.33B in revenue guidance and the market cap is roughly $30B? And no real earnings if you take all these ridiculous options costs into account.

     

    Nice opportunity for the ones who still need to sell some shares that came unlocked in May.
    29 Jul 2014, 04:34 PM Reply Like
  • DrGarnicus
    , contributor
    Comments (118) | Send Message
     
    I'm just learning this stuff, but it does sound crazy.
    29 Jul 2014, 05:39 PM Reply Like
  • Island_Dweller
    , contributor
    Comments (677) | Send Message
     
    Some reasons why the stock is reacting after earnings:

     

    1. There was a lot of pessimism surrounding the stock going into earnings. Many indie analysts were cautious or flat out avoid and chose FB (FB is a solid bet as well). Thus buyers were kept on the sidelines until proof showed that the company was not decelerating.

     

    2. While valuation is expensive going forward, you are looking at a stock in a world of Whatsapp being bought for $19 billion with no revenue. Before the huge pop, TWTR was valued at about $22.5 billion. Is TWTR, a global real time news feed, worth more than Whatsapp?

     

    3. MAUs are growing, the decline has been snapped, and now a renewed focus on engaging and attracting new users is starting to gain traction with the World Cup as a gateway to the revamped features. More new-user-friendly additions, additional features for existing users to play with, and testing, constantly testing, to see what works best. The company isn't afraid to morph or change dramatically to meet the user's needs.
    29 Jul 2014, 06:17 PM Reply Like
  • Deja Vu
    , contributor
    Comments (1825) | Send Message
     
    Textbook short squeeze!
    29 Jul 2014, 04:33 PM Reply Like
  • aust1n_24
    , contributor
    Comments (6) | Send Message
     
    Textbook? New investor here and I want to understand your reasoning for labeling it a short squeeze.
    29 Jul 2014, 05:53 PM Reply Like
  • markrpat
    , contributor
    Comments (248) | Send Message
     
    Yes..I would also like to know what's textbook about it. Short interest is mined on the 15th of each month, and released 8 business days later - that would be last Friday. That makes navigation based on short interest a bit of a gamble...wouldn't you say? A little like sailing in the ocean without knowing your longitude near the rocky shores of earnings reports. http://bit.ly/NVu8DJ
    29 Jul 2014, 08:19 PM Reply Like
  • markrpat
    , contributor
    Comments (248) | Send Message
     
    Even without a chronometer, a textbook short squeeze might be short interest reported as 20% -ish after these shares were freed (not 7%ish). If 20% short interest were disclosed, call option activity would have been light-housed across the media. Less fog on the shoals, different outcome.
    29 Jul 2014, 09:00 PM Reply Like
  • markrpat
    , contributor
    Comments (248) | Send Message
     
    Would like to hear other opinions on the matter...1980xls.
    29 Jul 2014, 09:35 PM Reply Like
  • pollyserial
    , contributor
    Comments (1113) | Send Message
     
    LOL @.02 cent non GAAP beat! Not short, just amused. Seeking Alpha can you please start making the distinction between GAAP and non-GAAP numbers when you report earnings? People are going to get hurt.
    29 Jul 2014, 04:35 PM Reply Like
  • labas112
    , contributor
    Comments (531) | Send Message
     
    Haven't you heard......Non-GAAP is the new GAAP. No one cares about GAAP anymore....don't fight the trend.
    29 Jul 2014, 04:49 PM Reply Like
  • James Sands
    , contributor
    Comments (2726) | Send Message
     
    They are just reported how the company is analyzed...depending on the company it can be GAAP or non-GAAP....

     

    Unfortunately, all estimates from financial sites are based on analyst estimates.
    29 Jul 2014, 04:59 PM Reply Like
  • pollyserial
    , contributor
    Comments (1113) | Send Message
     
    James, my understanding is that GAAP stands for 'generally accepted accounting principles' and non GAAP stands for 'toilet paper'. Just kidding. But seriously, should Twitter just be allowed to disregard the costs of delivering shares to employees, just....because? Going from -.24 to .02 PS stinks of book cooking to me. But, congrats, longs and good luck.
    29 Jul 2014, 05:50 PM Reply Like
  • King Rat
    , contributor
    Comments (1831) | Send Message
     
    pollyserial, what goes in the official books as seen by stock screens you can run through your brokerage or Google or Yahoo, is GAAP so they are not fooling anybody but the retail investors.

     

    The reason for choosing non-GAAP is no different than looking at operating profit or operating cash flow as a guideline for how well the company is operating. The reality though is that a stock bonus is part of salary because one way or another, Twitter has to pay it.
    29 Jul 2014, 07:55 PM Reply Like
  • Tomal
    , contributor
    Comments (2485) | Send Message
     
    Short squeeze. But it will be a good short in a few days.

     

    The world cup 2014 helped social companies a lot. Things will go downward from here.
    29 Jul 2014, 04:36 PM Reply Like
  • stockbuyer2014
    , contributor
    Comments (133) | Send Message
     
    i thought there was not a huge short interest in this name so how can there be huge short squeeze?
    29 Jul 2014, 04:47 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (7619) | Send Message
     
    Indeed, only about 1 dtc recently...

     

    http://bit.ly/19xo6dh

     

    I don't understand the fuss either.
    29 Jul 2014, 04:55 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (7619) | Send Message
     
    Funny how these companies stress the non-GAAP numbers. No wonder when one has a look at the GAAP numbers...tons of compensation for insiders.

     

    "Net loss – GAAP net loss was $145 million for the second quarter of 2014 compared to a net loss of $42 million in the same period last year. Twitter's GAAP net loss included $158 million of stock-based compensation expense."

     

    Mind the GA(NYSE:A)P!
    29 Jul 2014, 04:51 PM Reply Like
  • civ-e
    , contributor
    Comments (698) | Send Message
     
    Is there a standard definition for Monthly Active User? E.g. someone who only needs to log in once a month?
    29 Jul 2014, 05:34 PM Reply Like
  • James Sands
    , contributor
    Comments (2726) | Send Message
     
    "Monthly Active Users (MAUs). We define a monthly active user as a registered Facebook user who logged in and visited Facebook through our website or a mobile device, used our Messenger app, or took an action to share content or activity with his or her Facebook friends or connections via a third-party website or application that is integrated with Facebook, in the last 30 days as of the date of measurement. MAUs are a measure of the size of our global active user community."

     

    Straight from the 10-Q filed this week.
    29 Jul 2014, 05:56 PM Reply Like
  • civ-e
    , contributor
    Comments (698) | Send Message
     
    thanks James. regarding "via a third-party website or application that is integrated with Facebook" , u know how u visit other sites that require log-in to post a comment, but instead of creating a new account, u can sign in using your facebook/gmail/linkedi... account. This is activity done entirely outside of facebook's site. Does that count as a MAU too?
    29 Jul 2014, 06:01 PM Reply Like
  • James Sands
    , contributor
    Comments (2726) | Send Message
     
    I am not an authority on this, but based on the language I would think not. An example would be that you log onto TripAdvisor using Facebook. This in-of-itself is not the MAU trigger. But if you engage and share information with Facebook friends via TripAdvisor, I would believe that is the trigger to be counted.

     

    Engagement is what Facebook considers valuable whether directly on their site, or through third-party sites.
    29 Jul 2014, 06:07 PM Reply Like
  • James Sands
    , contributor
    Comments (2726) | Send Message
     
    I just realized I gave you Facebook's definition too, here's Twitter's:

     

    "We define MAUs as Twitter users who logged in and accessed Twitter through our website, mobile website, desktop or mobile applications, SMS or registered third-party applications or websites in the 30-day period ending on the date of measurement. Average MAUs for a period represent the average of the MAUs at the end of each month during the period."

     

    Mostly the same definition.
    29 Jul 2014, 06:22 PM Reply Like
  • civ-e
    , contributor
    Comments (698) | Send Message
     
    Hi James, appreciate the education and clarification on this stuff. I'm not good at researching financial documents so that was great help.
    29 Jul 2014, 06:56 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (6500) | Send Message
     
    looking to re-short when all the hoopla dies down.
    29 Jul 2014, 06:04 PM Reply Like
  • panaz
    , contributor
    Comments (66) | Send Message
     
    World Cup=+ twitter....WOW... hey analysts what happened ? hahaha
    29 Jul 2014, 08:37 PM Reply Like
  • Zeus2012
    , contributor
    Comments (714) | Send Message
     
    Here's a friendly advice for those looking to short this tomorrow: Don't. Wait till the QE is completely tapered in October to look @ shorting names like $TWTR, $FB, $Z, etc. You need a change in market psychology first.
    29 Jul 2014, 08:52 PM Reply Like
  • Shaduc
    , contributor
    Comments (3005) | Send Message
     
    I'm in Cn, Twtr has been sending me multiple update emails. Even when I was in SF, I didn't use it.

     

    Why all this promotion?
    29 Jul 2014, 08:59 PM Reply Like
  • Piptief
    , contributor
    Comments (1324) | Send Message
     
    Stock is crap. Not a single dime in net income and a much worse net loss of 144 million. All this financial shenanigans about non-gaap earnings is crap. Fact is firm making losses and will continue to make losses for some time to come. Short squeeze pushing stock higher. Reality will set in sooner or later, just like it did when it hit 70+ couple quarters back.
    30 Jul 2014, 12:22 AM Reply Like
  • BudH
    , contributor
    Comments (718) | Send Message
     
    Non-GAAP can give a truer picture of actual results. If Mgmt were lying the SEC would be all over them. A large write-off in one quarter of a years long project can give a false picture of a company's current situation. The GAAP numbers are always there to be viewed, analyzed and compared.
    30 Jul 2014, 01:24 AM Reply Like
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