Omar Oakes
Apr 23, 2019

Twitter ad revenue up 18 percent

The social platform stops reporting monthly user numbers and is replacing declining count of monthly users with 'monetisable daily active users'

Twitter: average monthly users fell 2% to 330 million in the first quarter
Twitter: average monthly users fell 2% to 330 million in the first quarter

Twitter’s ad revenue has climbed 18% to $679m (£522m) for the first three months of the year, despite suffering a year-on-year loss in monthly active users.

The social media giant's income from advertising, which makes up 86% of its total revenue of $787m (also up 18% year on year), showed a healthy increase in total ad engagements of 23% for the period.

The first quarter of the year is usually Twitter's strongest for user growth because of seasonal factors such as people downloading social apps when receiving new handsets over Christmas and New Year and many using the platform to "second screen" during big events such as the Super Bowl and the Oscars. 

Average monthly users fell by 2% to 330 million compared with the first quarter of 2018. Twitter’s monthly active user count already dropped 9% year on year to 321 million in the fourth quarter of last year.

However, the company is replacing its declining monthly user count with a new metric called "monetisable daily active users" (known as mDAUs). The measure, which counts people who visit Twitter on a daily basis via a platform that is able to show ads, increased 12% to 134 million year on year. 

Twitter is trying to discount fake users and duplicate users in its user number reporting, although investors such as Forrester’s Jessica Liu have criticised the change because "Twitter wants to make its user numbers look better".

Reacting to today’s earnings report, Liu told Campaign that the biggest question hanging over Twitter is how it will clean up and maintain a healthy environment for users. 

She said: "The social network is still riddled with issues that senior leadership verbally states it wants to improve, but small product tweaks like hiding comments or continuing to rely on users to self-report/police won't change the social network dramatically."

Just last week, the number of bot activity on Twitter nearly quadrupled in response to the release of The Mueller Report in the US. Twitter, which is frequently used by US president Donald Trump, is a hotbed of political news and opinion. 

However, eMarketer analyst Jasmine Enberg said the move to mDAUs is a positive one: "Twitter’s decision to share only monetisable daily active users going forward is in keeping with its value proposition to advertisers – a committed though not very large user base when compared with other social platforms.

"Q1 2019 revenue growth also beat expectations, with most of the growth coming from the US, despite the fact that most new users were international. That proves once again that Twitter is able to grow its revenue without significantly growing its user base."

Meanwhile, data licensing and other revenue, which makes up the remaining 14% of Twitter’s overall revenue, increased 20% to $107m.

Twitter still makes most of its money from the US, where revenue totalled $432m (up 25% year on year) for the first three months of 2019, while internatioal revenue reached $355m (up 11% year on year, or 15% on a constant currency basis). 

The company made a profit for the first time in the final three months of 2017 and this quarter reported a positive net income of $191m. However, the bulk of this came from a tax benefit of $124m (adjusted net income was $66m).

Twitter also said it expects total revenue next quarter to be between $770m and $830m. In July 2018, its shares plummeted 20% after the company reported $711m in total revenue and a fall in monthly active users.

In an earnings call with investors, Twitter chief executive Jack Dorsey reiterated how making the platform easier to use, particularly with respect to linking users with interests and events, will be key to the company's long-term health.

He said: "We believe the biggest impact change we're going to have is events, interests and topics. We want to make it as easy to follow an event as it is to follow an account. 

"Currently, people do a ton of work to find accounts related to their interest. Removing that work, so you can follow any particular interest, be it by location or a niche interest – the goal is to help you find this very quickly."

Source:
Campaign India

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