For once Twitter did not disappoint Wall Street, when moments ago it reported results that beat consensus estimates handily as non-GAAP EPS of $0.11 beat consensus of $0.02, even topping the highest estimate of $0.10, on revenue of $548.3 million, also beating est. of $509 million (just don’t look at the GAAP EPS loss of 8 cents). Helping the beat was a jump in monthly active users, which rose to 328 million, beating estimates of 322 million, on Q1 daily active usage up 14% y/y, higher than 11% in 4Q and 3% in 1Q16.
In kneejerk reaction the stock was up 9% in premarket trading, having risen as much as 11%.
That said, there were some less welcome signs, especially in the outlook, where Twitter expects adjusted EBITDA to be between $95 million and $115 million; below consensus est. of $137.1 million.
Some further guidance:
- Adjusted EBITDA margin to be between 21% and 21.5%; and
- Stock-based compensation to be between $115 million and $125 million.
- Additionally, for the full year 2017, Twitter expects:
- Total non-GAAP expenses to be flat to down 5%, compared to full year 2016;
- Stock-based compensation to be down 20% to 25%, compared to full year 2016; and
- Capital expenditures to be between $300 million and $400 million.
Just as concerning, the company still sees 2017 advertising revenue growth to meaningfully lag audience growth, further pressing the top-line growth case.
As shown in the chart below, TWTR just suffered its first revenue slowdown in Q1, with total revenues dropping 11% Y/Y.
Worse, advertising revenue in the US tumbled 17% Y/Y, a confirmation that advertiers are shifting to other social networks.
Adjusted EBITDA – which excluded $117 million in stock-based compensation – similarly declined by 6%.
How does TWTR get from net loss to adjusted EBITDA:
For now however the market is relieved that despite the clear disappointment in monetization metrics, at least user growth picked up and surprised favorably, sending the stock higher by nearly 10%. Whether this bounce lasts remains to be seen.
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