Updated from Oct. 24th to include additional thoughts from Sterne Agee analyst in the sixth paragraph. SAN DIEGO, CALIF. (TheStreet) --aTwitter hands in its third quarter results on Mondayaand the key to its continued ascent back toward itsaall-time is simple: showamass-marketapotential. The San Francisco's company stock has appreciatedaby 31% since itsalast earnings report when it reported 271 million monthly active users (MAUs),ashowing year-over-year growth of 24% and easing the market's anxiety around whether the social network could appealato newausers. Read More:aHow Social Media Is Threatening AT&T and Verizon And What They Can Do To Fix It This time around, ifathe company meets expectations on the fundamentals, as it has in each of the prior three quarters it has reported results, then it really only has two things to show Wall Street to solicit a positive reaction: healthy growth in monthly actives and improved user engagement metrics. The Basics: Market consensus is that Twitter willaposta$351.35 million in revenueawithaprofit ofaa penny per share when excludingashare-based compensation, according toaThomson Reuters. Advertising revenue is expected to representaaround 89% of total revenue, and MAU estimatesarange from 282 million users to a high of 290 million users. User Growth: Though few are expecting it, investorsawould love to see Twitter match second quarter net additionsaof 16 million people, which would put itsaaudience at 287 million monthly actives, representing 6% sequential growth. In a recent report,aMMK Partners said thataanything below 14 million net adds would be a miss and that anything greater than 17 million net adds -- 289 million MAUs or more --awould be a beat. Sterne Agee analyst Arvind Bhatia echoed those sentiments, noting that investors are likely to be skeptical of the second quarter additions, given the World Cup happened during the quarter, and "the subsequent debate has been whether this metric was boosted primarily by the FIFA World Cup or the impact of the product changes." Wall Street may decide to give Twitter a pass even if MAUs disappoint -- if and only if CEO Dick Costolo and executivesacan explain how it plans to make money from non-logged-in users. Last quarter, theacompany hinted that this audience isatwo to three times greater than its MAU audience.a "[Non-logged-in users are] beginning to enter the conversation on the stock, but difficult to analyze without any formal disclosure or monetization of this traffic," MKM Managing Director Rob Sanderson said. "We think it's likely that both are coming, and this is largely incremental to current thinking on the stock." What's more, Twitter said it mayaadjust the metrics it reports in this area, a disclosure that has the market salivating for additional detail on the number of MAUs who tweeted or did not tweet, and non-MAU unique visitors.a "Disclosing these [metrics] ...awould give investors a better sense for the size ofathe user base and the gains in monetization possible from the current low level," Canaccord Genuity analyst Michael Graham wrote in note from September. User Engagement: Engagement, which boils down to interactions with Twitter's web site or mobile app, directly equate to the bottom line. Twitter calculates advertisingarevenue per 1,000 timeline views, and the metricahasabeen a "somewhat volatile" one for the company, as Deutsche Bank notedain its Oct. 7 note.a In the second quarter, Twitter sawa173.2 billion timeline views or 640 timeline views per MAU, with ad revenue per 1,000 timeline views coming out to $1.60. The dollar figure was 100% greater than the year ago period and an 11% improvement sequentially. Wall Street still wants more and Twitter has taken further actions to improve engagement ratesaby inserting favoritedatweets and tweets from unfollowed users into the timelines of some users. Analystsawould like to see these changes reflected in timeline views per MAU and ad revenue per 1,000 views.a Early indications suggest that Twitter will be ableato improve at least one engagement metric:aoverall time spent on mobile. According to comScore, total minutes spent on mobile during the third quarter grew 11% year-over-year and surpassed 22 billion in the U.S. Thataadds upato an average of 620 minutesaper user acrossathe three-month period. Extra Goodies: Of course there are a whole host of other items that analysts will queryathe company about during the earningsacall. Specifically, on the back of the splashy launch of Fabric, a mobile software development kit (SDK) for app makers, Wall Street wants toaknow if Costolo actually eyes revenue from the suite of tools, and, more importantly, when they can expect it to see. Then there are Twitter's experimental "Buy" buttons,awhich giveamarketers a way to sell direct to consumers throughatweets. Twitter only just started aatest withaa small percentage of people in the U.S. thisaSeptember, butainvestors want to hear from management as to whetherathey think theanew ad offering will yieldamaterial results in future quarters. Bonus Points: While Twitter's Mondayacheck-in with Wall Street is important, the companyais hosting its first analyst day on November 12, and the affairamay overshadow earningsaif analysts get what they want: a product road map that points directly to additional revenue. "We expect the Analyst Day on November 12 will highlight product development around onboarding, content discovery and messaging, while 3Q results should highlight the impact that Twitter's traction with advertisers is having on financials," Goldman Sachs analyst Heath Terry wrote in a recent note. Foranow, Twitter just needs to provideaWall Street the kernels of proof it needs to believe that Twitteracan be a mass-market service with an audience that rivals the size of Facebook's ( ) audience. If not now, then sometime in foreseeable future. Read More:aAre Facebook and Twitter Your Next Impulse Shopping Destination? --Written by Jennifer van Grove in San Diego, Calif. >Contact by Email. Follow @jbruin
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