Twitter Plunges After US Monthly Users Drop; Ad Revenues Tumble

There was some good news and a lot of bad news in the just released Twitter (TWTR) results.

First the good news: the company reported Q2 Revenue and EPS of $573.9MM and $0.08, beating already depressed expectations of $537.2MM and $0.05.

That was about it for the good news. Now the bad: first, the company missed on total Monthly Active Users, which in Q2 were unchanged sequentially at 328MM, below the 332 expected. Worse, while US-based users rose by 4% Y/Y, they actually declined sequentially from 70 million to 68 million, confirming that the company's growth in the most profitable market is not only over, it has now reversed.

Commenting on the drop, Bloomberg's Jing Cao said that "it’s possible that political fatigue negatively impacted user numbers. Twitter doesn’t mention politics in the shareholder letter but does attribute MAU growth to product improvements, offset by "lower seasonal benefits and other factors."

Whatever the reason, the impact on the top line was profound as total revenue decline 5% from a year ago to $574 million, as growth in ad and licensing sales was not nearly enough to offset the drop in advertising revenue.

Worse, ad revenue in the US at $269 million dropped 14% Y/Y, and was the lowest in over. Elsewhere it wasn't better with global ad revenue sliding 8% and even international declined by 1%.

There was a glimmer of hope in the company's EBITDA line which rose 2% Y/Y to $178 million, above the $124.5 million expected, although the company warned it would drop substantially in Q3 to a range of $130-$150 million.

Finally, the market reaction was brutal: having pushed the stock higher for the past 3 weeks - for reasons unknown - TWTR tumbled on the report, sliding as much as 7% which, if the company's "growth" trend persists, will only accelerate in the coming months.

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Bill Myers 4 years ago Member's comment

#Twitter lost 2 MILLION users since their last quarter??? Time to dump this stock. $TWTR

Barry Hochhauser 4 years ago Member's comment

I would have thought having #Twitter as the official mouth piece of the US government (or at least #Trump) would have had a positive impact on Twitter's active users. $TWTR

Angry Old Lady 4 years ago Member's comment

Maybe people are so sick of hearing what #Trump has to say, that they are avoiding #Twitter all together. Seeing how our President just re instituted discrimination into our armed forces is enough to make me turn $TWTR off.

John Fitch 4 years ago Member's comment

Yes. One step forward, two steps back.

Moon Kil Woong 4 years ago Contributor's comment

It is hard monetizing this, however with dropping active users is going to make it even harder. Sadly #Google and #Facebook will make it hard for any major new Internet media to generate ad revenue. Be careful picking start ups in this space. $TWTR $FB $GOOGL

User 123 4 years ago Member's comment

Agree. Especially with the increased use of ad blockers and I hear #Google Chrome will soon block ads for all users by default!

David M. Green 4 years ago Member's comment

Actually, it is my understand that Google will only block "offensive" ads. These would include such things as pop-ups and auto-play videos. Regular ads should be fine. If all ads were blocked, everything that's free on the internet would go away.

Karen Klein 4 years ago Member's comment

I'm pretty sure #Facebook makes virtually all of it's ad dollars from #mobile. Not sure if any of that will apply to mobile anyway.

But I expect as usage increases, Facebook will continue to excel in generating ad revenue. For whatever reason, #Twitter never lived up to it's potential. $TWTR $FB

Bindi Dhaduk 4 years ago Member's comment

Is Facebook usage increasing? I would say more and more people are leaving Facebook. Especially among millennials. That's certainly the case among my peer group. There are new apps popping up every day that resonate with the next generation more than $FB. Facebook is so yesterday.

Bill Johnson 4 years ago Member's comment

I agree, Moon. But I've long believed that a huge percentage of #Twitter's users are "fake" users. Either created by the company themselves, or by marketers. $TWTR

Danny Straus 4 years ago Member's comment

It's true. Not just on Twitter though. You can buy #Facebook or #Twitter follows by the thousands. And thousands of companies/individuals offer this service. If thousands of people own thousands of fake accounts... well you can do the math. $FB $TWTR

Terrence Howard 4 years ago Member's comment

The entire #Twitter & Facebook system is flawed. Check out this video which exposes all. It's a real eye opener to the inner workings of how advertising at these companies work. $TWTR $FB:

Ayelet Wolf 4 years ago Member's comment

Fascinating video. I agree the system is flawed, but not just because of fraud.

For example, #Twitter has a partnership with #AmericanExpress, where you can get access to exclusive benefits and discounts by tweeting a specific hashtag after linking your #Amex card to Twitter. But you can only link 1 card to one account. But many people have multiple Amex cards. I literally HAD to create several additional Twitter accounts just to take advantage of this program and maximize my benefits. $TWTR $AMEX $AXP

Chee Hin Teh 4 years ago Member's comment

Thanks Tylers for your completeness