Twitter saw better-than-expected user growth in its second quarter earnings report, which was released after-the close, as average monthly active users (MAUs) grew 24% year-to-year, and 6% quarter-to quarter, to reach 271 million. Mobile MAUs increased 29% year to year, and 7% quarter to quarter, to 211 million. Analysts expected MAUs to grow at 21%.
User growth had been a problem for the company in past few quarters, though, and could easily become one again. So what will the company do? Try to monetize those users who visit the site without either creating an account, or logging in.
In a conference call following the earnings report, CEO Dick Costolo said that the company would "continue to highlight the reach, and impact, of Twitter across the mobile landscape and and beyond our owned and operated properties.'
For example, in the World Cup math between Germany and Brazil there were two billion Tweet impressions off of twitter, in addition to the 4.4B impressions on Twitter properties, giving it a total of 6.5 billion impressions in a single match.
This, he said, "highlights the expansion of our global reach and impact."
In addition, there are "hundreds of millions of additional unique visitors who come to Twitter every month, but don't log in. When you consider the combination of monthly active users and unique visitors, the size of our audience on our owned and operated properties is two to three times that of just our monthly active user base."
This allows Twitter to be ranked in the top 10 digital connected audiences in the world.
Now comes the task of building that audience, and Costolo says that the company has already begun trying to improve their experience with "more engaging, more visually appealing" profile pages," in addition to other experiments that the company will run "to improve the overall experience for logged out, unique visitors."
"By giving everyone the best of Twitter, no matter where, or how, they consumer our content, logged in, as unique visitors or in syndication, we will position ourselves to reach the largest audience in the world and every person on the planet."
Later on in the call, Costolo was asked by Anthony DiClemente of Nomura what exactly the company was going to be doing to monetize those users, Costolo reiterated the opportunity of having a large off-network userbase, but also said that he was more interested now in building that audience, rather than monetizing it at the moment.
"We see that as a big opportunity, obviously. Why are we sharing all information with you now? One is we've made changes we like to the profile pages that make them more engaging and visually appealing and that has led us to be excited about other experiments that we'll be running for those audiences," he said.
"Vis-a-vi revenue contribution of those audiences, we're focused 100% on user experience today, and we're not monetizing those audiences. As we eventually think about that, it will probably be over the long term, the same kinds of ad units we deliver to our on-network, logged in users, but we're focused right now on leveraging the content that's created by the majority of those 271 million monthly active users who come to the site to create the appropriate experiences for both the unique visitors and the syndicated audience."
Q2 numbers
The company posted quarterly revenue of $312 million, up 124% year to year, easily beating out analysts expectations of $283 million. Twitter reported non-GAAP EPS of $0.02, which beat expectations of a loss of 1 cents a share.
Timeline views reached 173 billion for the second quarter of 2014, an increase of 15% year-over-year, the same growth that the company saw last quarter.
Advertising revenue per thousand timeline views reached $1.60 in the second quarter of 2014, an increase of 100% year-over-year.
Once again, almost all of Twitter's revenue came from advertising, which accounted for $277 million, a 129% year to year increase. Data licensing, and other revenue, came to $35 million, an increase of 90% year-over-year. Of Twitter's total revenue, $102million, or 33%, was International, an increase of 168% year-over-year.
GAAP net loss was $145 million, compared to a net loss of $42 million in the same period last year.
Twitter is projecting revenue of between $330 and $340 million, with adjusted EBITDA in the range of $40 million to $45 million, for the next quarter. For the full year 2014, it expects to see revenue between $1,310 million to $1,330 million, with an adjusted EBITDA in the range of $210 million to $230 million.
(Image source: twitter.com/logout)
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Twitter is an online information network that allows anyone with an account to post 140 character messages, called tweets. It is free to sign up. Users then follow other accounts which they are interested in, and view the tweets of everyone they follow in their "timeline." Most Twitter accounts are public, where one does not need to approve a request to follow, or need to follow back. This makes Twitter a powerful "one to many" broadcast platform where individuals, companies or organizations can reach millions of followers with a single message. Twitter is accessible from Twitter.com, our mobile website, SMS, our mobile apps for iPhone, Android, Blackberry, our iPad application, or 3rd party clients built by outside developers using our API. Twitter accounts can also be private, where the owner must approve follower requests.
Twitter started as an internal project within the podcasting company Odeo. Jack Dorsey, and engineer, had long been interested in status updates. Jack developed the idea, along with Biz Stone, and the first prototype was built in two weeks in March 2006 and launched publicly in August of 2006. The service grew popular very quickly and it soon made sense for Twitter to move outside of Odea. In May 2007, Twitter Inc was founded.
Our engineering team works with a web application framework called Ruby on Rails. We all work on Apple computers except for testing purposes.
We built Twitter using Ruby on Rails because it allows us to work quickly and easily--our team likes to deploy features and changes multiple times per day. Rails provides skeleton code frameworks so we don't have to re-invent the wheel every time we want to add something simple like a sign in form or a picture upload feature.
There are a few ways that Twitter makes money. We have licensing deals in place with Google, Yahoo!, and Microsoft's Bing to give them access to the "firehose" - a stream of tweets so that they can more easily incorporate those tweets into their search results.
In Summer 2010, we launched our Promoted Tweets product. Promoted Tweets are a special kind of tweet which appear at the top of search results within Twitter.com, if a company has bid on that keyword. Unlike search results in search engines, Promoted Tweets are normal tweets from a business, so they are as interactive as any other tweet - you can @reply, favorite or retweet a Promoted Tweet.
At the same time, we launched Promoted Trends, where companies can place a trend (clearly marked Promoted) within Twitter's Trending Topics. These are especially effective for upcoming launches, like a movie or album release.
Lastly, we started a Twitter account called @earlybird where we partner with other companies to provide users with a special, short-term deal. For example, we partnered with Virgin America for a special day of fares on Virginamerica.com that were only accessible through the link in the @earlybird tweet.
What's next for Twitter?
We continue to focus on building a product that provides value for users.
We're building Twitter, Inc into a successful, revenue-generating company that attracts world-class talent with an inspiring culture and attitude towards doing business.
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