Twitter slammed after Q1 earnings leak, misses badly

Twitter stock nosedives over 18% as revenue falls far short of analyst expectations

Financial trends and news by Steven Loeb
April 28, 2015
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Shares of Twitter went into freefall on Tuesday, dropping over 18% in regular trading after its first-quarter earnings reportedly leaked, showing the company badly missing expectations with $436 million in revenue, while analysts wanted to see $457 million.

Sadly for Twitter, those reports turned out to be accurate. 

The company did, however, reported non-GAAP EPS of $0.07, beating the $0.04 expected by analysts. So at least there's that.

"While we exceeded our EBITDA target for the first quarter, revenue growth fell slightly short of our expectations due to lower-than-expected contribution from some of our newer direct response products," Dick Costolo, CEO of Twitter, said in a statement.

"It is still early days for these products, and we have a strong pipeline that we believe will drive increased value for direct response advertisers in the future. We remain confident in our strategy and in Twitter's long-term opportunity, and our focus remains on creating sustainable shareholder value by executing against our three priorities: strengthening the core, reducing barriers to consumption and delivering new apps and services."

Twitter also continued to struggled in the one area that has been giving it trouble in recent quarters: user growth.

In the first quarter, Average Monthly Active Users (MAUs) were 302 million, up only 18% year-over-year and compared to 288 million in the previous quarter. Average Mobile MAUs represented approximately 80% of total MAUs.

Once again, almost all of Twitter's revenue came from advertising, which accounted for $388 million, an increase of 72% year-to-year. It would have been 78% if not for foreign exchange rates. Mobile advertising revenue was 89% of total advertising revenue.

Data licensing, and other revenue, came to $48 million, an increase of 95% year-over-year. Of Twitter's total revenue, $146million, or 34%, was international, an increase of 109% year-over-year.

Twitter now is projecting revenue of between $470 and $485 million, with adjusted EBITDA in the range of $97 million to $102 million, for the next quarter. For the full year 2015, it expects to see revenue between $2.170 billion to $2.270 billion, down from $2.3 billion to $2.35 billion last quarter,, with an adjusted EBITDA in the range of $510 million to $535 million, down from $550 million to $575 million.

In addition to its earnings, Twitter also made two announcements today "aimed at strengthening its direct response capabilities."

First, it entered into a definitive agreement to acquire TellApart, a marketing technology company providing retailers and e-commerce advertisers with unique cross-device retargeting capabilities through dynamic product ads and email marketing.

Second, it announced a partnership with Google's DoubleClick platform to improve advertising performance measurement and attribution for Twitter direct response marketers.

As part of the partnership, Twitter will also make its inventory available through the DoubleClick Bid Manager, making it easier for clients who prefer to centralize their buying through DBM to create and manage campaigns on Twitter.

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