Future revenue at Twitter? Monetizing unique visitors

Twitter has hundreds of millions of visitors who don't have accounts, but can be monetized

Financial trends and news by Steven Loeb
July 29, 2014
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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.

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