Twitter stock soars 29% after outstanding quarter

Steven Loeb · July 29, 2014 · Short URL:

Twitter easily beats expectations with $312M revenue, $0.02 EPS

Shares of Twitter are exploding in after hours trading, after coming in ahead of revenue expectations in its second quarter earnings report, which was released on Wednesday.

The stock is up over 29%, after going up 1.74%, or 66 cents, in regular trading to finish at $38.59 a share.

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.

The company saw its average monthly active users (MAUs) grow 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. Mobile MAUs represented 78% of the company's total MAUs. User growth had been a problem for the company in its last two earnings reports, and this time it was able to beat expectations, as analysts had expected MAUs to grow at 21%.

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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What is Twitter?

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, 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. 

Where did the idea for Twitter come from?

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.

How is Twitter built?

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.

How do you make money from Twitter?

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, 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 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.