This week we get a read on the social-media space, with companies like Twitter (NYSE:TWTR), Facebook (NASDAQ:FB), Yelp (NYSE:YELP) and LinkedIn (NYSE:LNKD) all reporting second quarter results.
Tonight Twitter and Yelp are up, the two less-favored of the four social-media companies reporting this week. Estimize is looking for Twitter to post EPS of $0.06 on Tuesday, a penny higher than Wall Street, signifying 200% growth year-over-year. Revenue expectations are for $490M, slightly higher than the Street’s $487M and company guidance of $477.5M.
More important than the fundamentals are those closely watched user engagement numbers in the form of average monthly active users (MAUs) and daily active users (DAUs). Twitter disappointed investors in the latest quarter, posting average MAUs of 302M, an 18% increase, prolonging the fear that the company is not growing fast enough. For comparisons sake, Facebook, a much larger company, recorded MAUs of 1.4B last quarter, up 13%. One issue the micro-blogging site is trying to solve is the fact that users find it too difficult to use. Twitter hopes recently introduced features such as “while you were away,” Instant Timelines and group Direct Messaging will help to alleviate this problem.
The company has been progressing nicely in regards to mobile, despite being about a year and a half behind Facebook mobile efforts. Average mobile MAUs represented approximately 80% of total MAUs. Twitter also debuted app install ads last quarter, and reported that 89% of ad revenues now come from mobile. As the world continues to race towards mobile adoption, investors will be looking for updates on Twitter’s progress.
Twitter has also made an aggressive bet on video through applications like Vine and the recently acquired Periscope which allows users to stream live videos from their mobile phones. Other acquisitions during the second quarter include TenXer, a collaboration platform, TellApart and advertising/sales solution and Whetlab, a machine learning startup. In addition to hearing about these and future acquisitions, the marketplace also want to hear about plans to hire a new CEO following the highly publicized departure of former-CEO Dick Costolo.
Also out after the bell are results from Yelp. The Estimize community is looking for flat EPS vs. Wall Street’s $0.01, a significant decrease from the year-ago result of $0.04. Revenue expectations from the Estimize community are also lower at $132.7M as compared to the Street’s $133.2M and company guidance of $132.5M.
Yelp’s stock tanked after Q1 results were reported. Not only did they miss on both the top and bottom-line, but the company reported they had stopped the process of trying to sell itself, to the chagrin of investors. Rumors still swirl about the possibility of a takeover, with Facebook and Priceline being the most likely acquirers. Overall, the stock is down nearly 40% YTD.
Despite last quarter’s misses, the company continues to deliver impressive revenue growth, even as growth in performance metrics slow. A lot of this can be attributed to the fact that Yelp is looking to expand outside of the U.S. where the purchasing power of businesses and users is much lower. While international expansion is pinching the bottom-line in the short-term, it will certainly benefit in the longer term, and hopefully help with the company’s slowing traffic growth which only up-ticked to 8% last quarter. Plans to invest in marketing to reignite growth will also be a short-term drag on margins.