Twitter (TWTR) Q1 Earnings & Revenues Increase Year Over Year

Twitter (NYSE:TWTR) reported first-quarter 2019 non-GAAP earnings of 37 cents per share that skyrocketed 131.3% year over year.

Excluding benefit from deferred tax asset worth $124.4 million, adjusted earnings were 9 cents compared with 8 cents reported in the year-ago quarter.

Revenues increased 18% year over year to $787 million. On a constant-currency (cc) basis, revenues grew 20%.

The Zacks Consensus Estimate for earnings and revenues were pegged at 15 cents and $775 million, respectively.

Shares were up 9.3% in pre-market trading following the impressive results.

User Base Details

Average monetizable daily active users (mDAU) were 134 million in the reported quarter compared with 120 million in the year-ago quarter and 126 million in the previous quarter.

Average U.S. mDAU were 28 million compared with 26 million in the year-ago quarter and 27 million in the previous quarter. Moreover, average international mDAU were 105 million compared with 94 million in the year-ago quarter and 99 million in the previous quarter.

Twitter’s average monthly active users (MAUs) totaled 330 million, down from 336 million in the year-ago quarter but up from 321 million in the previous quarter. The company will discontinue reporting MAU from second-quarter 2019.

Focus on Reducing Abuse & New Products: Key Highlights

Twitter has been focusing on reducing abuse on its platform. Initiatives, including detection of rule violations and improvement in safety of users have been prioritized. This led to removal of 2.5 times more tweets that shared personal information in the reported quarter.

Additionally, the company launched a number of product improvements, including a public prototype app (twttr) and a new Twitter camera.

The primary aim of the public prototype app is to make Twitter more conversational. The new camera makes it easy for users to capture photos and share those by swiping left from their Home timeline.

Moreover, Twitter inked a number of deals with the likes of NBA, Turner Sports and FOX Sports during the reported quarter. These expanded the company’s content portfolio.

Quarter Details

U.S. revenues (54% of revenues) increased 25% year over year to $432 million.

International revenues (46% of revenues) increased 11% to $355 million. At cc, revenues grew 15%.

Japan remained Twitter’s second largest market and accounted for 17% of total revenues that grew 16% year over year to $136 million.

Advertising revenues increased 18% to $679 million. At cc, advertising revenues grew 20%.

U.S. advertising revenues totaled $363 million, up 26% year over year. International ad revenues grew 10% to $317 million.

Ad engagements increased 23% year over year, driven by higher ad impressions and improved clickthrough rates (CTR). Cost per ad engagement was down 4% on improved CTR and mix shift toward video ads.

Nevertheless, momentum in Video ads, driven by Video Website Card and in-stream pre-roll, continued in the quarter.

Data licensing and other revenues increased 20% from the year-ago quarter to $107 million. The company expects moderate data licensing revenue growth in 2019, as the multiyear enterprise renewal cycle is almost complete in data and enterprise solutions (DES).

Twitter’s total costs and expenses were $693 million, up 18% on a year-over-year basis. The growth was primarily attributed to higher infrastructure-related expenses and video content costs.

Adjusted EBITDA increased 19.1% to $290.6 million. GAAP operating income surged 25% from the year-ago quarter to $93.7 million.

Guidance

For second-quarter 2019, total revenues are expected between $770 million and $830 million. The Zacks Consensus Estimate for revenues is currently pegged at $821 million.

Moreover, operating income is expected between $35 million and $70 million.

For fiscal 2019, management expects GAAP operating expenses to increase roughly 20% year over year.

Twitter expects headcount growth to slightly exceed 2018’s 16% year-over-year growth.

Capital expenditures are expected between $550 million and $600 million.

Zacks Rank & Stocks to Consider

Twitter has a Zacks Rank #3 (Hold).

Alteryx (NYSE:AYX) , Ceridian HCM Holding (NYSE:CDAY) and ANGI Homeservices (NASDAQ:ANGI) are some better-ranked stocks in the broader computer and technology sector. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

While Alteryx and Ceridian HCM are set to report quarterly results on May 1, ANGI Homeservices is scheduled to report on May 8.

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