It`s a critical day for Twitter tomorrow, and I will close my eyes and cross my fingers tomorrow after the bell. Twitter`s third-quarter earnings report comes out tomorrow and that`s right after a dramatic CEO search and only a few weeks after co-founder Jack Dorsey became permanent CEO.
What I will look for tomorrow is Twitter`s user growth measured by MAU`s, which ended Q2 with 316 million (+15% YoY). I look at it as more important than their revenue and earnings because it is vital and fundamental for their future.
Wall Street anticipate revenue to come in at $556,99 million and an EPS of $0,05, which means a revenue growth of 55% and a YoY EPS growth of 500%. Analysts are betting the revenue to come in at $560 million.
Why are analysts more optimistic than Wall Street? It`s simply because Twitter`s advertising revenue last quarter was up 63%, and analysts are expecting a better growth for Q3. About 90% of total revenue is coming from Advertising revenue.
Right after the Q2 results, Twitter`s shares plummeted 13% despite that the company`s revenue and earnings was better than expected. It sounds strange for many but user growth is seen as a more important measure than revenue and earnings.
The user growth is slow and it grew 12% YoY, and that is only 0,07% sequentially.
I`m really sceptical when I hear a CEO on that level have two different jobs. Jack Dorsey is CEO and a co-founder of Twitter. But he is also working in Square at the same time. How is that possible? And what management is it in Twitter at the moment?
Last time Twitter reported earnings, Jack Dorsay was serving as interim CEO, and he said that the management was «not satisfied with Twitter`s growth of audience.» Twitter`s MAU`s is «only» 304 million, while Facebook has 1,19 billion MAU`s.
Marketers using Twitter can test one ad against a control group, but on Facebook marketers can test multiple campaigns at once. That`s because Twitter is much smaller than Facebook. The system is great because marketers can better know the true value of their ad. Twitter`s partnership with Alphabet`s DoubleClick can change that.
The company has announced a 336 job cuts and since Jack Dorsey entered as a leader, Omid Kordestani who is an ex-Google employee, came in as an executive chairman for Twitter. Other key executives are fleeing the company, like former Vice President of Corporate Development Rishi Garg.
CEO Jack Dorsay and Twitter need to change their platform and start with a new strategy. All this will take a lot of time, and investors will probably listen more to news like that than revenue, earnings and user growth tomorrow.
Twitter on Tuesday after the bell.
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