2 things to look out for in tonight’s Twitter results
Twitter’s results tonight (out around 10pm GMT) will be our first look into a company that had one of the hottest IPOs last year and is currently trading at more than double its $26 (£16) opening price in November.
These are the two main things to look out in Twitter’s numbers tonight:
User Growth
One of the big worries surrounding Twitter is that its user base growth will continue to slow. Reported at around 160m monthly active users last year this figure should now be somewhere just above 200m.
However Twitter has yet to solve its “onboarding problem” – the difficulty that new users face in knowing who to follow and what the service should be used for – causing a significant barrier to dramatic user growth.
Twitter’s slow user growth (in comparison to Facebook’s 1.2bn users or WhatsApp’s 450m) could end up being a problem, especially when it comes to monetisation.
Advertising
Twitter’s revenue – largely generated from advertising in the form of Promoted Tweets, Promoted Accounts and Promoted Trends – is expected to jump from $169m in the third quarter to around $230m during the fourth quarter.
Twitter has historically monetised its users at a much lower rate than Facebook, but is steadily closing this gap. In the fourth quarter year-on-year advertising growth is expected to be around 121 per cent (slightly below its third quarter growth of 123 per cent).
More advertisers are using Twitter and existing advertisers are increasing their spend. 60 per cent of existing Twitter advertisers expect to increase their budget in the next year, according to an Ad Age survey.
However much of Twitter’s use to businesses isn’t profitable – everything from hashtags used on TV, interactions with corporate accounts, and the sharing of viral links or photos to name a few.
Investors will be listening into the results call tonight to hear whether Twitter CEO Dick Costolo gives any indication of a wider monetisation strategy for the service going forward.