Twitter Beats Revenue Growth Expectations With Advertisement Targeting Improvements

Twitter has worked to improve the effectiveness of its advertisements, introducing 2,500 new topic categories.

By Reuters | Updated: 23 July 2021 10:47 IST

Twitter Beats Revenue Growth Expectations With Advertisement Targeting Improvements

Twitter reported 206 million monetisable daily active users, term for users who are served advertising

Highlights

Shares of Twitter rose 5 percent to $73 (roughly Rs. 5,430)
Advertising revenue totaled $1.05 billion (roughly Rs. 7,820 crores)
Twitter has worked to improve the effectiveness of its advertisements

Twitter on Thursday reported higher revenue growth than Wall Street had expected, as the social media platform rolled out ad targeting improvements to help brands reach potential customers.

Shares of Twitter rose 5 percent to $73 (roughly Rs. 5,430) in trading after the bell.

Since the start of the year, Twitter has raced to introduce products in new areas like audio-only chat rooms and newsletter publishing in an effort to turn around years of business stagnation and reach its goal of doubling annual revenue by 2023.

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Advertising revenue totaled $1.05 billion (roughly Rs. 7,820 crores), up 87 percent from the year-ago quarter, and beat Wall Street estimates of $909.9 million (roughly Rs. 6,780 crores).

Twitter has worked to improve the effectiveness of its advertisements, introducing 2,500 new topic categories during the quarter to help users find content they're interested in, all of which provides more ad targeting data back to Twitter, the company said on a conference call with analysts.

"We get great signal about what people are most interested in, where they are or the places they care about," said Twitter Chief Financial Officer Ned Segal during the call.

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Those improvements, along with higher demand from advertisers seeking to reach consumers as countries reopen from pandemic restrictions, helped propel ad revenue, Twitter said.

The strong results from both Twitter and its tech peer Snap, which reported quarterly revenue growth of 116 percent on Thursday, shows "that the overall digital ad market is on fire right now, with the reopening further strengthening advertisers' budgets," said Ygal Arounian, a research analyst at Wedbush Securities.

Twitter reported 206 million monetisable daily active users (mDAU), its term for users who are served advertising, for the second quarter ended June 30, matching analyst targets of 205.9 million users, according to IBES data from Refinitiv.

Its US user base declined by 1 million over three months from the previous quarter due to a lighter news cycle in the United States, Twitter said, with total users worldwide in line with Wall Street targets.

Total revenue, which also includes revenue the company earns from data licensing, rose 74 percent year-over-year to $1.19 billion (roughly Rs. 8,870 crores), beating analyst estimates of $1.07 billion (roughly Rs. 7,970 crores).

Future investments

The San Francisco-based company now expects headcount and total costs and expenses to grow at least 30 percent for the full year, up from its previous guidance of 25 percent, as it invests in its engineering and product teams.

Chief Executive Jack Dorsey, a longtime proponent of Bitcoin, said during the earnings call the digital currency "is a big part" of Twitter's future and could be used for ecommerce transactions on the platform or to tip popular content creators. Bitcoin price in India stood at Rs. 24.25 lakhs as of 9:30am IST on July 23.

Twitter added that new privacy controls that Apple implemented in April, which are designed to limit digital advertisers from tracking iPhone users without their consent, had a lower-than-expected impact on revenue in the second quarter.

The full impact of Apple's changes have yet to be seen, and some concerns still linger, Arounian said.

Twitter forecast third quarter total revenue to be between $1.22 billion (roughly Rs. 9,090 crores) to $1.3 billion, roughly in line with or slightly ahead of consensus analyst estimates of $1.17 billion (roughly Rs. 9,680 crores).

On an adjusted basis, Twitter earned 20 cents (roughly Rs. 14) per share during the second quarter, well above the estimate of 7 cents (roughly Rs. 5).

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