Twitter beats revenue targets with ad upgrades, shares jump 7 percent

Jul 22, 2021
Twitter beats revenue targets with ad upgrades, shares jump 7 percent

Twitter on Thursday reported higher revenue growth than Wall Street had expected, as the social media platform rolled out ad targeting improvements and said changes by Apple to keep iPhone user data private had hit ad revenue less than anticipated.

Shares of Twitter jumped 7 percent to $75 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.

Advertising revenue totaled $1.05 billion, up 87 percent from the year-ago quarter, and beat Wall Street estimates of $909.9 million.

Twitter has worked to improve the effectiveness of its ads, which have traditionally lagged larger rivals like Facebook, which holds vast troves of data on users.

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

“As we enter the second half of 2021, we are shipping more, learning faster, and hiring remarkable talent,” Twitter Chief Executive Jack Dorsey said in a statement on Thursday.

Jack Dorsey with a long beard and wearing an orange tie-dyed shirt
Twitter, led by Jack Dorsey, 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.
AFP via Getty Images

Twitter reported 206 million monetizable 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.

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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 the company invests in its engineering and product teams.

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.

A line chart of Twitter stock prices
Twitter’s stock price rose 7 percent to $75 in trading after the bell.
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‘ON FIRE’

Total revenue, which also includes revenue the company earns from data licensing, rose 74 percent year-over-year to $1.19 billion, beating analyst estimates of $1.07 billion.

Also on Thursday, Snap Inc reported its quarterly revenue grew 116 percent as advertisers flocked to its messaging app Snapchat to reach young consumers.

Twitter said 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.

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Twitter reported an 87 percent jump in ad revenue despite a decline in its US user base.
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In the case of Snap, the company said it saw a higher percentage of users allow the app to track them for advertising purposes than industry-wide rates that have been reported.

The full impact of Apple’s changes have yet to be seen, and some concerns still linger, said Ygal Arounian, a research analyst at Wedbush Securities, adding Twitter is reaping the benefits of a strong ad market.

“What is clear from Twitter and Snap’s results though is that the overall digital ad market is on fire right now, with the reopening further strengthening advertisers’ budgets,” he said.

Twitter forecast third quarter total revenue to be between $1.22 billion to $1.3 billion, roughly in line with or slightly ahead of consensus analyst estimates of $1.17 billion.

On an adjusted basis, Twitter earned 20 cents per share, well above the estimate of 7 cents.

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Shawn Utley

Shawn previously worked as a journalist for several local newspapers until he realized the potential of internet for news reporting. He joined the team as a contributor which provided him a platform to dedicate his experience and knowledge for a wider range of audience. He excels in curating business news for the website.