Wednesday, January 19, 2022

Twitter Posts Steady Increases in Users and Revenue for Q2, with Good Growth in Ad Spend

Twitter has published its Q2 earnings resultsThe platform is able to show steady growth in both revenue and users as it strives to maximize its growth. ambitious expansion targetsFor the next three years.

First, on users – Twitter’s Monetizable Active User (mDAU), now stands at 206M. This represents an 11% increase YoY and an additional 7M on its end. Q1 figure.

Twitter Q2 2021

As you can see here, all of that growth has come from international markets, with Twitter’s mDAU count actually declining slightly in the US from last quarter (38m in Q1.

That could be a result of the much-discussed ‘Trump bump’, with many speculating that the former President’s affinity for the platform likely spurred increased usage. While this could be true, Trump’s absence from the headlines could mean that fewer people are discussing issues that spark more Twitter conversations, which could have a positive impact.

It is not clear if this becomes a problem. Twitter has added only a million US users. over the past yearThat is because the company makes its majority of its revenue in the US market. It could be a problem if local growth continues stagnating. Twitter also saw a 69% increase in international revenue. This alleviates some of the concern but it will still be something to watch moving forward.

Another area of concern could be the platform’s growth in India, which has also been a key contributor to its overall usage stats. Indian Twitter usage surged some 74% during the pandemic, with the region’s 18.8 million users now making it the company’s third-biggest user market behind the US and Japan.

India is a major growth market for all social media apps. But, Twitter has emerged as a more recent contender. clashed with Indian regulatorsnew rules that give greater control to the Indian Government regarding local content removals, user info requests, and other matters. Twitter has now announced that it will be accepting the updated requirements after initially rejecting them. comply with the rulingBut tensions have been growing between the parties. It could also threaten to take further actions against Twitter, as it has threatened to do several times, which could have a major impact on its overall growth momentum.

But it hasn’t yet, and the numbers show that Twitter may well be on track to meet its growth projections, with its renewed focus on product development helping to spark new interest – even if, like Fleets, they don’t all go according to plan.

Twitter announced last week that it would be retiring Fleets next monthBut the upside is that Twitter will now be focusing more on its audio spaces, which will now take up most of the feed real estate. Twitter’s also adding a new, dedicated tab for Spaces in the app, as it looks to capitalize on the audio social trend and boost user engagement.

Twitter Spaces tab

Some may view Fleets as a failure. However, the fact that Twitter is trying to improve and iterating quickly seems like a positive. Twitter claims that research- and development expenses increased by 39% over the same period.

Twitter posted strong revenue results in Q2 with $1.19 billion, an increase of 74% YoY.

Twitter Q2 2021

As per Twitter:

“Total international revenue was $537 million, an increase of 69%, or 64% on a constant currency basis. Japan, which grew 40%, contributed $151 million (or 13%) to our total revenue in Q2. Japan is still our second largest market. Revenue from Japan declined on a sequential basis in Q2, reflecting typical country-specific seasonality.”

The vast majority of Twitter’s revenue was driven by ads ($1.05 billion), which have seen a surge in interest as a result of the pandemic-lead eCommerce boost. That’s likely to remain strong in the second half of the year (post-Olympics) as the vaccine roll-out continues, and more regions look to fully re-open and get back to normal operation.

“[We saw] strong demand from advertisers looking to launch new products and services, and connect with what’s happening on Twitter across a number of key verticals, including technology, auto, media, entertainment, and fashion. Our strong momentum in MAP and performance ads also continued in Q2.”

Twitter also noted that SMB customers saw an increase in their overall ad spending during the quarter. Total ad engagements rose 32% due to increased users and greater ad inventory.

This:

“Cost per engagement (CPE) increased 42%, primarily driven by like-for-like price increases across most ad formats due to the impact of COVID last year.”

So, due to the downturn in Q2 2020, Twitter’s saying that the increase here is disproportionate, but it may be worth monitoring your Twitter CPM numbers either way.

One other element that’s of particular interest is Twitter Blue, the platform’s new subscription offering, which is currently being tested in Australia and Canada. The option is Twitter’s first big move into direct user monetization, which could provide another revenue path – if users are willing pay for tweet add-on elements.

People pay so much for this?

Twitter included this generic note about Blue take-up in its shareholder letter.

“We’ve been encouraged by the initial response and look forward to further innovating and growing this new revenue stream with additional features, geographic expansion, and other offerings as part of our revenue durability strategy.”

Which doesn’t provide much insight (Twitter also noted similar about Fleets in its Q1 update), but it’s also likely too early to tell at this stage, with the offering only being made available last month.

Also, if you’re wondering why Twitter has been inserting more Topic prompts into your tweet feed of late:

“We also improved our ability to quickly connect people to the best conversations about their interests by better leveraging onboarding signals and introducing interactive feedback on Topic Tweets in the Home timeline. As a result, 41% of new customers in supported languages now follow Topics during sign-up, averaging ~14 Topics each.”

So Topics is working to improve Twitter content discovery. This could increase engagement. Twitter recently noted that it was experiencing a slowdown in its content discovery. reducing the frequency of Topic prompts in-stream after user complaints.

Overall, it’s a strong update from Twitter, though one which does benefit from a slowdown in Q2 2020, in terms of YoY comparison. I’m not sure how well it positions the company to reach its target of 123 million more usersIts revenue numbers are expected to increase by 2023, but they appear to be on track and heading in the right direction.

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