4 key takeaways from Twitter’s Q1 earnings report

Twitter Inc. (NYSE: TWTR) said on Thursday that its earnings and revenue came in better than expected in the fiscal first quarter. The company attributed its hawkish performance to robust ad sales in recent months.

1. Financial performance

Twitter reported £48.79 million of net income in the first quarter that translates to 5.74 pence per share. In the same quarter last year, it had posted £5.95 million of loss, or 0.72 pence per share. On an adjusted basis, the microblogging company earned 11.48 pence per share in Q1. Twitter valued its revenue in the recent quarter at £750 million versus the year-ago figure of £579.41 million.

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According to FactSet, experts had forecast the company to record £740 million of revenue and 10.04 pence of adjusted earnings per share. In the prior quarter (Q4), Twitter had noted a 28% growth in its revenue.

2. Average monetizable daily active users

Twitter reported 199 million average monetizable DAUs (daily active users) in Q1, or 20% higher than the same quarter last year. Analysts, on the other hand, had forecast an even higher 200 million DAUs for the social networking service in the recent quarter.

Ad revenue, the San Francisco-based company said, climbed by 32% in the first quarter to £644.99 million. Total ad engagement saw an 11% year over year growth. In separate news from the United States, Mastercard also reported its quarterly results on Thursday.

3. Guidance for the fiscal second quarter

For the fiscal second quarter, Twitter now forecasts up to £86.09 million of GAAP loss. It expects revenue to fall in the range of £703.10 million to £770 million in Q2. Analysts, on the other hand, are calling for £760 million of revenue and 2.87 pence of GAAP loss per share.

4. Wedbush analyst Ygal Arounian comments on Twitter’s earnings report

Wedbush Securities’ Ygal Arounian commented on Twitter’s earnings report on CNBC’s “Closing Bell” and said:

“As the pandemic starts to unwind and people start to go out more, investors are trying to understand what user growth will look like in the remainder of the year. Twitter guided for lower-than-expected users in the second quarter. So, I think that’s really the big thing that’s pressuring the shares right now.”

Arounian has a rating of ‘neutral’ on Twitter with a price target of £53.81.

Impact on the share price

Twitter shares were reported about 10% down in extended trading on Thursday. The stock is currently exchanging hands at £41.68 per share versus £39.12 at the start of the year. At the time of writing, Twitter has a market capitalisation of £37.30 billion.