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Twitter Slashes 9% of Workforce as Q3 Profit, Revenue Top Expectations

Thursday, October 27, 2016 5:31
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(Before It's News)

twitter-twtr-logoStruggling social media giant Twitter Inc (NYSE:TWTR) announced additional layoffs this morning in conjunction with its better-than-expected Q3 earnings report.

The San Francisco-based company reported Q3 net income of $0.13 per share, easily topping Wall Street’s view of $0.09. Revenue rose 8.3% from last year to $616 million, also beating estimates for $605.5 million.

Twitter noted its third quarter adjusted profit was $181 million, up 28% year-over-year, and well above its guidance of $135 to $150 million. Here’s a breakdown of how TWTR’s revenue segments fared in the latest period:

  • Advertising revenue rose 6% to $545 million.
  • Mobile advertising revenue was 90% of total advertising revenue.
  • Data licensing and other revenue rose 26% to $71 million.
  • U.S. revenue rose just 1% to $374 million.
  • International revenue surged 21% to $242 million.

Looking ahead, Twitter forecast full-year 2016 earnings to range from $700 to $715 million, on margins of 27.5% to 28% (up from prior guidance of 26-27%).

As for the all-important user metrics, average monthly active users (MAUs) were 317 million in Q3, up a modest 3% from the same period last year. On a sequential basis, MAUs rose 1.3% from Q2, however, indicating some potential acceleration recently.

U.S. MAUs were 67 million for Q3, up 1% from last year and 1.5% from Q2. International MAUs were 250 million for Q3, rising 4% year-over-year and 1.2% from Q2. Mobile MAUs represented 83% of the total users.

User growth has been a massive issue for Twitter in recent years, as the company appears to be reaching a top in terms of how many people can actually benefit from using its niche platform. The company has responded with new initiatives like live streaming sporting events to try and reel new users in.

Total ad engagements were surged 91% year-over-year, while cost per engagement (CPE) plunged 44%,. Average daily active usage (DAU) grew 7% year-over-year, an acceleration from 5% in Q2 and 3% in Q1.

The company commented via press release:

Refining our core service and improving safety are critical to growing our audience. In Q3, we saw accelerating rates of growth on a year-over-year basis for daily active usage, Tweet impressions and time spent on Twitter for the second consecutive quarter. The increase was largely driven by product improvements (including better relevance in the timeline and notifications) as well as organic growth.

TWTR also said a new round of layoffs will cut 9% of its employees:

This morning we announced a restructuring and reduction in force affecting approximately 9% of Twitter’s positions globally. The restructuring, which focuses primarily on reorganizing our sales, partnerships and marketing efforts, is intended to create greater efficiency as we move toward our goal of driving toward GAAP profitability in 2017.

Twitter shares rose $0.68 (+3.93%) to $17.97 in premarket trading Thursday. Prior to today’s report, TWTR had fallen 25.28% year-to-date.

TWTR-2016-10-27

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