Twitter in Q2: Revenue Up 61% From Last Year, But User Growth Is Lacking

Twitter's first quarterly earnings report since former CEO Dick Costolo stepped down looks like a mixed bag. Though revenue is up 61 percent year-over-year, user growth is slowing.

Twitter’s first quarterly earnings report since former CEO Dick Costolo stepped down looks like a mixed bag. Though revenue is up 61 percent year over year, user growth is slowing.

In Q2 2015, Twitter is now up to 316 million monthly active users (MAUs) — a rise of 15 percent year-over-year, and just 8 million from Q1. While that might not seem too terrible, Twitter pointed out that this increase is largely because of SMS Fast Follow users who (as Twitter’s Help Center points out) aren’t true account owners.

Excluding these SMS users, Twitter has 304 million monthly active users (302 million in the previous quarter). Mobile MAUs were roughly 80 percent of the total.

Interim CEO Jack Dorsey commented on Twitter’s Q2 performance in a press release:

Our Q2 results show good progress in monetization, but we are not satisfied with our growth in audience. In order to realize Twitter’s full potential, we must improve in three key areas: ensure more disciplined execution, simplify our service to deliver Twitter’s value faster, and better communicate that value.

On the revenue side, there are some promising signals for the future:

  • Advertising revenue totaled $452 million, an increase of 63 percent year-over-year. Excluding the impact of year-over-year changes in foreign exchange rates, advertising revenue would have increased 71 percent.
  • Mobile advertising revenue was 88 percent of total advertising revenue.
  • Data licensing and other revenue totaled $50 million, an increase of 44 percent year-over-year.
  • U.S. revenue totaled $321 million, an increase of 53 percent year-over-year.
  • International revenue totaled $181 million, an increase of 78 percent year-over-year.

Twitter also shared outlooks for Q3 and for the remainder of the year.

Outlook for Q3:

  • Revenue is projected to be in the range of $545 million to $560 million.
  • Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is projected to be in the range of $110 million to $115 million.
  • Stock-based compensation expense is projected to be in the range of $190 million to $200 million, excluding the impact of equity awards that may be granted in connection with potential future acquisitions.

Outlook for the full year:

  • Revenue is projected to be in the range of $2.20 billion to $2.27 billion.
  • Adjusted EBITDA is projected to be in the range of $520 million to $540 million.
  • Capital expenditures are projected to be in the range of $450 million to $550 million.
  • Stock-based compensation expense is projected to be in the range of $750 million to $790 million, excluding the impact of equity awards that may be granted in connection with potential future acquisitions.

Image courtesy of Tsyhun / Shutterstock.com.