A Complete Guide to Twitter’s Q2 2016 Earnings Call

Twitter reported its second-quarter-2016 financial results Tuesday, and Wall Street was far from overwhelmed.

Twitter reported its second-quarter-2016 financial results Tuesday, and Wall Street was far from overwhelmed.

The social network posted revenue of $602 million, up 20 percent compared with the second quarter of 2015, with ad revenue of $535 million up 18 percent year-over-year. Mobile ad revenue represented 89 percent of total ad revenue.

The company’s generally accepted accounting principles net loss for the second quarter was $107 million, down from $137 million in the year-earlier period.

Twitter reported 313 million monthly active users at the end of the second quarter of 2016, up from 310 million at the end of the first quarter and up 3 percent year-over-year. The company said mobile MAUs represented 82 percent of total MAUs.

TwitterQ22016Revenue TwitterQ22016NetLoss TwitterQ22016MAUs

An earnings call was held after market close Tuesday, and highlights follow, along with content from Twitter’s letter to shareholders, which was also released after market close Tuesday.

Product overview

Twitter highlighted the changes it introduced to its Timeline during the first quarter of the year, moving from chronological to algorithm-based, as well as tweaks to how users can express themselves in tweets, including the introduction of stickers. The company said in the shareholder letter:

We’re seeing continued good results from the enhanced timeline launched in Q1, which helps people catch up on the best tweets from the people they follow. It drove increased retention and engagement (tweets, retweets, replies and likes) in Q2, and we expect the experience will continue to improve meaningfully over time as our machine learning systems get better.

We also launched a significant improvement in May to the Connect tab so that people can get better account recommendations based on existing follows and other engagement. As people follow more accounts that are relevant to their interests, their timelines get better as a result.

And finally, we’re continuing to give people more ways to express themselves in a tweet. In May, we announced upcoming changes to simplify tweets–including what counts toward your 140 characters. For instance, @names in replies and media attachments (like photos, GIFs and videos) will no longer “use up” valuable characters. We’re giving developers time to prepare for these changes and expect to launch in the fall. Simplifying these rules will help people express themselves more easily without compromising the brevity and speed that makes Twitter unique.

Photos within tweets also got more expressive in Q2 with the launch of #Stickers, a fun way to decorate photos on Twitter with hundreds of accessories, emojis and other props. Any public tweet containing a sticker is easily searchable and discoverable, creating a new visual spin on the hashtag; simply tapping on a sticker brings up a new timeline of tweets from people around the world using that same sticker.

And during the question-and-answer portion of Tuesday’s earnings call, in response to a question from Canaccord Genuity analyst Michael Graham, Twitter co-founder and CEO Jack Dorsey replied:

We’ve been focused on four areas in the core product. And we believe there’s a lot more room within these four areas to really build a lot of strength. All of this falls under the line of two of the most important use cases that we want to focus on, which is news. And we think Twitter is better at real-time news and live news than anyone else on the platform–in the world, I should say. And also social commentary–anyone can comment about what’s happening now and share their thoughts, and sometimes those go into conversations.

So, that’s what we want to make stronger and also easier. So, four areas that we’ve been focused on there. No. 1 is around on-boarding. We’ve been applying a lot more machine learning and deep learning to our on-boarding, so we can match people faster to their interests. And we believe that that interest drive is really important to us and unique to us.