Twitter has released its Q2 earnings results, which show steady increases in both users and revenue, as the platform works to maximize growth in line with its ambitious expansion targets for the next three years.
First off, on users - Twitter's Monetizable Daily Active User (mDAU) count is now up to 206M, an increase of 11% YoY, and an additional 7 million on its Q1 figure.
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. Which may or may not be correct, but with Trump now out of the headlines, it could be that fewer people are discussing the issues that spark more tweets, which could be a resultant impact.
Whether that becomes an ongoing concern is another question. Twitter has only added a million new US users over the past year, and with the company earning the majority of its revenue from the US market, that could become an issue if local growth continues to stagnate. Twitter has also seen a 69% boost in international revenue, which alleviates some of that concern, but still, it'll be an element to monitor 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 key growth market for all social apps, but more recently, Twitter has clashed with Indian regulators over new rules that give more control to the Indian Government in regards to local content removals and user info requests. After initially rejecting the updated requirements, Twitter has now said that it will comply with the ruling, but tensions have been brewing between the two parties. If the Indian government were to take further action against Twitter, which it has threatened several times, that could deal a significant blow to its broader 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.
Last week, Twitter announced that it would be retiring Fleets next month, but the upside to that will be a bigger focus on its audio Spaces, which will now take over that top of 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.
Some will view Fleets as a failure, but the fact that Twitter is trying, and iterating, so quickly seems like a positive, even if it does occupy development resources as a result. Twitter says that research and development expenses grew 39% in the period.
In terms of revenue, Twitter posted a strong result of $1.19 billion in Q2, a 74% increase YoY.
As per Twitter:
“Total international revenue was $537 million, an increase of 69%, or 64% on a constant currency basis. Japan remains our second largest market, growing 40% and contributing $151 million, or 13% of total revenue in Q2. 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 notes that SMB customers increased their overall ad spend in the quarter, while total ad engagements increased 32%, due to more users and more ad inventory.
“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.
So are people paying so far?
Twitter included this generic note on Blue take-up within 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 are working to improve Twitter content discovery, which could help maximize engagement. That said, Twitter did note recently that it's 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 users by 2023, but its revenue numbers look to be on track, and headed in the right direction.