Twitter has just released the results of its earnings for the 2nd Quarter, and the results look fantastic. Based on the report outlining Twitter’s results, the platform has seen a steady increase in both users and revenue, pushing the platform to continue working on its ambitious expansions set to be developed and released over the next three years.
The first of many notable results from the report is the increase in Twitter’s Monetizable Daily Active User (mDAU). Twitter’s mDAU count is now currently at 206 million, which is a notable increase of 11% YoY, and is an additional 1 million on the platform’s first quarter figure.
As can be seen in the graphic above, the growth in the platform’s mDAU stems mostly from international markets, and Twitter’s mDAU count has actually lessened as compared to the first quarter.
The decline in US mDAU count is possibly due to the “Trump bump”, wherein users and theorists alike have speculated that increased usage of the platform is due to the former President’s affinity for Twitter. While we cannot be sure whether this statement is factual, Trump stepping into the sidelines could definitely mean that fewer people are discussing issues and tweeting on the platform.
While we cannot be sure if the absence of Trump from the platform will become an issue or not, the decline in US Twitter users certainly is. Over the past year, Twitter has only succeeded in adding one million new US users, and as most of Twitter's Revenue results from the US market, the decline in local growth is definitely proving to be an issue. However, despite the decline in local growth and revenue, Twitter has seen a 69% boost in international revenue, giving them some breathing room to monitor and figure out where to go with the US market.
Another area of concern that the platform may need to focus on is its growth within India, which has greatly contributed and boosted Twitter’s stats. According to reports, Indian Twitter usage increased by a whopping 74% during the pandemic, and India’s 18.8 million users are now Twitter’s this-biggest market, just behind the US and Japan.
As a matter of fact, India has contributed a significant amount to the growth of all social apps, however recently, tensions have been rising between Twitter and the Indian Government. Tensions between the two parties stems from the disagreement on the Indian government’s recent requests to change rules regarding local content removals and user info requests. Twitter has agreed to comply with the new rules set by the Indian Government, but only after initially rejecting. Due to these issues, Twitter is in danger of the Indian Government taking action against the platform, which could ultimately take a big blow on Twitter’s growth.
However, as of now, the two parties have yet to make a move and Twitter stays on its track and continues to grow. With the platform working on a number of different products and features, it is highly likely that growth projections will be met.
It was announced last week that Twitter would be retiring Fleets next month. While Fleets may be missed by some users, Twitter has announced that they will be putting a bigger focus on their audio Spaces. Twitter plans to develop spaces and capitalize on the audio social trend as they try to maintain growth. They will also be adding a new tab dedicated solely to Spaces.
While some may see Fleets as a great Twitter failure, it's great to see Twitter trying. And, while a few resources may have been wasted, it still seems like a positive. According to Twitter, research and development expenses grew by 39% during this period.
In terms of revenue, Twitter also produced an amazing result of $1.19 billion in the second quarter, a 74% increase in YoY.
As stated by 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.”
Most of Twitter’s revenue was driven by ads ($1.05 billion), which have seen a great increase in interest due to the pandemic and the eCommerce boost.
The eCommerce boost is likely to remain strong as the year goes on, and the vaccination efforts continue and more regions slowly go back to normal.
“[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 has also noted that SMB customers have increased their overall ad spend and ad engagements have increased by 32%. They stated that this was due to more users and more ad inventory in the quarter.
“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.”
Due to the figures in 2020 Q2 going down, the increase in figures this year is disproportionate, but Twitter CPM may still be worth monitoring either way.
Another element of interest in Twitter is the new subscription service, Twitter Blue. As of now, the service is being tested in Australia and Canada. This new service is the first of many moves that Twitter will take as the platform tries to delve into the world of direct user monetization. If proven to be successful, then Twitter may have found another revenue path.
The question stands, however, are people paying?
Based on a note from Twitter’s shareholder letter on Blue take-up:
“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.”
While this does not provide much insight as Twitter has noted similar things about Fleets, it is still too early to tell whether the service will be successful.
Moreover, if you have been wondering why so many Topic prompts have been popping up into your Twitter feed:
“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.”
Twitter is using Topics to improve content discovery and engagement on the platform. However, Twitter has recently announced that, due to a number of complaints, they will be reducing the amount of in-stream Topic prompts.
All in all, Twitter’s new report is a strong one, even though it has benefited greatly from the slowdown in Q2 2020. While we can't be too sure if this means the company will reach its target of 123 million users in 2023, revenue numbers show that they are on track and everything seems to be going well.