Twitter (TWTR) has released the financial results for Q2 2016, revealing that it brought on board 3 million new users. The company also generated $602 million in revenue with an earnings per share (EPS) of $0.13. As an aside, this quarter marks the one-year anniversary of Jack Dorsey resuming control (granted, at the time, he was the interim chief executive).
For those interested in Wall Street’s expectations, analysts estimated Twitter would have $606.77 million in revenue and an EPS of $0.10. Some projected that Twitter would bring in just 2 million new users.
“We’ve made a lot of progress on our priorities this quarter,” Dorsey said in a shareholder letter. “We are confident in our product roadmap, and we are seeing the direct benefit of our recent product changes in increased engagement and usage. We remain focused on improving our service to make it fast, simple and easy to use, like the ability to watch live-streaming video events unfold and the commentary around them.”
There are now more than 313 million monthly active users on the service, which is up 3 percent from this time last year — international growth has seen a 4 percent increase while U.S. has gone up just 1 percent. Once again, most of the total users are accessing Twitter from a mobile device (82 percent).
Advertising continues to be the main driver of revenue to the company, with $535 million coming in this quarter, an 18 percent increase from last year; 89 percent of that came through mobile advertising, a 1 percent increase from Q2 2015. Its Promoted Tweets with video are Twitter’s largest revenue-generating ad format.
Twitter’s stock performance hasn’t been exceptionally stellar since Dorsey assumed the mantle of power — in the past year, it’s down approximately 48 percent.
Shares in Twitter closed the day down 1.07 percent at $18.44. However, investors continue to worry about the company following the company sharing that it expects revenue next quarter to be the same as it predicted for this quarter. In after-hours trading, the stock has gone down 9.76 percent.
Getting back the users
The addition of 3 million users on Twitter comes as the company is trying to work its way back into the hearts and minds of internet users. When Dorsey assumed control as interim CEO, there were 316 million monthly active users, but growth had been slowing down for a while. Twitter said it added just 4 million users the following quarter, but in Q4 2015, there was no growth for the first time.
It wasn’t until April when the company announced that it had started to grow again, bringing on board 5 million new users.
As Twitter continues to make efforts to turn itself around, it hasn’t lessened the noise coming from pundits that are suggesting that time as an independent company (or worse) is running out. Earlier today, Carnegie Mellon professor Vivek Wadhwa suggested that Twitter was “toast,” largely due to the lack of user growth: “It’s losing momentum … I’m not optimistic about Twitter overall. Some short-term gimmicks, maybe, but long-term it’s toast.”
Former Yahoo CEO Ross Levinsohn also opined about Twitter earlier this month, days before his former employer wound up selling to Verizon for $4.83 billion. “I don’t see a chance that this [Twitter] is an independent company in 24 months,” he said.
Undeterred, Twitter recently launched a new marketing campaign aimed at explaining what it is to the general public.
— Twitter (@Twitter) July 25, 2016
Live events and video are the key
Twitter has been working furiously to show that it’s about more than just a tweet, but more about a real-time conversation taking place worldwide. A big part of that involves video and livestreaming, and in the past few months, the company has landed notable media partnerships, securing livestreaming rights with Major League Baseball, the National Hockey League, the Pac-12 broadcast network, and the National Football League.
Other efforts to showcase its live events include partnering with CBS News to air non-stop coverage from both the Republican and Democratic National Conventions this year.
Indirectly, it saw a prime use case of its Periscope service last month when members of the U.S. House of Representatives aired a sit-in over gun control laws not being brought to vote. Speaker of the House Paul Ryan ended the session, which turned off the cameras in the congressional chamber, but Democratic representatives turned to Periscope.
Kayvon Beykpour, Periscope’s CEO, said at the time: “Today is an example of what drives us. Twitter and Periscope take you where other cameras don’t — letting you experience breaking news through the eyes of those living it.”
Other improvements to Twitter include increasing the duration of videos that can be uploaded to the service; launching a dedicated app for influencers, celebrities, and verified users; adding searchable stickers in photos; debuting an app for businesses to manage their social media presence on the site; and eliminating photos and usernames from the 140-character limit.
For advertisers, Twitter said one challenge it’s seeing is in getting adoption for video ads on mobile. The company explained that to unlock marketing budgets, it’ll “also need to launch additional features and functionality over the next few quarters, including accurate audience verification, reserved buying, and reach and frequency planning and purchasing.” Twitter has already started laying the foundation for this, and it said soon advertisers will be able to “directly control the unique reach of their campaign across their target audience.”
But while the company is working on making itself more relevant to users, critics are chastising it over a lack of safety and the constant harassment some face, such as Ghostbusters actress Leslie Jones, who briefly left the service following a barrage of racist tweets and other bullying. Twitter seemed to act swiftly, shutting down some of the offending accounts and even banning for life Breitbart News editor Milo Yiannopoulos.
However, there are those who still view the service as an unsafe place, and even reporters have deleted their accounts. In the company’s shareholder letter, Twitter said, “We, along with the broader industry, have a lot more work to do in this area, but we’re committed to continuing to develop tools that will help keep Twitter, Periscope and Vine safe and open for people to connect in real time.”
We’ll see what Dorsey has to say about the matter during the company’s earnings call later today.