Social media platform provider Twitter Inc reported better-than-anticipated fiscal 2021 first-quarter earnings and revenues.
However, the stock lost 15.16% or $9.87 to close at $55.22 as the company forewarned about increasing expenses related to staff count increase. The weak second-quarter revenue guidance also fueled the selloff.
San Francisco, the California-based company, reported first-quarter 2021 revenues of $1.036 billion, up 28% from $807.64 million in a similar quarter last year.
In the quarter ended March 31, 2021, Twitter swung to a profit of $68.01 million, or $0.08 per share, from a net loss of $8.396 million, or $0.01 a share; in the quarter ended March 31, 2020.
Excluding stock-based compensation expenses, income tax benefits, amortization of intangible assets, impairment on investments, and non-cash interest expenses, among others, 1Q 2021 non-GAAP net income was $141.211 million, or $0.16 per share, compared with a non-GAAP net income of $87.41 million, or $0.11 a share, in 1Q 2020.
Analysts polled by Thomson Reuters anticipated adjusted earnings of $0.14 per share on revenues of $1.03 billion.
Commenting on the quarterly results, Ned Segal, Twitter’s CFO, said, “Q1 was a solid start to 2021, with total revenue of $1.04 billion up 28% year-over-year, reflecting accelerating year-over-year growth in MAP revenue and brand advertising that improved throughout the quarter.”
Segment-wise,
- Advertising revenue aggregated $899 million, an increase of 32% on a y-o-y basis. Specifically, total ad engagements rose by 11% year-over-year. Also, cost per engagement (CPE) grew 19% year-over-year.
- Data licensing and other revenues were $137 million, up 9% on a y-o-y basis.
- US revenue increased 19% y-o-y to $556 million.
- International revenue got a boost of 41% to $480 million.
Stock-based compensation (SBC) expensed increased by 13% y-o-y to $111 million and was roughly 11% of aggregate revenue.
Twitter also reported average monetizable daily active users (mDAU) of 199 million for the first quarter, up 20% from 166 million last year and compared to 192 million in the prior quarter. The reported figure was in line with analyst estimates.
Despite the impressive results, the stock declined because of the weak second-quarter revenue outlook. For the second quarter, Twitter forecast revenues of between $980 million and $1.08 billion. The mid-point of the guidance range was below the $1.05 billion forecast by Wall Street analysts.
The company also forecast Q2 GAAP operating loss in the range of $120 million to $170 million.
The company also warned that it anticipates costs associated with increasing its employee count would rise by 25% in 2021. Furthermore, an increase in the staff count implies a rise in stock-based compensation costs.
Specifically, Twitter projects FY 2021 stock-based compensation expenses of $600 million, increasing from its earlier forecast in the range of $525 million to $575 million.
The company also reaffirmed its user growth outlook, stating that its user base would rise in the low double-digit percentages for the remaining part of the year.
Capital expenditures are anticipated to be in the range of $900 million to $950 million.
The quarterly earnings beat and weak Q2 outlook are expected to keep the stock range-bound with a slight bearish bias.
The price chart indicates considerable resistance for the stock at 70. The next significant support is anticipated only near 45. The stochastics oscillator is also declining. Therefore, we are anticipating the stock to remain in a downtrend in the short term.
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