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Twitter (TWTR) to Report Q2 Earnings: What's in the Cards?

Aniruddha Ganguly

Twitter TWTR is set to report second-quarter 2019 results on Jul 26.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 28.5%.

Twitter reported first-quarter 2019 non-GAAP earnings of 37 cents per share that skyrocketed 131.3% year over year.  Moreover, revenues increased 18% year over year to $787 million. On a constant-currency (cc) basis, revenues grew 20%.

Further, the company had 330 million average monthly active users (MAUs) at the end of the first quarter. Additionally, average monetizable daily active users (mDAU) totaled 134 million.

Twitter expects second-quarter 2019 total revenues between $770 million and $830 million. The Zacks Consensus Estimate for revenues stands at $828.5 million, indicating an increase of 16.6% from the year-ago quarter’s reported figure.

The consensus mark for second-quarter earnings has been steady at 18 cents over the past 30 days.

Twitter, Inc. Price and EPS Surprise

Twitter, Inc. Price and EPS Surprise
Twitter, Inc. Price and EPS Surprise

Twitter, Inc. price-eps-surprise | Twitter, Inc. Quote

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Let’s see how things are shaping up for the upcoming announcement.

Factors to Consider

Twitter’s efforts to add features like the ‘Lights Out’ mode and the in-app camera aim at improving user experience. The company’s focus on making the platform more conversational must have helped it expand the monetized user base in the soon-to-be-reported quarter.

Moreover, the company’s efforts related to detection of rule violations and improvement in the safety of users are expected to have reduced abusive behavior on the platform.

Notably, the company has strengthened its reporting features, allowing it to accelerate the process of removing accounts based on tweets reported by users. Moreover, Twitter has allowed users to hide replies to their tweets to reduce online trolls and abuse.

These initiatives are likely to boost user engagement in the to-be-reported quarter.

Further, continued strong demand for video ad products like Video Website Cards and in-stream pre-roll is anticipated to drive the top line. The company is also expected to benefit from an expanding live streaming sports content portfolio.

Notably, Twitter inked a number of deals with the likes of NBA, Turner Sports and FOX Sports in first-quarter 2019, which are expected to yield results in the second quarter.

Nevertheless, Twitter faces significant competition in the ad space from the likes of Facebook FB, Google and Amazon. This can hurt top-line growth in the second quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Twitter has a Zacks Rank #2 but an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post earnings beat in their upcoming releases:

Facebook has an Earnings ESP of +0.61% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.    

Apple AAPL has an Earnings ESP of +1.35% and a Zacks Rank #3.

Grubhub GRUB has a Zacks Rank #3 and an Earnings ESP of +12.04%.

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