Earnings Release Is Twitter A Buy?

 

Twitter, Inc. (NYSE: TWTR) today announced financial results for its first quarter 2021.

 

“People turn to Twitter to see and talk about what’s happening, and we are helping them find their interests more quickly while making it easier to follow and participate in conversations,” said Jack Dorsey, Twitter’s CEO. “Average monetizable DAU (mDAU) reached 199 million, up 20% year over year and up 7 million sequentially, driven by ongoing product improvements and global conversation around current events.”

 

“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,” said Ned Segal, Twitter’s CFO. “Advertisers continue to benefit from updated ad formats, improved measurement, and new brand safety controls, contributing to 32% year-over-year growth in ad revenue in Q1.”

 

First Quarter 2021 Operational and Financial Highlights

 

Except as otherwise stated, all financial results discussed below are presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. As supplemental information, we have provided certain non-GAAP financial measures in this press release’s supplemental tables, and such supplemental tables include a reconciliation of these non-GAAP measures to our GAAP results. The sum of individual metrics may not always equal total amounts indicated due to rounding.

 

  • Q1 revenue totaled $1.04 billion, an increase of 28% year-over-year.
    • Advertising revenue totaled $899 million, an increase of 32%, or 30% on a constant currency
      • Total ad engagements increased 11% year-over-year.
      • Cost per engagement (CPE) increased 19% year-over-year.
    • Data licensing and other revenue totaled $137 million, an increase of 9% year-over-year.
    • US revenue totaled $556 million, an increase of 19% year-over-year.
    • International revenue totaled $480 million, an increase of 41%, or 38% on a constant currency

 

  • Q1 costs and expenses totaled $984 million, an increase of 21% year-over-year. This resulted in operating income of $52 million and 5% operating margin, compared to an operating loss of $7 million or -1% in the same period of the previous

 

  • Stock-based compensation (SBC) expense grew 13% year over year to $111 million and was approximately 11% of total revenue.

 

  • Q1 net income was $68 million, representing a net margin of 7% and diluted EPS of $0.08. This compares to a net loss of $8 million, a net margin of -1% and diluted EPS of -$0.01 in the same period of the previous

 

  • Net cash provided by operating activities in the quarter was $390 million, compared to $247 million in the same period last Capital expenditures totaled $179 million, compared to $121 million in the same period last year, driven by infrastructure investments in data center build-outs to support audience growth and product innovation.

 

  • Twitter average monetizable daily active users (mDAU) were 199 million for Q1, compared to 166 million in the same period of the previous year and compared to 192 million in the previous
    • Average US mDAU were 38 million for Q1, compared to 33 million in the same period of the previous year and compared to 37 million in the previous
    • Average international mDAU were 162 million for Q1, compared to 133 million in the same period of the previous year and compared to 155 million in the previous quarter.

CWEB Analyst’s have initiated a BUY Rating for  (NYSE: TWTR)  and potential upside of $150 in 2021. We believe that total revenue will grow faster than expenses in 2021, assuming the global pandemic continues to improve and that we see very minimal impact from the rollout of changes associated with iOS 14.5. 


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