Twitter Shares Fall, Making Social Zero For Two This Earnings Season

Morning Report: A double disappointment from the dynamic duo leaves Snap to uphold the honor of the social world.

Twitter reported its Q2 earnings this morning. The company presented a mixed picture of its performance with strong trailing financial results and slack usage metrics.

In the second quarter, Twitter reported revenue of $711 million (up 24 percent), well above expectations of $696.2 million. The company also reported $0.17 in adjusted per-share profit, meeting expectations. So one beat and one meet. Not bad.

However, Twitter did not excite the investing class with its forward-looking metrics. First, the company’s financial guidance was light. Per TechCrunch, Twitter expects its adjusted EBITDA to “decline to $215-$235 million in the next quarter.” Twitter reported adjusted EBITDA of $265 million in the second quarter. That’s not great for a company that now partially trades on its ability to generate income instead of merely growth.

Twitter also reported fewer monthly active users in the second quarter than the quarter before. The company reported 335 million monthly active users in the second quarter, down one million from 336 million in the first. Twitter’s international usage held steady at 267 million monthly actives, while its U.S. audience slipped from 69 million to 68 million in the second quarter.

The company did report that its year-over-year daily active user growth rose to 11 percent in the second quarter. (For more on Twitter’s user figures, Recode’s Rani Molla has some fun charts here.)

But the slack financial guidance and weak user numbers (investors were projecting monthly active user growth) led to Twitter’s shares falling sharply in pre-market trading. Twitter shares are off around 13 percent, up some from intra-morning lows.

Two Strikes: Good Luck Snap

Facebook took a hit after it noted that rising costs related to taking care of its platform would erode operating margins in the future.¹ It also whiffed on user growth. Twitter is also doubling-down on cleaning up its platform and also reported disappointing user figures. Both were whacked for their reports.

Now Snap is left to carry the torch for social media-focused public companies. The concept isn’t too assuring, frankly, given that Snap is the only unprofitable company of the trio. It has had user-growth issues of its own in the past as well.

And now it has pessimism at its back, instead of another fantastic Facebook quarter to rest on. Snap reports earnings on August 7th. Get hype.

1. Answering a question on margins, Facebook’s David Wehner said this week that “on the safety and security side, those are costs that are layering in that we think are the right thing to do for the business but don’t necessarily have a revenue impact.” It just costs more to run Facebook responsibly than irresponsibly.

From The Crunchbase Daily:

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