Twitter: Should You Stay Logged In?

Twitter (TWTR) generated good results for the third quarter, 2015. The quarter resulted in 58% increased revenue to $569 million for the quarter from $361 million for the third quarter, 2014, driven primarily by advertisement services.

Moving in the right directions

Considering non-GAAP expenses, the cost of revenue went up to $182 million from $102 million for the third quarter, 2014. The research and development expenses increased to $107 million for the quarter from $89 million for the third quarter, previous year.
The sales and marketing expenses increased to $166 million from $119 million for the third quarter, 2014. The general and administrative expenses went up to $39 million from $32 million for the same period, 2014.

Furthermore, the adjusted EBITDA scaled up to $142 million from $68 million for the third quarter, 2014. The Non-GAAP net income rose to $67 million from $7 million for the third quarter, 2014. The Non-GAAP Diluted Earnings per share increase to $0.10 for the quarter from $0.01 for the same quarter, 2014.

The advertising revenue went up to $513 million for the quarter, from $320 million for the third quarter, 2014. Also, the revenue from Data Licensing and other services increased to $56 million for the quarter from $41 million for the third quarter, 2014.

The revenue from United States went up to $370 million for the quarter from $240 million for the third quarter, previous year. The International revenue increased to $199 million from $121 million for the third quarter, 2014.

Smart moves

The monthly active users increased to 320 million from 287 million for the third quarter, previous year, driven by increase in International active monthly users to 254 million from 224 million for the third quarter, 2014 and the increase in active monthly users of United States to 66 million from 64 million for the third quarter, 2014.

The company in addition launched Music on Vine, Highlights on Android, and web profiles and landscape view for Periscope. Furthermore, the company also launched the video auto-play, on all of its devices. The company expanded its platform of self-service ads to around 200 countries.

Twitter also announced the commerce partnerships, with the platforms powering e commerce sites. Twitter also entered in partnership with Square for enabling political donations of U.S through Tweets.

Cash flow

Twitter generated cash of $102 million for the quarter compared to cash used in operating activities of $86 million for the third quarter, 2014. The cash used in investing activities fell to $79 million from $136 million for the third quarter, last year. The company used cash of $27 million in financing activities compared to $1 billion for the third quarter, previous year. Twitter generated cash and cash equivalents of $876 million at the end of the quarter, which fell from $2.2 billion for the same quarter, previous year.

Valuation

Twitter has PEG ratio of 1.08, meaning that the company has to pay less for its future growth earnings. The company has Price/Sales ratio of 8.76 and Enterprise Value/Revenue of 7.69. Further, the Current ratio went up to 9.97 from 9.43 for the same period, previous year. Additionally, the Debt/Equity ratio dropped to 0.37 from 0.43 for the same period, previous year.

Takeaway

Twitter generated good results for the third quarter, 2015. The company posted increased revenue, adjusted EBITDA, and net income. Also the Diluted Earnings per share rose to $0.10 from $0.01 for the same period, 2014. The company has PEG ratio of 1.08.

Looking forward to the fourth quarter, the company expects revenue in a range of $695 million-$710 million and Adjusted EBITDA is expected to be between $155 million-$175 million for the next quarter.
Published on Dec 16, 2015
By Vinay Singh

Copyrighted 2016. Content published with author's permission.

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