★ Twitter Reports Q2 Earnings: No MAU Growth, Slowing DAU Growth, Revenue Down (Jul 27, 2017)

At the time I’m writing this, Twitter stock is off 13% after it reported another set of poor earnings. It failed to grow global monthly active users at all in the quarter (US users actually shrank, offset by modest growth elsewhere), daily active user growth shrank from 14% in Q1 to 12% in Q2, and revenue was down 5% year on year, the second straight quarter of overall revenue declines. Importantly, all of this happened in a quarter when Twitter released a big redesign of its apps and sites and launched its Lite product in India, both of which should have driven good growth if effective. The contrast with Facebook’s results last night couldn’t be starker, with the two companies moving in seemingly opposite directions. The one thing they have in common is that both are working to convince advertisers of the value of spending money on their platforms, but Facebook is doing so from a position of strength, trying to win more TV ad dollars with its targeting and attribution features, while Twitter is mostly still trying to convince advertisers that it has a world-class ad platform at all. In theory, it’s making progress behind the scenes with its ad offerings, and users are responding positively to its product changes too, as evidenced by the fact that DAUs have grown quite a bit faster than MAUs over the past year. But the company also suggested on today’s earnings call that DAUs as a percentage of MAUs haven’t shifted much from three years ago, when that ratio was below 50% in its top markets. The picture that’s emerging here is one of a smaller number – perhaps around 160 million – highly engaged users (likely including most of the bots on the platform) and a constantly cycling second 160-170 million users coming onto and then rapidly leaving the platform as they fail to find value in it, something I first hinted at in this piece last October. Twitter would arguably be best served by emulating Snap’s reporting and ditching MAUs in favor of DAUs, then focusing on growing that number, which it seems to be doing more successfully. And yet it’s bafflingly reluctant to report DAUs directly, probably because that would be a concession that it’s reaching a much smaller engaged audience than it likes to claim. Note that just 17% of its MAUs watched any live videos last quarter, for example. It’s getting tougher and tougher to believe that Twitter is ever going to outgrow its current stagnation.

via Twitter (PDF)

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