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Twitter’s ad business in numbers 

  • Twitter’s ad revenue rose 32% year-over-year to $899m, with total ad engagement up 11%, indicating steady if unspectacular progress.

  • Both revenues and user numbers were broadly in line with analyst expectations – a disappointing performance given the spectacular performance of digital ad firms such as Facebook, Alphabet and Amazon.

  • In a cautious shareholder update, Twitter warned that a recent surge in user growth was unlikely to be sustained as lockdowns ease, leading to ‘low double-digit growth’ for the immediate future.

  • Twitter now expects second-quarter revenues to fall somewhere between $980m and $1.08bn – likely undershooting a Wall Street estimate of $1.06bn.

Why does it matter?

  • Asked to explain the relative underperformance, chief financial officer Ned Segal blamed a dependence on marketers taking out brand advertising campaigns which generally get planned after the Christmas break.

  • Segal also pinned the blame on ‘exacerbated’ brands reining in spending following the riots at Capitol Hill, as well as president Joe Biden’s inauguration.

  •  “When there is unrest for one reason or another,” Segal told analysts, brand advertisers “often pause when there is a more important conversation than the conversation around their product.”

  • Pointing to a rebound in advertising in March, Segal stressed that revenues would fall on the upper end of estimates if maintained.

  • Twitter is dependent on big brand advertising for 85% of total sales, with direct response advertising such as retailers and small businesses which have boomed during the pandemic forming a relatively insignificant share.

OK, anything else?

  • Twitter also announced that the number of daily active users increased 20% to 199 million in the first quarter, a 7 million increase over the previous quarter.

  • This bore out a February estimate of 20% year-over-year growth in the first full quarter since former US President Donald Trump was banned from the platform.