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Video drives revenue for Twitter; losses at $107M in Q2 2016

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Twitter’s operating metrics from Q2 2016:

– Twitter currently has over 313 million monthly active users (MAUs) globally, up 3% from 304 million MAUs in the same quarter last year. In the previous quarter, Twitter reported more than 310 million  MAUs.
– There were 66 million MAUs in the US at the end of Q2 2016. In the previous quarter, this number stood at 65 million MAUs. MAUs in US have remained almost flat throughout the whole of last year. The company had reported 65 million MAUs in the US for Q1 2015, Q2 2015 and Q4 2015, while there were 66 million MAUs reported in Q3 2015.
– International MAUs stood at 247 million for the quarter, up 4% from 239 million MAUs in the same quarter last year. In the previous quarter, Twitter reported 245 million international MAUs
– The company claimed, following an internal review, that false and/or spam accounts represented less than 5% of Twitter’s MAUs, as of December 31, 2015.

Key takeaways from the call:

Video is growing: “Video is now the number-one ad format in terms of revenue on Twitter,” its COO Adam Bain said during the Q2 2016 analyst call. He added that the Twitter’s blogging platform is now  “a video-centric platform.” Advertisers and brands using Twitter Amplify for promoted tweets are now increasingly upgrading to video-based ads. “A good number of…premium advertisers, have signed up, people like Anheuser-Busch, Verizon, Sony and Nestlé,” added Bain.

Expansion of live content: Twitter will be focusing more on tie-ups with content producers to expand its premium live content offering. It said that for this, it will partner with more live sports, news, politics and entertainment, livestream sports events like NFL, elections or video highlights with commentary, relevant tweets, etc.

“Those deals economically build on the success of the program that our team built over the last four years in Amplify with 250 media partners,” Anthony Noto, CFO of Twitter said during the analyst call. He also hinted at the launch of a new live-streaming product in September which will focus on “both live games, live commentary, as well as live news analysis.”

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Target audience of live products: The company says that it is targeting Twitter users who don’t have access to live sports, election, or any other live  content on their TVs or video devices. “We can now deliver to that audience the live video combined with a curated timeline, like we’re doing for the Democratic National Convention right now, in one complete solution,” Twitter’s CEO Jack Dorsey added. Even those with access to live video on TVs could “drive vitality and popularity” of an event, as they tweet about the particular event. This, according to Dorsey, has got it many live streaming deals with media houses, sports leagues, etc.

Monetizing logged out users: Twitter claims to have over 300 million logged-in users, and more than 500 million logged out users. It said both category of audiences was important since live premium streaming content was open to both categories without restrictions. “The video player that sits in the logged-in experience from the app is the same exact experience you’ll get in logged out without having to log-in,” added Dorsey.

Magic Pony acquisition: Twitter’s Magic Pony acquisition last month has enabled it to “digitally reconstruct the stream in real-time, independent of network or device,” according to Dorsey. Magic Pony’s technology is also utilized in all deep learning and machine learning functions that is being applied on the Twitter timeline, notifications, and tweeting, which are Twitter’s core products.

Twitter used for news discovery & social commentary: Dorsey mentions that real-time news discovery and social commentary are Twitter’s primary use cases. Twitter is now looking to “on-board” new users and engaging them with relevant content; for this Twitter is employing machine learning and deep learning techniques to refine the Twitter timeline. In addition, notifications is “another area where we think we can do a much better job, especially around breaking news”, Dorsey added. Custom notifications will allows users to be connected with content that is most relevant to them.

Online abuse on Twitter: Dorsey said that that safety and privacy on Twitter was one of its top 5 priorities for this year. “…Abuse is not part of civil discourse. It shuts down conversation. It prevents us from understanding each other. Freedom of expression means little if we allow voices to be silenced because of fear of harassment if they speak up. No one deserves to be the target of abuse online, and it has no place on Twitter. We haven’t been good enough at ensuring that’s the case, and we must do better,” he added.

– Twitter reported revenues of $602 million for Q2 2016, up 20% year-on-year (YoY) from $502 million revenues reported in Q2 2015. In the previous quarter, Twitter posted overall revenues of $595 million.
– The company’s net losses were $107 million during this quarter, down 21% from $137 million in the same quarter last year (Q2 2015). In the previous quarter (Q1 2016), Twitter posted net losses of $80 million
– Advertising revenue accounted for 88% or $535 million of the revenues, while data licensing & other accounted for the remaining $67 million revenues.
– Advertising revenue grew 18% YoY from $452 million in the corresponding quarter last year.
– EBITDA stood at $175 million for the quarter, up 45% YoY from $120 million in Q2 2015. In the previous quarter, EBITDA stood at $180 million.

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