Key Takeaways From Twitter Inc (TWTR)’s Conference Call


Twitter Inc (NYSE:TWTR)’s stock initially moved higher in the extended hours of Tuesday’s trading following the second quarter earnings beat. However, its interim CEO, Jack Dorsey’s, candid talk not only erased the gains but dragged down sharply. It was the first earnings conference call that he was addressing analysts. The platform would have been more opportune for him to stake a permanent position on the back of revenue and earnings exceeding expectations in the second quarter. However, he preferred to be candid. One of his candid talks was about the update on CEO search. He said that the company’s search company does feel a sense of urgency but there was nothing to update.

Product Announcements

Twitter Inc (NYSE:TWTR)’s Dorsey expressed his frustration during the conference call that product announcements failed to have any meaningful impact on audience growth. In a candid talk, he termed it ‘unacceptable’. He also said that the social media company did not do anything in respect of aligning the company in its entirety around its tactics. Though his candid talks would not have been liked by the insiders, especially the former CEO, Dorsey’s talk helped to win the investors trust.

One of the analysts, Rob Sanderson of MKM Partners, has reportedly said that he liked the way Dorsey’s speaking directly and that he was doing very well. Another analyst, Brian Wieser of Pivotal Research Group, said there was not much to read into what Dorsey said during the call.

Positive Reaction

On the performance, the company indicated that it saw a favorable reaction with advertising dollars. The social media firm also said that it was experiencing bigger budgets, as well as higher returns. The company admitted that it did not communicate as to why the people should use its platform and failed to provide the easy understanding of how to use the site or product. The company also admitted the issue in respect of marketing.

Twitter Inc (NYSE:TWTR) said that it is working to unveil marketing strategies, as well as, the campaign in the current year. For this, the company is in the process of recruiting a fresh CMO and was encouraged by the candidate profiles. The social media firm was categorical in saying that there will not be any meaningful monthly active users (MAUs) growth till it can reach the mass market. It will take a lot of time to reach that level. However, it will move quickly to raise the bar and be bolder to unlock the shareholders value.

It was articulated that Twitter must do a better job of simplifying its service and making sure that people can get in and get to the value of Twitter faster and in a more immediate way.

Margin Expansion

The company indicated that its non-GAAP costs jumped 50% YOY due to infrastructure in sales, as well as, marketing apart from the head count. Still, its adjusted EBITDA margin grew to 24% in the second quarter from 17% in the year-ago quarter. Twitter Inc (NYSE:TWTR)’s Interim CEO has identified three areas to realize full potential. The first is to ensure more disciplined execution while the second factor is to simplify its service to deliver value quickly. The third one is to communicate the value better.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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