Social media companies had an interesting year in 2018 and Twitter Inc. (TWTR) was no exception. Let’s take a quick look at how Twitter performed in general during the first three quarters of 2018 and what can be expected from the company going into 2019.
Twitter’s worldwide revenue saw steady year-over-year growth of 21%, 24% and 29% through the first three quarters of the year. Of this, advertising revenue, which makes up the majority of total revenue, saw steady year-over-year increases during the first three quarters of the year.
On a sequential basis, both total revenue and advertising revenue dropped in the first quarter of 2018 compared to the fourth quarter of 2017 but managed to grow steadily in the second and third quarters of 2018.
Data licensing and other revenue posted healthy year-over-year increases in all three quarters of 2018 but fluctuated on a sequential basis. After growing sequentially in the first and second quarters of 2018, data licensing revenues dipped slightly by 1% in the third quarter.
By geography, in the US, revenues maintained a healthy rate of growth on a year-over-year basis, increasing 2%, 10% and 28% through the first three quarters of the year. On a sequential basis, after seeing a sharp decline of 15% in Q1 2018 versus Q4 2017, US revenues managed to pick up in the second and third quarters of 2018, posting increases of 6% and 15% respectively.
International revenues grew solidly on a year-over-year basis, posting increases of 53%, 44% and 30% in the first three quarters of this year but on a sequential basis, they fluctuated. After seeing a decline of 2% in the first quarter of 2018, revenues increased by 8% in Q2 and then dropped by 3% in Q3.
The number of users is an important metric for social media companies and Twitter’s user count has come under the spotlight this year for a variety of reasons including data security and privacy as well as the toxic content on its platform. Twitter said it would focus on tackling false propaganda and hate speech and improving the health of its website in order to provide a better experience for its users.
Twitter’s worldwide monthly active user count declined sequentially through the first three quarters of 2018. The company said the decrease in users was due to the removal of several fake accounts as part of its clean-up efforts. The number of monthly active users in the US fell sequentially through the year. Internationally, the user count stayed flat in the first and second quarters of 2018 and declined in the third.
Twitter does not provide the number of daily active users instead releasing only the year-over-year growth rate. This metric fluctuated during the year and reached 9% in the third quarter of 2018, which is the lowest level in the past one year.
The issue of data privacy and security which started with Twitter’s peer Facebook (FB) impacted social media companies as a whole during 2018. Earlier this month, Twitter faced a security breach from international hackers which raked up this issue again hurting its stock.
This matter is likely to continue into next year as well and technology and social media firms like Twitter, Facebook and Alphabet’s (GOOGL) subsidiary Google are likely face scrutiny over their data collection and protection methods. It has long been speculated that technology companies might have to face regulations soon enough on data security.
So how is 2019 likely to shape up for Twitter? Despite all the criticism over its content, Twitter still remains an important platform for information, marketing and advertisements, both for individuals and businesses. The company’s advertising revenues can be expected to grow in 2019.
Twitter’s efforts to clean up its platform as well as diversify into new areas like video to increase revenues will benefit the company going forward. All in all, despite a few challenges, Twitter is likely to see benefits in the coming year.
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