Social media companies Twitter (TWTR) and Facebook (FB) reported their third-quarter 2018 results on October 25 and 30, respectively. While Twitter surpassed market expectations on both revenue and earnings, rival Facebook managed to top earnings estimates but missed the mark on revenues.
Twitter posted a 29% increase in revenues to $758 million, with broad-based growth in most products and regions. Facebook’s revenues grew 33% to $13.7 billion, reflecting one of its slowest quarterly growth rates. Facebook had earlier warned of slow growth in revenues due to increased investments in data privacy measures as well as its Stories feature.
Twitter’s adjusted earnings improved significantly to $0.21 per share. Facebook saw reported earnings grow 11% to $1.76 per share despite an increase in expenses.
Twitter reported a 29% year-over-year growth in advertising revenues while Facebook’s ad revenues grew 33%. More than half of Twitter’s ad revenue came from video ad formats while mobile advertising revenue made up the majority of Facebook’s ad revenue.
Twitter’s average monthly active users (MAU) declined both sequentially and on a year-over-year basis to 326 million. The monthly user count declined in the US and internationally, both on a sequential and year-over-year basis.
Facebook, meanwhile, posted a 9% growth in DAU, which was slower-than-expected, and MAU grew 10% year-over-year. Both metrics came below Wall Street estimates. Although Facebook posted increases in user counts on a year-over-year basis, the number of users have remained stagnant in the US and Canada over the past five quarters.
Facebook’s DAU has remained relatively unchanged at 185 million in the US and Canada while in Europe, there is a bit more improvement although not massive. MAUs also show a similar trend with Europe seeing a slight improvement versus the US and Canada region where the user count has not increased much over the past year.
Twitter’s monthly user count has not grown much internationally over the past one year while Facebook is seeing good growth in both monthly and daily users in Asia-Pacific and the Rest of the World.
Twitter and Facebook are facing the same issues in terms of fake accounts and toxic content on their platforms. Twitter attributed the decline in user count to its efforts in removing malicious accounts in order to clean up its site. Facebook has taken hits in the form of data breach scandals and its user count was impacted by the GDPR in Europe.
Both companies are looking to increase user engagement and see huge opportunities in video content. Facebook is in better form than Twitter as the company has the advantage of a large user base spread across various services like Instagram and WhatsApp. At least 2 billion people use at least one of Facebook’s services.
Looking at the past five days, Twitter’s stock is up 7%. Twitter’s shares have gained 44% thus far this year. The shares soared over 14% after its latest quarterly announcement. Facebook’s shares have dropped 14% so far in the year but looking at the past five days, the stock is up 2%. Facebook’s stock gained close to 2% after its latest earnings release.
Both Twitter and Facebook face challenges in terms of increasing their user count and tackling the issues related to content on their platform. Despite these challenges, both companies appear to be capable of recovery in the not-too-distant future.
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