Twitter Inc (NYSE:TWTR) will release financial results for the first quarter of 2014 on Tuesday, April 29, 2014, after market close. On the same day, Twitter will hold a conference call to discuss these financial results at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time).
Wall Street anticipates that the 140 character social site will lose $0.03 per share for the quarter. iStock expects Twitter to beat Wall Street's consensus number. The iEstimate is -$0.02, a penny better than expected.
Sales, meanwhile, are forecasted to be $241.47 million for the quarter. The iEstimate for the top line is a little shy of $245 million, a bullish surprise which could be more influential than EPS. Read on and we'll show you how we got to $245 mill.
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Twitter is a global platform for public self-expression and conversation in real time. Twitter is a real-time platform, where any user can create a Tweet and any user can follow other users. Each Tweet is limited to 140 characters of text, but can also contain rich media, including photos, videos and applications. Viewers can see photos, videos and conversations directly in Tweets to get the whole story at a glance, and all in one place. The Company offers Twitter apps for phones, tablets and computers. The Company generates its advertising revenue primarily from the sale of its three Promoted Products: Promoted Tweets, Promoted Accounts and Promoted Trends.
While you may not be a tweeter or is it twitterer, the company's business is a very basic advertising model. There are three main parts:
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Monthly average users (MAU) – speaks for itself, the average number of monthly users. This is broken down into two groups, USA and international. The difference is significant; you'll know why shortly.
Timeline views per MAU – best we can understand, it's the number of times of Twitter user views Twitter per month.
Finally, ad revenue per 1,000 Timeline views – this will come into focus rather quickly.
If you can figure out, somewhat accurately what the number of US and International MAUs were during the quarter, the number of timeline views per MAU, and ad revenue per 1,000 Timeline, then you can create your own revenue model.
Here is ours:
Based on Twitter's recent USA trends for MAU, we calculate 3.7% growth from last quarter, which would put the number of US MAUs at 56 million. On the intentional side, we forecast 194 million MUAs, up from 187 million in Q4.
We believe US Timeline views per MAU will increase by 3.11% to 780. Now, we multiply that by the number of US MAUs, divide the sum by 1,000 to arrive at 43.654 million.
In Q4, ad revenue per 1,000 Timeline views was $3.80 in the US. This number has been on the rise so it could be higher than $3.80 in Q1, but we'll stick with it. Take $3.80 and multiple it by 43.654 million, and we get US ad revenue of $165.885 million.
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Now, we follow the same process for the international business, except with different numbers: 574 Timeline views per MAU and ad revenue per 1,000 Timeline views of $0.60; the same as Q4. Although, the price trend is rising fast here too, which means higher average ad revenue is possible. The math here works out to $66.814 million.
The two add up to $233.699 million, but it doesn't end there. Twitter also collects data licensing arrangements, which accounted for roughly 7% of 2013's revenue. Management says they believe data licensing arrangements as a percentage of sales will decrease. For our purposes, we went with 5%, putting total revenue at $244.946 million.
There you have iStock's prediction for the quarter and the thinking behind it. Now, please excuse us for a moment while we tweet our forecast to the twitterverse.
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