Twitter reports Q1 next week. Its shares are down 80% from its all-time high of $69 due to multiple issues that include slowing user, revenue growth, anaemic profits, account security issues and top management exodus. The company has taken multiple steps to increase user growth and engagement to bolster advertising revenues, which make up ~90% of its revenues. In the upcoming earnings call, investors will be keen to monitor the following areas:
1) Trends in subscriber growth, user engagement (Daily Active Users metric) and growth in revenues
Twitter has taken multiple initiatives recently to bolster subscriber growth and revenues.These include introducing safety features for accounts to deal with offensive users, introducing live video broadcasts and paid subscription models for premium services to increase user engagement. It recently launched Twitter Lite to attract more subscribers in emerging markets with patchy internet availability. Investors would be keen to understand the impact of these initiatives on subscriber growth and engagement as well as revenues
2) Impact of cost cutting initiatives on profits
Twitter undertook cost control measures that included employee retrenchment and reducing non-cash compensation. While it is expected that these measures will help boost profits, investors would want to understand the primary driver of profits – cost cutting or revenue growth. Any sign of sustainability of profits would help boost investor sentiment
3) Management outlook on key issues
Investors will be keen to know management views on tackling fake accounts (managed by bots). These accounts form around 10-15% of its total user accounts.
Read more about Twitter earnings here