Twitter- Color on Qtr: Analysts Disappointed
- Stifel Research notes Twitter missed consensus revenue expectations by roughly 5% and lowered its full-year revenue outlook by 5% and adj. EBITDA guidance by 7%. Monthly active user additions were in-line with expectations largely shaped by positive commentary during 4Q earnings. However, 2Q:15 MAUs are off to a "slow start" and the inclusion of SMS-only users in MAU disclosures going forward could mask Twitter's true organic user growth. Firm is lowering price target to $36 and maintain Sell rating.
- Oppenheimer notes it is lowering '16E EBITDA 8% & removing $46 price target on limited revenue visibility around new advertising initiatives. Higher direct-response auction floor prices drove weaker demand. As a result, 1Q revenue 4% below consensus, & mgmt lowered FY guidance 5%. Furthermore, US MAUs (+15% y/y) decelerated 200 bps & mgmt indicated 2Q user growth is slowing, which firm attributes somewhat to tougher '14 World Cup comps. DoubleClick deal should increase ad volume at lower pricing, with higher sales leverage. However, impact is hard to quantify given limited disclosure. Maintain Perform.
- RBC Capital notes Three Quarter Keys -- 1) Significant Revenue Growth Deceleration; 2) EBITDA Outperformance -- Despite the Revenue miss, TWTR was still able to outperform on EBITDA, suggesting significant leverage in the model;; 3) MAU Results In-Line Though Outlook Commentary Unsettling; mgmt's expressly cautious commentary about Q2 MAUs raises questions about the user value proposition. Reiterates Sector Perform, lowers target to $47 from $54.
- Brean Capital notes Twitter reported a weaker Q1'15 quarter and outlook. Although firm noted that Twitter had the most risk amongst coverage universe heading into numbers, it's longer term Buy thesis remains intact. Changes in pricing options and engagement measurements adversely impacted the quarter and guidance, but are important to the long term story: attracting larger budget branded advertisers. Continue to believe that Twitter is in the early innings of a long game—one that will not be linear. Reiterate Buy rating but have cut tgt to $55 from $61.
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Wunderlich Securities notes TWTR reported 1Q15 revenues 4% below and adjusted EBITDA 8% above consensus estimates, with revenues affected by weaker-than-expected results from its direct response ad products and currency exchange headwinds. Without fx headwinds, the company would have posted revenue growth at the top of its guidance range and just below the consensus. Monthly active users (MAUs) were inline at 302 million, an addition of 14 million, although the company has gotten off to a slower start in April and should see slower MAU growth in Q2. Firm is lowering estimates given the guidance and also lowering price target to $40 from $50.