As the advertising transformation paid off, Twitter’s revenue soared
Twitter’s transformation of its advertising products paid off in the second quarter, as it reported a sharp increase in revenue and said it plans to build its e-commerce capabilities.
In a letter to shareholders, Twitter listed “revenue product improvements, strong sales execution, and broad growth in advertiser demand” as the main drivers for its second-quarter revenue growth of 74% year-on-year to US$1.19 billion. This exceeded the consensus expectation of US$1.06 billion.
The company recently overhauled its products to advertisers to improve its positioning capabilities and make it easier for small businesses to carry out activities. It added that user engagement with advertising has increased by 32%, and the cost per engagement has increased by 42% year-on-year.
In an interview with the Financial Times, Chief Financial Officer Ned Segal said that as competitors Facebook and TikTok increase their investments in the field, the company hopes to promote more online services on the platform. Shopping.
He said that Twitter plans to introduce a “buy button” for advertising in the future, so that users can directly buy things on the platform without leaving. He added that business profiles on Twitter can also have a “buy button.” The company had previously offered a buy button, but abandoned it in 2017 after failing to gain traction.
“We will continue to work hard to ensure that we can help clear transactions, regardless of whether they are cross-border or within the same region, to minimize friction as much as possible,” he said. “Business is an important part of our long-term strategy.”
After the financial report was announced, Twitter’s share price rose nearly 5% in after-hours trading.
Twitter’s monetizable daily active users-a local metric that calculates the number of logged-in users that the platform displays ads to-increased 11% year-on-year to 206 million, in line with analyst expectations.
However, the number of Twitter users in the United States has fallen by 1 million since the first quarter to 37 million, which Siegel attributed to factors such as the calming of the news cycle and people’s freedom from blockade.
After failing to meet user growth expectations in the first two quarters, the company focused on better retaining users through its new theme feature, which can help users quickly find content that meets their interests. “We continue to improve the notification and relevance of what people see on their timeline,” Siegel said.
According to data from S&P Capital IQ, Twitter expects its third-quarter revenue to be between US$1.22 billion and US$1.3 billion, which is higher than the current analyst estimate of US$1.17 billion.
The company has also been developing many other features, including tools for rewarding or subscribing to content creators, in order to increase engagement and diversify advertising revenue.
It now expects full-year headcount and expenses to grow by at least 30%, which is higher than the 25% guidance in the previous quarter.
In addition, on Thursday, Snap also announced strong quarterly results, with sales increasing 116% year-on-year to US$982 million, which was much higher than analysts’ expectations of growth to US$84667 million. It has also been building its e-commerce capabilities, focusing on using augmented reality technology to allow users to try on clothes online before buying.