3 Key Predictions For Twitter's Q1 Earnings Report

Despite its well-documented struggles, Twitter (TWTR - Free Report) still attracts plenty of investor attention, and as the company gets set to report its first-quarter results next week, there are likely still some optimists who think this will be the quarter that the struggling social media company turns it around.

The micro-blogging site has revolutionized the way that its users consume breaking news and interact with current events, but it has been quite the frustrating stock to own over the past few years. Twitter has simply failed to substantially grow its user base, and its most recent attempts to return more value to shareholders have fallen short.

Last quarter, Twitter posted a narrower-than-expected loss, but revenues of $717.2 million fell short of our consensus estimate of $737.7 million. On a year-over-year basis, revenues were up a mere 1%--the lowest gain since the company went public. Advertising revenues slumped, and monthly averages users (MAUs) were up just 0.6% sequentially.

So what’s in store for Twitter this quarter? Well, the Zacks Consensus Estimate currently calls for a loss of 16 cents per share, and our consensus revenue estimate calls for total revenue of $512.11 million.

Of course, earnings and revenue are just two of the many things investors will be looking at when Twitter reports. Check out these three additional things to expect.

These important stock drivers are from our exclusive non-financial metrics consensus estimate file. These estimates are updated daily and are based on the independent research of expert stock analysts. Learn more here>>>

1. User growth will continue to be sluggish

Based on the estimates of 20 analysts, our consensus estimate calls for Twitter to hit 320.8 million MAUs in the quarter. This would maintain the sluggish 0.6% quarter-over-quarter growth rate that the site recorded last quarter. While Twitter is poised to have 10 million more users than it did in the prior-year quarter, this growth is unlikely to satisfy investors given the massive investments the company has made in live-event streaming over the past year. The company’s Thursday Night Football deal, for example, failed to attract many new users.

2. Advertising revenue will slump again

Our consensus estimate for Twitter’s first-quarter advertising revenue—which is based on 21 separate estimates—calls for the segment to bring in about $446.6 million this quarter. Unless Twitter can post a surprise, this would represent a decline of nearly 16%. While Twitter’s new ad strategies have helped boost overall engagements, cost-per-engagement has declined amid a shift to auto-play videos, which traditionally have a lower cost-per-view than click-to-play.

3. Data licensing could be the lone highlight

In the face of sluggish user growth and slumping ad revenue, our estimate for Twitter’s data licensing segment—a consensus of 21 independent estimates—calls for the unit to grow more than 10.2% to $70.3 million. While this accounts for less than 15% of the company’s total revenue, it underscores Twitter’s extensive knowledge of its users and the growing demand for such information. Data is big business these days, and if Twitter can address some its other issues, it could unlock even further growth in this division.

Disclosure: Zacks.com contains statements and statistics that have been obtained from sources ...

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