Twitter Inc (NYSE:TWTR) will set out to announce Q3 results for 2014 this Monday and it is important that investors evaluate the company’s prospects before considering to invest in the company. Analysts predict that the social network will make a revenue of around $351 million and a $52.6 million EBITDA with EPS of $0.01. Twitter’s estimates were way below these in the last quarter and its revenue is to fall by nearly $330-340 million and EBITDA by $40-$50 million.
The strong predictions were due to the company posting high earnings in its last quarter giving it $312 million in revenue compared to the estimate of analysts amounting to $282 million only. The company’s stock gained an increase of 22% in spite of this however, as its performance was the result of the increase in user activity on the social platform. This increase was due to the FIFA World Cup otherwise, the company may not have seen such an outstanding display of customer interaction.
Twitter makes around 90% in revenue due to its advertising segment. It offers services which range from promoted accounts to promoted trends. Twitter also targets its advertisements based on the information database it holds. Twitter’s shares are still low however, because of the single revenue generation stream that they have. Even with the increase in earnings the company reported last year, its shares are still down to 17% since last year.
The company is looking into this weakness and it aims at releasing its Software Development Kit (SDK) which will help it expand the revenue stream for the company. Kevin Weil, the Vice President of the Revenue Products Division reported in the first conference of mobile development in the previous four years that Twitter is a company that is fast becoming a mobile service provider. He continued to say that the company is expanding in this opportunity that it is providing on every major platform.
Twitter only made one acquisition since its last quarter earnings were announced but it acquired Mitro Labs this August and scrapped the flagship product of the security application; in turn enhancing geo-location services. However, the company will surely be affected in the direction it takes by its previous acquisitions. The three startups that the company acquired from November last year are all advertisement service providers which include MoPub, TapCommerce and Nano Media.
Twitter’s success is judged by the monthly active user metric (MAU). In the last quarter the company had an MAU amounting to 271 million which is expected to rise this quarter to 287 million. Hence showing a 6% increase with a 23.6% increase on a yearly basis. Mobile MAUs of the company amounted to 211 million in the last quarter and are expected to rise to 224 million this quarter. Twitter must focus more on increasing its revenue stream so that when one route is affected, others can be opened which will help in making a strong impact for the company.