Twitter's (NYSE:TWTR) first-quarter earnings release is less than a week away. Ahead of Twitter's earnings report on April 25, expectations are high. Investors will be looking for Twitter to maintain its recent return to revenue growth, deliver more strong growth in users, post strong growth in ad engagements, expand its EBITDA margin, and more.
Before Twitter reports its first-quarter results, here's an overview of some of the most important areas for investors to watch.
1. Monthly active users
In Twitter's fourth quarter, the social network had 330 million monthly active users. Though Twitter's monthly active users in Q4 were up 4% year over year, they were flat sequentially. Stalled user growth may concern some investors, sparking them to look for reinvigorated growth in the key metric in Q1.
Twitter management cited several reasons for its stalled sequential growth in monthly active users in Q4.
MAU was impacted by seasonality and the change to Safari's third-party app integration, which affected approximately 2 million MAU in Q4 (roughly 1 million in the US and 1 million in international markets), as well as increased information quality efforts, which are our overall efforts to reduce malicious activity on the service, inclusive of spam, malicious automation, and fake accounts.
A return to the low single-digit sequential growth Twitter saw in quarters prior to Q4 for its monthly active users would put the company's first-quarter monthly active users at about 334 million or more.
2. Daily active user growth
Though Twitter doesn't disclose its absolute number of daily active users, it does share growth rates for the key metric. Daily active users were up 12% year over year in Q4, marking the company's fifth consecutive quarter of double-digit year-over-year growth.
Investors should look for similar growth in daily active users in Q1.
3. Ad engagement growth
Twitter has been benefiting from a surge in ad engagement, with total ad engagements rising 75% year over year in Q4. Though this metric can be volatile, it has been consistently high recently. Total ad engagements have risen 95%, 99%, and 75% year over year in the second, third, and fourth quarters of 2017, respectively.
Can this strong catalyst keep up its momentum in Q1?
4. Adjusted EBITDA
Twitter's earnings before interest, taxes, depreciation, and amortization (EBITDA) has been surging, so much so that Twitter was able to report its first profit ever in its fourth quarter.
For Twitter's first quarter, management guided for adjusted EBITDA to be between $185 million and $205 million, up from $170 million in the first quarter of 2017.
5. Adjusted EBITDA margin
Also highlighting Twitter's improving profitability recently, the company's adjusted EBITDA margin has also been on the rise. Management expects further year-over-year improvement in the metric in Q1, guiding for an adjusted EBITDA margin between 33% and 34% -- up from 31% in the first quarter of 2017.
6. Revenue growth
Of course, there's no escaping the importance of revenue growth in Twitter's first-quarter results. Twitter's 2% year-over-year revenue growth in Q4 was a total surprise. After the pleasant upside to Twitter's revenue in Q4, the pressure is on for Twitter to report another quarter of revenue growth. Indeed, given Twitter's recent momentum, investors may be looking for revenue growth to accelerate in during the period.
For Twitter's revenue growth to persist in Q1, it will need to be higher than year-ago revenue of $548 million.