Since returning to growth in its fourth quarter of 2017, Twitter (TWTR +0.00%) has regained investor confidence as the company's year-over-year revenue growth rate accelerated to impressive double-digit levels. In the company's most recent quarter, for instance, Twitter's revenue surged 24% year over year. Then, of course, there's Twitter's rapidly improving profitability. Suffice it to say, investors have high expectations for the social network.
Investors will get to see whether Twitter has kept up its momentum in a few weeks, as the company is scheduled to report its third-quarter results on Oct. 25.
Ahead of Twitter's earnings release later this month, here's a preview of some important areas investors will want to check on.
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Revenue growth
Twitter's top-line performance recently has been stellar, driven by strong momentum with advertisers as they respond to the company's more rapid innovation for improving return on investment for advertisers and enhancing its service for users. Capturing the company's momentum, second-quarter year-over-year revenue growth of 24% was an acceleration of Twitter's 21% year-over-year revenue growth in Q1.
For Twitter's third quarter, analysts expect a slower growth rate for revenue. On average, analysts expect revenue to rise 19.1% year over year. A forecast for slower growth makes sense, as Twitter's second-quarter comparison benefited from approximately $30 million of incremental revenue related to the World Cup.
Non-GAAP EPS growth
Another key area for investors to check on is the company's earnings per share, which has been growing rapidly.
In Twitter's second quarter, the company reported earnings per share of $0.13 -- up significantly from a loss per share of $0.16 in the year-ago quarter. Similarly, Non-GAAP EPS surged from 0.08 in the year-ago quarter to $0.17.
On average, analysts expect Twitter's third-quarter non-GAAP EPS to come in at $0.14, up from $0.10 in the year-ago quarter.
Daily active user growth
Just as important as Twitter's revenue and non-GAAP EPS growth is the company's user growth. More specifically, investors should look to see whether the company was able to increase its daily active users even as the company aggressively shut down phony accounts.
Leading up to the company's third-quarter earnings release, Twitter's daily-active-user numbers have been on a roll. The social network has registered seven consecutive quarters of double-digit year-over-year growth rates in the number of its daily active users. For Q2, Twitter's daily-active-user figures increased 11% year over year, an acceleration from 10% growth in Q1.
It's unclear how Twitter's aggressive removal of bad accounts will affect daily active user growth for the quarter, but it's safe to expect a deceleration in the key metric.
Twitter reports its third-quarter results before the market opens on Thursday, Oct. 25.
