Twitter: Years After the Alphabet Acquisition
6 February, 2019 — Twitter reported its Q4 2018 earnings today.
Twitter’s monthly active users — MAUs — is now 487 million and up 14% compared to Q4 of 2017. Last quarter, the company reported 479 million monthly active users across all its properties. Total marketable reach, which includes users that interact with logged-out pages, topped 1.3 billion — up 18% from same period last year.
The company reported earnings of 62 cents per share and revenue of $1.9 billion. Analysts were expecting earnings of 56 cents per share on $1.81 billion in revenue. Revenue was up 47% year on year. In fiscal year 2018, the company took in revenues of just over $6.3 billion, for a net operating profit of $962 million.
The company said it expects between $1.84 billion and $1.98 billion in revenue for the first quarter of 2019. This compares to estimates of 1.9 billion. The company also reported employee growth from about 2300 to over 4000 in just three years.
CEO Jack Dorsey, standing next to CFO Anthony Noto and his number two Adam Bain (COO), live streamed the earnings call using Periscope.
When Alphabet bought Twitter back in June 2016 for almost $29 billion— in cash and stock — almost everyone was bewildered. It was just as confusing as Facebook picking up Oculus. In the years prior, there were rumors of the potential acquisition, and other rumors denying that. As months and quarters passed, it started to make sense. Like some of it’s other acquisitions, Alphabet had made it clear that Twitter would remain an independently-reporting company.
The biggest reason the critics of the acquisition quoted was the failed attempts by Google at social. Wave, Buzz, Google+. Google tried social a lot, but failed miserably. Google was carving out its own share of a monopoly. What it learned, in doing so, was that going head-on against Facebook from scratch is impossible. Facebook had (and still does) a strong footing in the social space with Facebook, Messenger, WhatsApp and Instagram.
Alphabet understood that Twitter isn’t competing with Facebook. It understood that Twitter is its own category. Live!
Prior to the acquisition, Twitter was a product that:
- Seemed confusing to new users.
- Bloated with features that made it hard to understand the product.
- Was not clear about its strategy and vision.
All this was bound to change under the leadership of part-time CEO (and co-founder) Dorsey.
What changed Twitter’s history was the unbundling. The company now has multiple services and apps:
- Timeline — The core of the original product that has remain unchanged since its inception. You open to app to enjoy a live, reverse chronological view of what your friends are talking about. You can swipe right to only see the top tweets within your network.
- Periscope — One of the smartest acquisitions in Silicon Valley. Twitter acquired Periscope in January 2015 for a reported sum of $75–100 million, which in retrospect seems like a deal. Twitter reported that users worldwide watch over 290 million hours worth of live streams every day on Periscope.
- Moments — In early 2017, Twitter spun out its Moments feature into its own dedicated app. Moments allows you to view what’s trending on Twitter and within your network. The app features a concept of “channels” — that break down these trends by categories. What movies are trending right now? Moments. How about a local artist that’s making the news? Moments. What GIFs are blowing up? Moments. Twitter reported that over 205 million users now open Moments every month.
- Business — A new offering by Twitter is it’s B2B platform that drove revenue growth for the company. Launched in late 2017, Business gives powerful tools to businesses to manage their social engagement on Twitter and run ad campaigns. While the company didn’t give exact numbers, COO Adam Bain did say that Business now has “millions” of customers.
Ever since Jack Dorsey shared his vision for the company in the Q4 2015 earnings call saying “Twitter is for live, and that’s why we’re different”, it’s never been easier to understand what Twitter is and why it exists. The Alphabet acquisition instilled consumer confidence — something that Twitter was lacking for years. The company is now able to focus on a long-term strategy, than the short-term worries of Wall Street. Alphabet also cleaned Twitter’s house by injecting better mid-level management to steer the skilled engineers.
Twitter now processes over 3 billion tweets a day. That’s about 35,000 tweets every second. Twitter is now able to ingest, index and service all this data in real-time on infrastructure that powers Google and other Alphabet companies.
Back in October 2017, at its annual developer conference Flight, Twitter opened its API further based on developer feedback. Everyone from the big banks on Wall Street to media outlets to data platforms (like Mattermark) pay Twitter for extended use of the API. Twitter did not report numbers for its developer offerings.
Probably the biggest consumer of the API is Google, which now digests this real-time feed of tweets from around the world, and provides insights to its users. Google is now able to notify users of any event in their neighborhood within seconds. This kind of information highway has never been seen before. Twitter is also deeply integrated into Google Maps and Waze to provide better real-time navigation services.
Twitter has finally managed to do what it should have for a long time — differentiate itself. It’s hard to argue that there is nothing quite like it. Now, more than ever, it’s hard to deny, that Twitter’s best days are yet to come.
Shares of Twitter jumped as much as 11% in after-hours trading, hitting a new high of $69.17 and are trading at $68.09 at the time of press.
Next on your reading list: Your prediction of Twitter’s future is wrong.