Twitter has posted its Q3 2021 performance numbers, showing steady increases in both users and revenue. But steady may not be enough, given the platform’s ambitious growth targets, while its ongoing investment into new projects doesn’t appear to be paying off as it likely would have hoped.
First off, on active users – Twitter’s Monetizable Daily Active User count is now up to 211 million, a 13% year-over-year increase.
Twitter kind of tries to obscure its data by reporting direct YoY comparisons, as opposed to a quarter by quarter chart, but for context, here are its 2021 Q2 and Q3 mDAU figures side-by-side.
As you can see, Twitter didn’t add any new users in the US at all, with all 5 million of its new users coming from outside North America. Which is not necessarily a bad thing, as Twitter still has plenty of growth potential in various markets, but it may be a concern for investors, given that the majority of the platform’s revenue is driven by US users.
Again, Twitter uses a more skewed YoY comparison, as opposed to displaying quarterly performance, but again, for context, Twitter brought in $1.19 billion in revenue in Q2 2021, meaning that it generated an additional $94 million in Q3, with the majority coming from the US.
Any growth is obviously good, but it’s interesting to consider where Twitter’s usage stats are trending with respect to its growth targets, which it announced back in February. As part of its Analyst Day presentation, Twitter noted that it was aiming to reach 315 million mDAU by Q4 2023, with revenue rising to $7.5 billion in that year.
So how is Twitter tracking?
Twitter was at 199m mDAU in Q1 this year, rising to 206m in Q2 (+7m), and is now 211m in Q3 (+5m). In order to reach 315m by 2023, it needs an annual growth rate of around 38.6m mDAU. So right now, it’s not exactly on track, while its revenue numbers will also need a significant boost to get the platform to those marks (Twitter’s on track to reach $5.1b in revenue this year).
Which it needs to hit, otherwise it could face significant change. Last year, a group of activist investors bought their way onto Twitter’s board in order to push for the replacement of current CEO Jack Dorsey, who they feel is not maximizing the opportunities of the platform. Twitter’s executive team was able to arrange a stay of execution for Dorsey, based on these ambitious growth targets, but if Twitter can’t meet them, you can bet that those calls for Dorsey’s removal will ramp up once again, which could spark a major shift at the app.
Which is also why Twitter’s been so keen to try new things, and throw new ideas at the wall, which, in general, has been a welcome change for the app that’s long been criticized for its lack of innovative momentum. But even so, the numbers, at least right now, don’t point to these new additions providing any major usage boost as yet, with many of the projects either falling flat or failing to gain significant take-up in the early going.
For example, Twitter shut down its Stories-like Fleets option in July due to lack of user interest, it’s subscription add-on program Twitter Blue hasn’t provided any radical new functionality that would justify the monthly cost, despite Twitter trying to angle ‘undo send’ as an alternative for a tweet editing functionality, and its Communities group tweeting process seems to run counter to a lot of the platform’s key engagement opportunities.
Twitter is, of course, still developing these options, which is a side-effect of launching faster, and iterating as you go, but thus far, while Twitter is definitely doing more things, we’re yet to see any ‘game-changing’ or major usage boosting functionality as a result of these experiments.
Which then brings us to Spaces, the platform’s major hope in latching onto the audio social trend, which is already fading in many respects.
Twitter’s been working to boost awareness of Spaces chats, as it seeks to increase engagement with the option, while it also added Spaces topics to assist in showcasing the most relevant discussions to each user.
Spaces could still become a bigger part of the tweet experience, but again, will it be enough to boost usage to the levels that Twitter needs, and get to that 315m mDAU mark in 2023?
Overall, the numbers for Twitter are okay – the revenue figures met market expectations, and Twitter has also noted that its ad business has not been heavily impacted by Apple’s data privacy update, which was specifically highlighted as an impediment in Facebook and Snapchat’s reports.
But some key challenges remain, when looking at the company’s overall direction. That’s not to say Twitter can’t make these targets, nor that change is guaranteed if it doesn’t, but there is a question as to how much benefit the platform can drive from its various updates, and whether they’ll be able to drive the increased adoption that it needs.
That is, of course, unless it can derive a major boost from eCommerce, another element of focus in the app.
Can eCommerce sales via tweet add a significant amount to its bottom line, while also boosting usage?
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