Twitter headquarters. Photo by Tim Trueman. Image source: Twitter.
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Twitter (NYSE: TWTR) is scheduled to report results for its third quarter on Thursday, Oct. 27, after market close. The quarterly update notably follows recent wild swings in the company's stock price as buyout rumors sent shares up and down. When the company reports results, investors will look for more clarity on Twitter's plan to address rapidly decelerating revenue growth.
Here are four specific metrics to check in on when Twitter reports third-quarter results.
Twitter's revenue growth in its third-quarter will be closely watched, as management guided for a sharp deceleration in year-over-year revenue growth rates in Q3. The company's midpoint of its guidance range for third-quarter revenue of $590 million to $610 million implies just 5.4% year-over-year revenue growth, down from Twitter's 20% year-over-year revenue growth in Q2. Further, the midpoint of this guidance range actually marks a sequential decline in revenue, from $602 million in Q2 to an expected $600 million in Q4.
Analysts, with a consensus estimate for revenue of about $606 million, expect Twitter's third-quarter revenue will come in at the high-end of the company's guidance range.
Earnings per share
Investors will be looking to see if Twitter's profitability can continue to improve the way it did in the previous quarter.
Twitter's second-quarter GAAP and non-GAAP EPS were a loss of $0.15 and a profit of $0.13, respectively. These results were above its year-ago GAAP loss per share of $0.21 and a profit per share of $0.07.
In Q3, investors should look for Twitter's GAAP loss to continue to narrow on a year-over-year basis and for its non-GAAP EPS to improve again. For the current quarter, analysts expect Twitter to report non-GAAP EPS of $0.09, up from $0.01 in the year-ago quarter.
Monthly active users
Another key area to watch, of course, will be the company's reported monthly active users. This metric began getting extra attention earlier this year when monthly active user growth stalled on a sequential basis. But Twitter returned to sequential growth in its user base in Q2 when it reported 313 million monthly active users for the quarter, up from 310 million in the prior quarter and up 3% year over year.
The bulk of Twitter's growth in monthly active users in Q2 came from its international markets. International monthly active users were 247 million, up 4% year over year. Can its international segment continue to help drive monthly active users higher?
Investors should look for another sequential uptick in Twitter's user base between Q2 and Q3 in order to prove the social media company is still growing.
Image source: Twitter.
Finally, investors should check in on the company's guidance for the final quarter of the year. Typically Twitter's best quarter, guidance for Q4 will be important.
Analysts, on average, expect Twitter's fourth-quarter revenue to be $754 million, up 6.2% compared to Twitter's fourth quarter last year.
Looking past financial and user metrics, investors should look for management to address recent buyout rumors and to clarify the company's plan to reinvigorate user and revenue growth. With its recent rollout of NFL live streams and the company's increasing focus on video, Twitter is clearly looking to strengthen its video content. But Twitter still doesn't have investors convinced recently launched product features and ongoing product improvements are enough to help the social network begin appealing to masses in a way that will attract new users.
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Daniel Sparks has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.