The World Cup may have saved Twitter’s quarter.
According to two sources, Twitter’s monthly active users would have declined during Q2 2014 if not for a boost in activity delivered by viewers of the World Cup. Our sources base their information on data gleaned from Twitter’s data firehose.
Monthly active users (MAUs) comprise the most important statistic that Twitter publishes to gauge its growth with consumers. An MAU is any person who logged into Twitter during the month. In Q1 2014, Twitter reported it had 255 million MAUs, up 25% year-over-year. But that number was up only 6% sequentially from 241 million in the immediate prior quarter. Twitter’s growth is slowing, essentially.
One of our sources says Twitter will only have 260 million MAUs for the second quarter of the year. That would be a paltry 2% quarter-over-quarter growth.
Twitter declined comment to Business Insider, citing a pre-earnings quiet period. Twitter will report Q2 earnings on July 29.
It is not possible to say definitively from the data provided by Business Insider’s two sources that Twitter’s MAUs are in trouble. The information comes with an array of caveats and qualifications:
- First, the data come from third-party software developers who have access to Twitter’s application programming interface (API). The API is the portal through which other companies plug in to Twitter, so that they can serve apps into the Twitter ecosystem or use Twitter’s plug-ins on their own sites and apps. API data is Twitter’s data, but it is not the same as Twitter’s own internal data, which it reports in SEC filings.
- Secondly, the MAUs communicated to Business Insider were taken during non-standard time periods that don’t sync with the calendar quarters that Twitter uses to report its totals to investors.
- Third, the data comes from samples that are then extrapolated to impute total MAUs according to Twitter’s definition. Those samples include hundreds of millions of users — so they are genuinely representative — but they aren’t the same as the actual total Twitter database. In short, the results could be a fluke or a temporary distortion misrepresenting Twitter’s full user base.
But the fact that two separate sources leaked this data to Business Insider independently, and the fact that both sources reported low or negative periods of MAU growth in Q2, is not a good sign. Even if you assume the data is completely misleading, it’s an issue for Twitter because this is the type of data that developers see and talk about when they access the Twitter API. It’s also interesting that Twitter cut off some developers from its API because those companies were reporting Twitter user stats without its permission.
Any weakening in MAUs would be bad news for Twitter — it would send a signal to investors, users, and the advertisers that pay to engage consumers on Twitter, that the microblogging service is losing its pull with the people. But again, we do not know that this is the case. It is, however, a topic of conversation within the vendor ecosystem that hooks into Twitter.
Here’s what our sources say:
- One source says that at one point in May, Twitter MAUs sunk to about 240 million — below the 255 million reported in April as Twitter’s Q1 MAU average over the period.
- That source says that in June-July, MAUs hit 252 million, up a bit on May but still below the Q1 number.
- The second source said that MAUs were “down a bit” in April, but “up a bit” in May and up more in June, when the World Cup began. (Soccer fans are heavy Twitter users.)
- This source believes MAUs overall in April and May were basically flat, with an uptick in June.
- The source estimates that MAUs for Q2 as a whole will come in somewhere in the “very low” 260 million range, a rise of as little as 2% sequentially (assuming 260 million) or as much as 4% (assuming 265 million) at the higher end.
Note that the sources contradict each other on the May numbers. That is because they are looking at different data sets compiled across different time periods. The devil, evidently, is in the details.
But both sources agreed that the World Cup rescued Twitter’s quarter, as headlines and dramatic games drew in new and dormant users. Twitter rolled out a special welcome mat for users during the World Cup. People’s streams carried a note at the top inviting them to explore more World Cup themes on Twitter. New users got more soccer themed options if they so chose. That likely helped Twitter’s numbers.
But the underlying issue, which CEO Dick Costolo is working furiously to resolve, is that a large number of ordinary people don’t feel the need to tweet, or to engage any further with the app. More than 1 billion people have tried Twitter, but 75% of them gave up on it.
Twitter has been dogged by its inability to substantially grow its user base. In the early part of the year, investors aggressively sold off Twitter stock, driving its price down 55%, from $US69 to $US30.66 in large part because the company was not adding users as fast as had been hoped. More recently, TWTR has recovered to around $US37 after Costolo began his program of changes to improve the user experience. In early June, Costolo ousted his COO and replaced him with a new chief of product who had previously worked at Google.
One of our sources offered a theory for weakness in MAUs: Twitter has a younger average user than Facebook. A huge number of people on Twitter are teenagers, especially in Asia. But the Western media has a distorted view of Twitter because they experience it as a medium filled largely with adults, tweeting about current events, and many of them have thousands of followers.
In reality, teenagers have a few dozen followers — their friends — and they tweet about themselves. If youngsters move to another medium, like Instagram or WhatsApp or Line, then Twitter will be disproportionately affected by their departure. Facebook, by contrast, was essentially unaffected when it reported a slight decline in teen usage because its core user-base is so much larger. Teens are too small to affect it, in other words.
Finally, it is worth underlining the fact that it is not appropriate to compare Twitter to Facebook when it comes to user growth. Facebook is a mass medium for friends and families. Twitter is a mass medium for specialist users who often have a specific interest, or professional reasons, for being on Twitter. Twitter therefore cannot be expected to grow like Facebook, and its revenues will develop differently as advertisers figure out that user growth is not the same as user value.
Unfortunately, that subtlety will likely be lost if Twitter reports more weak MAUs at the end of the month.
On the other hand, if BI’s sources are wrong — and we’re admitting upfront that their data is at best imperfect — then Twitter could enjoy the last laugh.
Disclosure: Author owns shares of Twitter.
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