I’m reviewing the transcript in my notes of Twitter’s second-quarter earnings call — which definitely did not go well, with the stock crashing more than 10% — and it seems like Twitter is beating the drum very hard on its daily active user growth.
The company is regularly referring to double-digit growth in its DAU count year-over-year and that it is stressing DAUs as one of its most important focuses. In the company’s fourth-quarter earnings in February, Noto said that was the number the company was “comfortable” sharing. That being said, the company still hasn’t seemingly given an exact number for those DAUs — and we, instead, got Silicon Valley’s favorite chart-without-a-Y-axis metric. Here it is, in all its glory:
Even when asked about the company’s advertising business, COO Anthony Noto zeroed in on DAU growth to start. “As I mentioned, we’re very excited about the third consecutive quarter, double-digit DAU growth at 12% year-over-year,” he said on the earnings call. “Because that bodes really well for future revenue growth.”
This is a very classic Silicon Valley thing to do. The growth story is always something that’s going to be critical, and it’s what Wall Street is looking for as it gauges whether Twitter can be a sustainable business. Its ad business has stalled, but it can sell its product as something that users adore and heavily engage with — meaning those individual eyeballs are more attractive than the sum of the eyeballs that look at Twitter on a monthly basis. This is definitely Snap’s strategy as it points to its DAU and engagement metrics.
To be sure, double-digit growth isn’t bad. In fact, in Twitter terms (and maybe in the broad scheme of things) it’s pretty good! We could probably guess that its DAUs are some non-trivial percentage of its monthly active users — which did not grow this quarter compared to the previous quarter and sits at 328 million. Twitter is trying to bill itself as an essential service for real-time information, where it certainly excels. That includes proving out a strategy in live video, as a lot of online content people consume is now video.
Twitter, still, seems to be judged on that metric of monthly active users. And for the company that’s going to be pretty unfortunate, as it’s going to be compared to other social networks like Facebook which can add tens of millions of monthly active users in a similar period. Facebook even said that WhatsApp now has around a billion daily active users. These are staggering metrics in the scope of Twitter, which isn’t really trying to be Facebook — and wants to be judged on something differently.
I’m sure we can do some mathematical gymnastics to walk backwards into a DAU number from its MAU number. But Twitter still seems to be apprehensive about offering a specific DAU number, and instead will drop these charts into its presentation. In the end, this is a positive trend for Twitter, but it might not be enough to appease Wall Street just yet as they look for some more clarity as to where the company’s business is going.
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