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Takeaway: We're not sure what happens on this print since it all depends on mgmt. TWTR will need to rebase expectations again, question is when.


  1. 2Q15 = UGLY PUNT: We're not sure which way the ball is going to bounce on this print since it really depends on how mgmt chooses to address the street (appease or rebase).  We see some upside to the print off light 2Q guidance, especially if it can sustain its CPE tailwind from 1Q15.  Further, mgmt's cautious 2Q MAU comments on its 1Q15 call should offer some breathing room as well.  But we're not sure if mgmt is going to try to appease the street as they historically have and guide high 3Q/increase 2015, OR attempt to rebase expectations prior to its 2016 guidance release.        
  2. WILL NEED TO REBASE AGAIN: We remain short for this reason.  Even though the 2Q15 print can go against us, we suspect that upside to be short-lived at best.  For context, the bulk of TWTR's 2015 guidance cut was concentrated into 1H15.  In turn, that's where consensus has concentrated its estimate revisions as well.  Consensus is now looking for TWTR to essentially flat-line a +50% advertising revenue growth rate from now through the end of 4Q16.  That will be a tall order given its precipitous decline in ad engagements, which we expect to continue without a clear shift in its monetization strategy (see note below).

TWTR: Thoughts into the Print (2Q15) - TWTR   2Q13 Supply Shock slide

TWTR: Thoughts into the Print (2Q15) - TWTR   FC Ad Revenue

Let us know if you have any questions or would like to discuss further.

Hesham Shaaban, CFA


TWTR: Rock and a Hard Place (1Q15)

04/29/15 08:15 AM EDT

[click here]