Facebook, Twitter & Snap Inc. Q1 2019 Earnings Review

James Mortimer

Paid Social Director

Wednesday saw Facebook announce its Q1 2019 earnings, a day after rivals Twitter and Snap Inc. posted theirs. 

It’s clear why these announcements send investors into a frenzy, but what does it mean for us – those who use the platforms to connect with customers and advertise brands?

Why do we look at earnings?

The announcements from Facebook, Twitter and Snap Inc. centre around revenue (predominantly earnings from advertising) and active user figures.

Revenue gives us a good indication of which platforms are seeing the greatest growth in investment from brands. As paid social generally will target an ROI figure, platforms with the greatest growth in revenue are generally the ones offering brands a better return on their advertising spend. 

For example, Facebook’s impressive advertising growth will be predominantly due to new e-commerce functions within Instagram, dynamic remarketing campaigns in Facebook and improved measurement across both platforms.

High revenue growth can mean a future increase in competition and may signal a rise in CPMs and CPCs to come. Looking deeper into the reports, we can see the functionality driving this growth and understand whether there are areas of each platform that brands can capitalise on, or potentially monitor for declining performance.

Active user figures give a longer-term view on the health of platforms. Even if revenue for the quarter increases, plateauing active users can signal future trouble for paid social performance as audiences become less engaged. 

Looking for nuances within the reports (like Twitter’s switch in metrics from monthly active users to ‘monetisable daily active users’) might set off alarm bells, causing us to investigate emerging platforms to move paid social spend towards. It could have us on the lookout for next big thing in social advertising.

Overall, earnings give us a great indication of what’s currently working within paid social, but can also signpost where we should be investing to reach our target audiences. What platforms are they going to be most engaged with in the future?

What were the highlights for each platform in Q1?

Facebook and Instagram Q1 2019 earnings

Despite all the issues that Facebook has faced over the last year, and even with a potential $3bn fine looming, Facebook’s earnings call painted a healthy picture that was well received by Wall Street.

The userbase grew by an extra 2.5% compared to Q4 2018, and across its entire family of apps, Facebook now has 2.7 billion monthly users – 2.1 billion of which use the apps daily.

Instagram Stories continues to be called out as a big success, with 3 million advertisers now buying adverts across Facebook’s entire family of apps. Maximum ad load has caused investors to panic in the past, but those fears were softened with the announcement that the majority of new impressions in Q1 came from Instagram Stories. Unlike the feeds on Facebook and Instagram, there’s still plenty of room for more ads in Stories, so Facebook will be able to increase its revenue from the platform. 

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Twitter Q1 2019 earnings

Twitter’s earnings report excited Wall Street, with shares jumping up 15% after its call to announce the latest results. The main spur for this increase was the 11% uplift in daily active users (mDAU). mDAU is often seen as the most important metric for influencing share prices, and Twitter’s Q1 earnings back up this trend. Conversely, monthly active users are down to 330 million compared to 336 million last year – Twitter say this is due to a continued purge of ‘Locked’ accounts. 

Advertising revenue has grown by 18% year-on-year, mostly driven from the US market which increased by 25%. Revenue from outside the US is up 11%. 

Twitter credited the launch of its beta app as helping to better develop its main product and advertising solutions for brands. CFO Ned Segal said “our results demonstrate Twitter’s unique value proposition for advertisers as the best place to launch something new or connect with what’s happening.”

One of the key challenges that Twitter faces to improve its reputation with advertisers is dealing with abuse on the platform, making it a healthier place for brands to operate. In the first page of its letter to investors, Twitter highlighted “We are taking an even more proactive approach to reducing abuse on Twitter and its effects in 2019. Improvements in Q1 emphasised proactive detection of rule violations and physical, or off-platform, safety – including making it easier to report Tweets that share personal information, helping us remove 2.5 times more of this content since launch.”

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Snap Inc. Q1 2019 earnings

Q1 was a strong quarter for Snap, with more users joining the platform in the first three months of 2019 than during the previous five quarters combined. The majority of this user growth was credited to the new Android app, but total users are still down compared to this time last year. 

Revenue is significantly up with a 39% increase year-on-year.

Investors were sceptical of the long-term profit of the platform, but there’s been a lot of investment from Snap on its advertising capability. With continued user growth, we should see increased platform performance within our paid social campaigns.

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So what can we expect from social platforms in the coming months?

It’s clear that the platforms are still focused on three main things:

1. Increasing active users by giving consumers what they want – fast, ephemeral content that taps into human psychology to drive engagement

2. Positive cultural change – addressing concerns over the impact of social media on young people and monitoring content for extremism, violence and abuse

3. Monetising each platform through new ad formats, capability and in-platform e-commerce like Instagram checkout. We expect the arms race to continue!

Who’s our money on for Q2?

We see Instagram continuing to dominate. 


Image credit: https://techdaily.ca/

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