Twitter has had a busy year, and it's only July. For the company’s second quarter of 2021, Twitter reported total revenue of $1.19 billion, a 74% increase year-over-year. The company also reported GAAP operating income of $30 million, a 3% increase year-over-year, compared to a $274 million loss in the second quarter of 2020. Twitter traffic also grew during the last quarter with 206 million average monetizable daily average users (mDAU), an 11% increase compared to 186 million for the same period last year. Of those, 37 million are from the U.S. and 169 million are international users.

“As we enter the second half of 2021, we are shipping more, learning faster, and hiring remarkable talent,” said Jack Dorsey, Twitter CEO, in a July 22, 2021 news release. “There’s a tremendous opportunity to get the whole world to use Twitter.”

Quarterly highlights

Other highlights during the quarter include the following:

• Of the total revenue earned, $1.05 billion came from advertising revenue, an 87% increase over Q2 2020.
• Total ad engagements increased 32% year-over-year and cost per engagement increased 42% year-over-year.
• Data licensing and other revenue was $137 million, a 13% increase over the second quarter of 2020.
• Twitter’s expenses for the quarter were $1.16 billion, a 21% increase year-over-year.
• Net income for the second quarter was $66 billion, representing a net margin of 6% and diluted earnings per share of $0.08. This is impressive considering the second quarter of 2020 had a net loss of $1.38 billion, a net margin of (202%) and diluted earnings/loss per share of ($1.75).
• As of June 30, 2021, Twitter reported $15.3 billion in total assets, including $4.1 billion in cash and cash equivalents and $4.5 billion in short-term investments.
• Japan is Twitter’s second largest market, growing 40% during the quarter, and representing 13% of total revenue at $151 million.

“We delivered better-than-expected performance across all major products and geographies while growing our audience,” said Twitter CFO Ned Segal. “We continued to make significant progress on our direct response and brand products with updated ad formats, improved measurement, and better prediction. We are driving more value for advertisers with our strong push into performance-based advertising and expanded offerings for small and medium-sized businesses.”

Third quarter and full year outlook

Twitter provided the following guidance for the third quarter: total revenue between $1.22 billion and $1.3 billion and GAAP operating income between break even and a loss of $50 million. For the full year, twitter estimated that stock-based compensation expenses will be approximately $600 million, and capital expenditures will be between $900 million and $950 million.

“We continue to focus on making Twitter the best place for people to keep up with and discuss their interests. In Q2, we launched over 2,500 new Topics,” said Twitter in their shareholder letter. “Conversations are also core to our service. Twitter is where people go to have real conversations about what’s happening, and we’re working on ways for the people driving those conversations to earn money from audience support and engage their followers in a new way.”

Monetization opportunities, including subscriptions

To that end, the company has been working on monetization opportunities including Tip Jar, Ticketed Spaces, Super Follows, Twitter Blue, a paid newsletter service using the newly-acquired Revue, streamlined timelines through the company’s acquisition of Scroll and a weather news subscription called Tomorrow.

Insider Take

After treading water for years, and a year or more of subscription teasers, Twitter is finally using innovation and monetization to its advantage. This year, they’ve acquired Revue and Scroll, and they are creating new Twitter-powered platforms and premium tools for power users. These changes will attract creators and audiences alike. We don’t expect every new Twitter tool to be a winner, but the social media platform has enough variety to test, so they can keep the monetization tools that best suit their needs and scrap the rest. We’re only halfway through the year, but we expect to see more major moves from Twitter in the second half of the year.