To The Moon

Thanks to the growing demand for advertising and advertising prices, American social platforms$Twitter(TWTR)$ ,$Snap Inc(SNAP)$ It has handed over an unexpected financial report. Snap recorded the highest quarterly growth rate of revenue and DAU in the past four years, and its share price rose by 17% after hours; Twitter swept away the gloom of the first quarter and achieved strong quarterly growth, with its share price rising more than 5% after hours. The two performances are also$Facebook (FB) $,$Pinterest, Inc. (PINS) $Injecting a booster, the whole social sector is expected to continue the general increase in the first quarter.

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Advertising has fully recovered and revenue has grown rapidly

As far as social platforms are concerned, the strong performance of basic Q1 continued in the second quarter, and the revenues of Twitter and SnapQ2 maintained a high double-digit accelerated growth trend, with a year-on-year increase of 74% and 116% respectively.

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We look at it from two dimensions: 1) First, the overall environment is improving. According to eMarketer's forecast, as the advertising market and the whole economy recover from the epidemic, the digital advertising expenditure in the United States will increase by 25.5% this year, which is the fastest growth rate since 2018.

The restart of economic activities has made the demand for digital advertising stronger than expected, and the core advertising revenue has achieved rapid growth under the low cardinal utility last year. Advertisers are eager to launch new products and services to interact with users in vertical fields such as automobiles, tourism and entertainment. For example, Ford announced its major plan to enter the field of electric vehicles on Twitter.

2) From the perspective of enterprises themselves, the self-iteration of social platforms is significantly accelerated. By optimizing product functions and advertising tools, innovative payment functions are introduced to match the needs of advertisers, and creators and users are also encouraged.

Twitter has always had shortcomings in innovation, and has obviously accelerated its update frequency this year. This quarter, Twitter launched features such as Tip Jar, Ticketed Spaces and Super following, which enabled users to directly support creators in the form of tips, and allowed people to access the exclusive live audio experience of Ticketed Spaces through paid access, as well as subscribe to other exclusive content every month through Super following.

Snap creative advertising tools are more abundant, such as AR Lenses Experiences, Story Ads, Collection Ads and so on. AR is the company's differentiated competitive advantage. At the annual partner summit in May, the company launched the next generation of Spectacles AR glasses covering global computing, and re-imagined the shopping experience through AR.

In addition, this quarter, Snap also launched a public file function for enterprises, allowing any enterprise to create personal files on Snapchat; Cooperate with Salesforce.com to allow major brands to use their first-party data to put relevant advertisements to Snapchat; API Lens is introduced, which enables enterprises to automatically import the latest product inventory into AR Lens without extra work.

Since its development in 2011, Snap has long been a mature advertising platform, with various forms, high efficiency and better ROI, which is well received by advertisers.

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The user increment exceeded expectations, and the innovation function was improved and retained

There is always an upper limit on the total number of users on any social platform, and this day will come. But what investors don't want to see is that companies are indifferent to it. Q2 companies are dispelling market concerns through actions.

In the second quarter, Snap and Twitter both showed efforts to stimulate the activity of existing users, which eased the worries about user growth, especially Twitter, whose user growth showed fatigue ahead of time. From the perspective of stock price reaction, investors can re-examine the new growth stage of the company.

This quarter's financial report shows that Twitter's average monetized mDAUs reached 206 million, up 11% year-on-year and 7 million quarter-on-quarter, slightly exceeding Bloomberg's expectations.

There are obvious differences between Snap and Twitter in the user base layer. Twitter users are under much more pressure to grow than their peers. In the first quarter, mDAUs was slightly worse than expected, which led to a sharp drop in stock prices. The Q2 user growth warning has not been lifted, and the company once again reiterated that the company will meet in the next few quartersCompared with the difficult period, it is expected that the growth rate of mDAUs in the third quarter and the fourth quarter will still show low double-digit growth, but Q2 may be the low point of the whole year, and investors are worried that the gap between Twitter and Facebook, Snap, Pinterest and other peers will be widening.

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In fact, the second quarter is a period when global sports events and current affairs are relatively scarce. Sports mainly focus on the discussion and warm-up of the Olympic Games and the European Cup, and establish long-term cooperative relations with WNBA and NFL; In terms of global current affairs, the second wave of outbreak in India is the main one, and others are lacking. It can be seen that Twitter is still the best place for people to discuss current affairs and new topics such as providing new customers with a more personalized family timeline have also significantly improved the retention rate.

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Looking forward to the second half of the year, Twitter will usher in a rare "honeymoon period". With the gradual recovery of large-scale sports events, such as the ended European Cup, the upcoming Olympic Games and the 2022 World Cup, this will greatly promote the obvious user activity in the third quarter.

Snap was driven by young users with high stickiness, and DAU increased by 23.1% year-on-year and 5% quarter-on-quarter in the second quarter. The loosening of travel restrictions in the United States has not affected the activity of users, and the five ecology of maps, social activities, sequences, stories and Spotlight remain attractive as always. Some product functions of Snapchat encourage users to go out and shoot AR videos, such as virtual maps.

In addition, Snap has accelerated the pace of innovation, which has always been the first driving force for companies, whether it is the innovation of social product functions or advertising tools. In the six months from 2021 to now, Snap has launched 18 innovative functions in an unprecedented way, exceeding the sum of any previous year, attracting a large number of young core users of "millennials" and "Generation Z". It can be said that the product function richness and user experience are the best among the four social platforms.

In the North American market, Snap is undoubtedly the most potential, and the most direct manifestation is that ARPU has a lot of mining space compared with its peers.

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Summary

Judging from the unexpected performance of Twitter$Twitter(TWTR)$ and Snap$Snap Inc(SNAP)$ , the change of advertising identifier (IDFA) of Apple iOS platform has little impact on the platform, and we are looking forward to the financial performance of the remaining two social platforms.$Facebook(FB)$ $Pinterest, Inc.(PINS)$

Social companies are entering a new stage, that is, gradually emerging from the epidemic dividend. The focus of the four social platforms is how to monetize the traffic brought during the epidemic, which is both an opportunity and a challenge.