Dive Brief:

• “A growing audience, better ad products, strong sales execution, global events and advertiser product launches” brought Twitter its fastest quarterly revenue growth since 2014, CFO Ned Segal told analysts on last week’s second quarter earnings call. The social networking site generated $1.19 billion in revenue, a 74% year-over-year jump.

• The vast majority of Twitter’s revenue stems from advertising; $1.05 billion came directly from ad sales, an 87% year-over-year jump. Total advertising engagement exceeded the high end of the company’s guidance range by 10%, or approximately $110 million.

• Over time, Segal told Bloomberg, Twitter envisions subscriptions being a “big part” of the company. “But right now, advertising is firing on all cylinders.”

Dive Insight:

Spurred by its momentum, the company is upping its outlook, now saying it expects to earn between $1.22 and $1.3 billion during the third quarter. 

“There are millions of small businesses on Twitter today, but most of them don't yet advertise, because we haven't made a good case to them what the value proposition is, or made it easy for them to do it,” Segal said. 

He said the company is working to make it easier to buy and see return on ads, and is capable of gradually growing its advertiser base as a result. “We can show the incredible value proposition to lots of medium-sized advertisers who haven't historically advertised with us.”

One of Segal’s KPIs, monetizable daily active users (mDAUs), reached 206 million in Q2, an 11% year-over-year jump.

“We've noticed that the people who came to Twitter [when] we went into shelter-in-place last March, have been staying with us better than previous cohorts have,” Segal said. This suggests that the product work the company has been doing to make it easier for people to find, and trust, what they're looking for, “is really working.”

During the second quarter, Twitter released its inaugural subscription service, Twitter Blue, which gives select users access to an Undo Tweet button, among other features. It also rolled out its audio chat feature, Spaces, and a Tip Jar, which allows creators to send money to one another. 

“If the creator is creating great content ... or it’s long-form content that we include in a different price point for a subscription, without ads, that complements it with other features that come from us," Segal told analysts. "We would make sure [dollars go to them for] that part of the value that can be attributed to the creator. We’re facilitating a transaction.” 

“We want people to be able to tip across borders," he told Bloomberg. "We want people to be able to subscribe to the best tweets. We want people to be able to pay Twitter and pay creators for their best content and for the premium features that we’ll offer. These decentralize how value is exchanged, and [are] a long-term opportunity for us to continue to break down the friction between a creator and their customer on Twitter.”

Apple’s iOS 14.5 release this spring, which gave consumers the option to “ask apps not to track” their activity, brought fewer negative ad-related impacts to Twitter than the company had anticipated, Segal said.

“I think it's too early to call a trend here, because not everybody's upgraded to the new operating system yet,” he said. “And advertisers haven't fully adjusted, but we feel like there's opportunity here for Twitter."