The Official Reason Twitter Doesn’t Report Its Daily Active Users — The Motley Fool

For the last four quarters, Twitter (NYSE:TWTR) has reported its year-over-year growth rate for daily active users (DAUs). But when pressed for an exact number, Twitter won’t budge. That stands in contrast to other social networks like Facebook (NASDAQ:FB) and Snap‘s (NYSE:SNAP) Snapchat, which both readily offer that information to investors every quarter.

The SEC recently questioned Twitter’s decision not to provide its DAU numbers. It formally asked Twitter, “Please explain why you present the actual number of monthly active users [MAUs] but only the percentage change in DAUs, and tell us how the percentage change information provides an investor with a clear understanding of user engagement on your platform.”

Twitter’s response contained a couple of interesting tidbits.

Image source: Twitter, Copyright Asa Mathat for Twitter, Inc.

An internal metric of engagement

Twitter says the percentage change in daily users is actually what management uses internally to evaluate the health of the platform. Sharing that metric with investors, the company argues, allows investors to judge the platform the same way management does. “The absolute number of DAUs is less important than the percentage change in DAUs because the key factor is whether engagement is increasing or decreasing on a relative basis,” according to Twitter.

Looking at the last six quarters, it’s clear that engagement by that measure is increasing.

Quarter

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

MAU YoY Growth

3%

3%

3%

4%

6%

5%

DAU YoY Growth

3%

5%

7%

11%

14%

12%

Data source: Twitter. YoY = year over year.

DAU growth has outpaced MAU growth in each of the last five quarters, indicating increasing engagement among Twitter users. That said, MAU growth has been extremely slow compared to competitors like Facebook or Snapchat.

Facebook has grown MAUs about 17% in each of the last three quarters. Snap doesn’t report Snapchat’s MAUs, but DAUs increased 36% year over year last quarter.

But the idea that management doesn’t pay attention to the actual DAU numbers, instead focusing on the growth rate relative to MAUs, doesn’t really make sense. The absolute number of DAUs is an extremely important metric for any social-media company.

A marketer isn’t going to care how many more DAUs Twitter has than last year — it wants to know whether it has more DAUs than Snapchat….

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