How Twitter’s Data Licensing Business Fared in 4Q17



TWTR’s DES business grew 10% in 4Q17

In recent times, Twitter (TWTR) executives have talked favorably about the company’s data licensing business, saying it was shaping up to be a key driver of growth and profitability. In a letter sent out to shareholders following the release of its 3Q17 earnings, Twitter wrote: “We expect data and enterprise solutions (or DES) will continue to be an increasingly important contributor to revenue growth and overall profitability.”

In 4Q17, Twitter’s revenues from data licensing and other non-advertising sources (known as its DES business) grew 10% YoY (year-over-year) to $87 million, building on its growth of 22% during the previous quarter. DES revenues grew 14% in 4Q16.

Article continues below advertisement

A significant number of enterprise deals

Notably, Twitter was able to ink a significant number of new data licensing deals with enterprises during 4Q17, and this led to the continued growth in DES business in the quarter. But it’s also worth noting that Twitter’s DES business growth slowed both from the previous quarter and from 4Q16, and this slowdown may be because the business is getting larger.

Twitter’s data customers

Twitter’s DES business serves companies that use data insights to make their marketing campaigns more successful. Banks and CPG (consumer packaged goods) companies are some of Twitter’s data licensing customers. According to eMarketer, CPG companies, which include brands such as Procter & Gamble (PG), Coca-Cola Company (KO), PepsiCo (PEP), and Unilever NV (UN) (UL) are expanding their digital advertising budgets. Twitter’s data licensing relationship with CPG companies could thus benefit its core advertising business.

In the next part of this series (below), we’ll make a key comparison between the non-advertising businesses of Twitter and Facebook.


More From Market Realist