Data licensing seems to be the new point of focus for Twitter after struggling to bump up the number of users on its social platform without much success.
The company seems to be looking for growth in other areas since subscriber growth seems to have hit a brick wall. Twitter’s investors were recently disappointed after the company announced in its quarterly report that its monthly user base did not register any growth. The company reported that the number of users in the U.S went down by 2 million to 68 million though there was positive counter growth from the rest of the world.
Despite the lack of user growth, the company registered significant growth in revenue from its data licensing business. The social media firm reported that the business experienced 26 percent growth year over year to $85 million and there was significant contribution from the second quarter of 2017. The data licensing business delivered significant growth despite the fact that it represented just 15 percent of the company’s overall revenue.
“$1 in data revenue is equal to about $3 to $4 in advertising revenue, given the difference in profitability,” Twitter CFO Anthony Noto told investors during the Q2 earnings call.
It looks as if Twitter is now betting big on data licensing as the best path to follow in terms of profitability. This is especially because it offers a higher profit margin than its advertising business. Despite the positive news, it is worth noting that the data licensing business experienced slowing revenue growth in 2016 alongside the rest of the company’s businesses.
Growth in the fourth quarter of 2016 was registered at 14 percent, marking a huge drop 34 percent growth recorded in the second quarter in the same year. Twitter made some changes to the data licensing business this year including the introduction of a new tiered-pricing structure. The move was significant because it provided new potential areas of growth and even ushered in new enterprise deals.
The new changes played a significant part in boosting the growth in the licensing business. Twitter hopes that the business will continue to grow and provide even more opportunities that will help improve the revenue numbers.