NEW YORK (TheStreet) -Twitter's (TWTR - Get Report) smallest source of revenue, the social network's data licensing arm, may be an important piece of the company's earnings that investors should pay attention to as the burgeoning communications powerhouse matures.
As it currently stands, Twitter's data licensing revenue is expected to come in at between $13-to-$15 million in the fourth-quarter, according to a range of estimates provided by analysts. That represents minimal year-over-year growth, and is about the only thing that may be fairly predictable in Twitter's first quarterly earnings report as a public company.
Analysts forecast that the company will generate about $218 million in fourth quarter revenue, and a negligible adjusted profit or loss for the quarter.
Other issues such as Twitter's valuation, the trends of its user and revenue growth, and whether or not the company can beat Wall Street consensus appear far harder to gauge.
But it doesn't appear that Twitter has been making much progress with its data licensing even as more and more data crosses the network. Single digit or mid-teens licensing revenue growth would mark far slower growth than Twitter's advertising platform, its biggest source of earnings.
In an age of big data and analytics-based decision making, the insights that Tweets could give into consumer habits, trends and even investment ideas seems like an opportunity for the company. It could also be an important source of diversification from volatile advertising revenues.
But, as it currently stands, Twitter's earnings are a bit of a black box and mostly reliant on advertising.
Twitter generates nearly all of its advertising revenue through the sale of Promoted Tweets, Promoted Accounts and Promoted Trends. The majority of those revenues are conducted on a pay-for-performance basis.
It is unlikely investors or even the company will have a firm handle on the long-term prospects of Twitter's advertising platform, especially on mobile devices for many more quarters.
Data licensing, however, could be far more predictable. Unfortunately, according to Twitter's S-1, the company expects data licensing to decrease as a percentage of its overall revenue over time.
At between $13 million-to-$15 million in quarterly revenue, data licensing currently looks like a missed opportunity for the fast-growing platform.