Twitter Shares Fall Despite Better Than Expected Q4 Results

Despite the micro-blogging site Twitter Inc. beating analysts’ estimates in terms of both revenue and adjusted earnings per share for the fourth quarter, the shares of the company dropped over concerns for not as expected forecast guidance.

The profits of the company for the fourth quarter as reported by Twitter was more than double the number it had reported in the same period a year ago.

But the company also reported a year on year decrease in the average monthly active users or MAU. Further the company also made a m=not so encouraging revenue forecast for the first quarter of the current year and added that in the future, the financial reports would not cover he MAU numbers. These announcements saw the company shares drop by more than 7 per cent.

The net revenues and the earning per share for the fourth-quarter as reported by the company was $255.30 million and $0.33 respectively compared to $91.08 million and $0.12 per share in the same period a year ago.

On an adjusted basis, twitter’s earnings were $244.14 million and an EPS of $0.31 compared to $141.41 million or $0.19 per share a year ago in the same period. An average estimate by a poll of analysts by Reuters had expected the EPS to be $0.25 per share.

There was a 24 per cent increase in the revenues of the company for the fourth quarter to touch $909 million compared to the $732 million it reported in the same period a year ago. The revenues also were more than a consensus estimate of analysts of about $869.5 million. On a constant currency basis, there was a growth of 26 per cent in revenues.

There was a reduction of 330 million year on year in the number of average monthly active users or MAU top touch 321 million in the fourth quarter as reported by Twitter. This number in the earlier quarter was 326 million.

While the decision of the company to accord more focus to the health of the service and of not introducing a paid SMS carrier relationships in some of the markets was one of the reasons for the reduction in the average MAU, which was also compounded by a changes in the product which brought down the number of email notifications sent. The company also said that the average MAU was also impacted – albeit to a lesser degree, by the changes i\that it brought in so as to adhere to the new General Data Protection Regulation or GDPR in Europe.

Despite the better than expected revenues and profits, investors were however spooked by the revenue and income forecast issued by the company for the first quarter of the current year. Twitter said that its operating income would be between $5 million and $35 million against anticipated revenues between $715 million and $775 million. The market expectation was that Twitter would forecast revenues of $762.43 million for the first quarter of the current year. This caused a selloff of its shares

(Adapted from BusinessImsider.com)

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