Weak Advertisement And Low Demand Hit Twitter Revenue, Misses Expectations

Twitter Inc cited issues with advertising efforts, which included product bugs and unusually low demand over the summer as the reasons for the social media company posting both revenues and profits much lower than what the market was expecting for the third quarter. The bad earnings report also resulted in a sharp drop in Twitter shares by 15 per cent at $33.

Revenue of the micro-blogging platform registered a growth of 9 per cent year on year at $824 million but was much lower than the market expectations of $874 million according to data from IBES data from Refinitiv. The company also reported a 8 per cent year on year growth in its total advertising revenues for the quarter at $702 million.

Twitter reported a net income of $37 million, or $0.05 per share for the third quarter compared to  net income of $789 million, or $106 million when adjusted to exclude certain items in the same period last year. The market was expecting a net income of $161.5 million.

Twitter had earlier issued warnings that the revenue growth in the third quarter would be lower than the first two quarters partly because of the use of some older ad formats. However the company was also troubled by some unexpected problems which included bugs affecting the ability of the company to effectively target ads as well as sharing of data with ad partners. The company was also affected by a lower number of big events during the quarter in comparison to the summer a year ago.

The company has forecast a fourth quarter total revenue of between $940 million and $1.01 billion while the market is expecting revenues of $1.06 billion on the average.

Despite the dismal financial numbers, Twitter however reported an increase in the number of daily users who view ads on the social media platform and that number was more than what the market was expecting. The company no longer discloses its monthly active users count and in its place, the company now discloses mDAU numbers. This is a metric that has been created to reflect the measurement of the users exposed on a daily basis to advertising through the site or Twitter applications where ads can be shown.

A number of efforts at product improvements, such as making the site easier to navigate for users and greater pro-activeness to identify and remove abusive content had driven the growth in monetizable daily active usage (mDAU), said Twitter’s Chief Executive Officer Jack Dorsey.

According to IBES data from Refinitiv, the number of average mDAU for Twitter during the quarter touched 145 million which was more than the analyst expectations of 141 million. That marked a 17 per cent growth year on year.

Twitter has been trying to make the platform better for conversations and launched the a more personalized desktop Twitter.com in July. the company has also recently expanded testing for a feature to hide replies and has also tested with the ability to follow topics.

(Adapted from Reuters.com)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s