Twitter Warns Of Slowing User Growth While Reporting Estimate Beating Sales And Profit

The growth of the number of users during the pandemic will slowing down in the upcoming quarters, warned the social media company Twitter Inc as the company reported a 27 per cent growth in the number of users which missed estimates of Wall Street.

The estimates of the market for its quarterly sales and profit were however beaten by the social media company. It however warned that there would be a 25 per cent or more rise of expenses in the current year but also predicted that its total revenues would also grow faster than the growth in costs.

The company reported a total of 192 million average monetizable daily active users (mDAU) in the fourth quarter. The mDAU is the term used by social media companies for the number of daily users who can view ads. According to IBES data from Refinitiv, analysts were expecting 196.5 million.

Product improvements and more global conversation from events and incidents such as the Covid-19 pandemic and the presidential elections in the United States was the main driver of user growth, the company said. There was however as small negative impact on global user growth because of some temporary changes implemented by the company to reduce misinformation around the US election.

There were global debates about what the company allowed on its platform – ranging from the ban on the former US President Donald Trump to the refusal of the company in recent times to not comply with the directive of the Indian government to block accounts linked to the farmers’ protest, which had put the social media company in the spotlight.

There were challenges for future gains because of the significant pandemic-related surge in users last year, the company said in a letter to shareholders.

Chief Financial Officer Ned Segal said in the earnings release that new ad formats and improved targeting had benefitted the advertising business of Twitter.

The company reported a 28 per cent year on year growth in total revenue came which came in at a record $1.29 billion. There was a 31 per cent year on year growth in ad revenue of the company at $1.15 billion. According to the average estimates of analysts, the company’s revenues were pegged at $1.19 billion while ad sales were predicted to be at $1.05 billion.

Newsletter startup Revue was acquired last month by Twitter.  A low-pressure way for users to post on the site in the form of disappearing tweets called “fleets” was launched recently by the company. A beta test of “Spaces,” its audio-chat room feature which has similarities with voice-based app Clubhouse was released by the company in the late fourth quarter, the company said.

In the current quarter, the company expected total revenue in the current quarter to be between $940 million and $1.04 billion, compared to estimates of $965.14 million, Twitter said.

(Adapted from Nasdaq.com)

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