Weak profit, revenue, overshadow Twitter user growth

Disappointing third-quarter profit and revenue at Twitter overshadowed strong user growth, sending shares of the social media company plummeting more than 17 per cent at the opening bell for stock market trading Thursday.

The San Francisco company also lowered its outlook for the fourth-quarter and for the year, and blamed some of its problems in the most recent quarter on bugs in its advertising platform.

The company said it’s addressing those issues, but that they will likely weigh on its advertising business in the near term.

Those problems caught industry analysts off guard and shifted their attention from some positive trends in growing user numbers that can drive the company’s advertising revenue.

The number of people using Twitter daily in the most recent quarter jumped 17 per cent to 145 million compared with the same period last year, and increased by six million from just the previous quarter.

That is three million more users than industry analysts had expected, according to a survey by FactSet.

“These bugs affected our ability to target ads and share data with measurement and ad partners,” said Ned Segal, chief financial officer. “We also discovered that certain personalisation and data settings were not operating as expected. These issues were in our control and we will work to do better.”

Net income was US$37 million, or five cents per share. Removing non-recurring charges, per-share profit was 17 cents, three cents shy of Wall Street expectations, according to a survey of industry analysts by FactSet.

It was a 65 per cent drop from last year’s adjusted profit of US$106 million.

Revenue was US$824 million, an increase of nine per cent over the same period last year, but well short of Wall Street’s projections of US$874 million.

Twitter started disclosing its daily user base earlier this year. These are users who log into the site at least once a day and see advertisements on the platform. Twitter says the daily metric is replacing its monthly user count, which it will no longer disclose.

The company said it has made progress on what it calls the “health” of its platform. The microblogging service, which has been criticised in the past for not doing enough to combat abusive comments and users, says it has been proactively identifying and removing such content. CEO Jack Dorsey said Thursday that more than 50 per cent of the tweets removed for abusive content last quarter were taken down before they were reported.

Twitter now projects fourth-quarter revenue of US$940 million, the lower end of its previous guidance range and short of the US$1.1 billion analysts were looking for.

Advertising revenue came to US$702 million for the quarter, an increase of eight per cent over the third quarter last year.

The company said data licensing and other revenue totalled US$121 million, an increase of 12 per cent over 2018’s third quarter.

– AP