Twitter posts bigger 4Q profit, monthly user base slips

Daniel Fowler
February 8, 2019

Twitter reported a better-than-expected 24 percent increase in fourth-quarter revenue on Thursday, helped by growth in its video advertising business. Management's decision to prioritize the health of its platform is part of its commitment to remove "questionable accounts".

Some analysts said it was time for Twitter to show the results of efforts to safeguard its platform.

Twitter's operating costs are expected to surge by 20 percent year on year, a large increase from analysts projections of 12 percent.

"The street is just about done giving them a break about it", said JJ Kinahan, chief market strategist at TD Ameritrade. Analysts are expecting about $765 million, on average. During the fourth quarter of 2018, Twitter announced that 126 million monetizable Daily Active Users visited the site on average each day. Analysts had expected 25 cents, on average, according to IBES data from Refinitiv.

Shares were down about 6 percent in premarket trading at $32.10, after closing at $34.16 on Wednesday. For instance, earlier this week Snapchat reported that it has stopped shedding users and is keeping the service afloat at 186 million daily users - but it's not clear how many of those daily users are monetised by Snapchat.

The social media company said monthly active users declined, partly because it deleted millions of abusive accounts following criticism the platform was being used for political manipulation and hate speech. Twitter said that after the current quarter it would stop disclosing monthly active users, a statistic that has become standard among internet companies over the last decade. Revenue rose from $723 million in the fourth quarter of 2017, to the fourth quarter of 2018.

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Twitter said on Thursday profits rose sharply in the fourth quarter, lifted by gains in advertising despite a drop in its global user base.

The switch to a monetisable daily user count enables Twitter to put a more positive spin on how it's doing, but even there, Twitter gives off the impression that it's trying to paint a slightly rosier picture than reality - at least when it comes to the competition.

FILE PHOTO - A 3D-printed logo for Twitter is seen in this picture illustration January 26, 2016.

Those figures are a big deal compared to what Twitter pulled in a year ago, and revenues have risen from $665 million from Q1 through to $909 million now.

Revenue from data licensing and other non-advertising businesses rose 35 percent from a year earlier to $117 million.

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