- Twitter reported ad revenue growth of 12% for a total of $885 million in Q4 from a year earlier, as its user base expanded 21% to 152 million, per a quarterly report. Total revenue climbed 11% to $1.01 billion, marking the first time that the social network surpassed the quarterly billion-dollar mark.
- Ad targeting and measurement difficulties dampened yearly global ad revenue growth by 4 percentage points for the quarter. Total ad engagements jumped 29% during the period on improved clickthrough rates and higher impressions from audience growth. Cost per engagement (CPE) fell 13%, partly because of a shift to video ad formats that have lower CPE rates, per its report.
- Higher costs pressured Twitter's operating income, which fell 26% to $153 million from a year earlier and missed the consensus estimate of $161 million, per data cited by Reuters. Twitter's total U.S. revenue rose 17% to $591 million, outpacing the 3% rise in global sales. The company's top priority this year is to roll out new features more quickly, CEO Jack Dorsey said in a conference call with analysts.
Twitter's ad growth of 12% was slower than the gains seen by social media rivals, but the company did outperform on other metrics like user growth. By ending the quarter with 152 million monetizable daily active users (mDAU), as the company reports its user base, it handily beat estimates of 147.5 million, as Reuters reported. Expanding its user base should help to drive future ad revenue, even if Twitter provided a disappointing revenue outlook for the current quarter. Twitter forecast Q1 revenue of between $825 million and $885 million, mostly below the consensus estimate of $872.6 million.
The growth in users helped Twitter to overcome other disappointing metrics, and continued measurement issues that have dogged the company. The report also shows an improvement from Q3, when advertising revenue growth fell considerably short of estimates. At that time, Twitter said overall revenue was down three or more percentage points due to "revenue product issues," referring to ad-tech bugs that became apparent earlier in the quarter. Twitter last year also apologized for applying people's personal information, including phone numbers, for ad targeting purposes without their consent.
Looking ahead, political concerns may become an issue for Twitter as the U.S. presidential election approaches. The company this week said it would put "false" warning labels on tweets with "deepfake" or deceptively edited forms of media, or remove them altogether. Twitter in November banned political ads as social media companies faced greater public pressure to curtail commercials with misleading or false information, CNBC reported.