Twitter profits slump after settling $809m lawsuit
LONDON: Twitter lost more than half a billion dollars in the three months to September after it paid $809.5m (£588m) to settle a long-running lawsuit.
The social media giant was accused of misleading investors over user engagement in 2015. However despite this one-off charge, its quarterly revenue grew 37% as it managed to shrug off the impact from Apple’s privacy changes which hit rivals such as Snap and Facebook.
This sent Twitter’s shares up three percent.
In September Twitter agreed to settle a class action with their shareholders dating back to 2016.
The suit claimed Twitter misled investors about how many users were active on the platform each month as well as how frequently they viewed Twitter’s timeline.
The company denied any wrongdoing but agreed to use cash on hand to settle the claim, flagging that it would hurt its bottom-line this quarter.
And that it did, with the social media giant reporting a net loss of $537m (£390m) in the third quarter.
There were some bright sparks, though, for the San Francisco-based company.
Unlike its rival Snap, whose shares plunged 25% last week, Twitter was relatively insulated from Apple’s privacy changes. It made $1.14bn (£830m) in advertising revenue during the quarter, labelling the impact “modest” as most of its advertisers do not rely on highly targeted ads.
Chief Financial Officer Ned Segal told a conference call with analysts that the platform is expanding its targeted advertising business, such as by introducing topics that users can follow on Twitter.
“A lot of this is opportunity that’s in front of us,” he said. The Apple privacy updates were rolled out broadly in June and prevent digital advertisers from tracking iPhone users without their consent.
Facebook signalled that they’re causing the company “headwinds” when it released its earnings earlier this week.