Twitter’s push for healthy discourse pays off as revenue rises
Firm posts first full year of profitability, but shares fall after decline in monthly users
Twitter Inc. reported record quarterly revenue and its first full year of profitability Thursday, signs the company’s efforts to promote healthy discourse on the platform appear to be paying off.
Still, shares of Twitter fell 10% in morning trading on the company’s declining numbers of monthly users and its revenue forecast for the current quarter.
Twitter disclosed its number of daily users for the first time: 126 million, a figure the company said was up 1.6% from the previous quarter.
The number makes it easier to compare Twitter with its socialmedia peers Facebook Inc. and Snap Inc., which have 1.52 billion and 186 million daily users, respectively.
Twitter said it measures its number of daily users differently than other companies, because it counts only users who can view ads.
Revenue rose 24% to $908.8 million in the fourth quarter, typically the heaviest spending period for advertisers, up from $731.6 million a year earlier. Those results topped analysts’ projections of $867 million, according
to FactSet.
Twitter said its number of monthly users, the metric it has released for years, fell 1.5% to 321 million from three months ago. Twitter has struggled for years with little to no momentum in building up its user base. It plans to stop disclosing monthly users after the current quarter.
Chief Executive Jack Dorsey said last year the company’s priority was to reduce the amount of abuse that occurs on the platform. Although those efforts sometimes result in closing the accounts of bad actors, other users tend to spend more time on Twitter when there is less harassment.
Marketers also say they are in
favor of the changes, because they don’t like advertising alongside negative content.
Mr. Dorsey told analysts Thursday that the company needs to keep up efforts to minimize bad behavior, something he sees as a growth initiative. “We have to make Twitter more conversational,” he said.
Twitter projected a sequential decline in revenue in the first quarter to between $715 million and $775 million. While that would be up from $665 million a year earlier, the range’s midpoint of $745 million sits below the $764.93 million analysts had penciled, according to Refinitiv.
Doing away with the monthly user number could suggest Twitter doesn’t like the trends it is seeing in that area, raising questions about how it will grow daily users from a shrinking pool, said Colin Sebastian, an analyst at R.W. Baird.
He also pointed to higher expenses Twitter is facing in 2019 as it combats abuse, adds new features and digests its growing head count. Twitter, which grew its employee number about 16% last year, said it expects operating expenses up about 20% in 2019.
Those costs could weigh on margins, Mr. Sebastian said.
Twitter’s profit in the fourth quarter increased to $255.3 million, or 33 cents a share, from $91.1 million, or 12 cents a share, a year earlier.
Robust spending in the online advertising industry also drove both Facebook’s record quarterly profit and Snap’s record quarterly revenue.