Twitter reports surge in ad sales

Twitter Inc on Thursday reported a surge in sales as ad product improvements pushed revenue past Wall Street targets, joining other big tech digital ad firms such as Facebook Inc and Alphabet Inc’s Google whose businesses have proliferated during the coronavirus pandemic.

But Twitter said costs and expenses were rising and that stock-based compensation for new hires would be more than expected this year. It also said user growth could slow in the coming quarters as the Covid-19-related flow fizzles.

Twitter says it wants to reset after years of product stagnation, announcing in February bold goals to expand its user base, speed up new features for users, and double its revenue by 2023.

Ad revenue for the first quarter were US$899 million, up 32 per cent from the same period a year ago and beating analyst estimates of US$890 million, according to IBES data from Refinitiv. Total revenue for the quarter was US$1.04 billion, up 28 per cent year-over-year and slightly higher than estimates of US$1.03 billion.

The San Francisco-based company reported 199 million daily active users, up 20 per cent year-over-year, compared to analysts’ estimates of 200 million, according to Factset data. Twitter repeated its warning that growth of its monetizable daily active users (MDAU) — its term for daily users who can view ads — could reach “low double digits” in the next quarters, likely hitting a low point in Q2.

The company said in a letter to shareholders it was too early to understand the full impact of Apple Inc’s privacy policy change which began rolling out on Monday, but said its integration with a new ad measurement tool from Apple has increased the number of IOS devices it can target certain types of ads to by 30 per cent.

Facebook Inc this week said its growth could “significantly” decline this year as Apple’s change makes it harder to target ads.

Twitter pledged in February a goal to double its annual revenue to US$7.5 billion in 2023 from US$3.7 billion in 2020. Responding to criticism that was summed up by CEO Jack Dorsey this year as “we’re slow, we’re not innovative, and we’re not trusted,” the company has recently snapped up newsletter platform Revue and podcast company Breaker and teased a litany of new products.

The company, which last year launched vanishing tweets called “Fleets” similar to Snapchat’s ephemeral features, is also testing a live audio feature “Spaces” to compete with voice-app Clubhouse and has teased new ways for creators to make money on the site, from tipping to “super follows” where fans can pay for exclusive content.

Twitter said it expected total revenue to grow faster than expenses this year.