Twitter passes $1bn quarterly revenue mark, but rising costs dampen earnings

6 Feb 2020127 Views

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Twitter has reported record revenue for Q4 2019 and has seen the number of users it can monetise increase by 21pc.

It was a mix of good and bad news for Twitter as it released its earnings report for Q4 2019 today (6 February). Revenue rose by 11pc during that period to $1.01bn, making it the first time the social media company has achieved this amount in a single quarter and surpassing market expectations of $992m.

Twitter also revealed an operating income of $153m in the quarter, however this was not only less than the $161m predicted by market analysts, but significantly less than the $207m it achieved a year earlier.

One of the big changes to how Twitter reports its earnings in recent years was the introduction of the monetisable daily active users (mDAU) metric, designed to show investors how many users can be shown ads on the platform. This was a move away from the standard industry practice of showing daily active users alone.

Twitter said mDAU grew by 21pc from 147.5m to 152m. This, it added, was primarily driven by product improvements, including increased relevance in the home timeline and notifications.

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Average international mDAU was 121m, compared to 99m in the same period of the previous year and compared to 115m in the previous quarter.

Rising costs

However, costs rose 22pc year on year to $854m, with the company’s CEO, Jack Dorsey, saying after Q3 that software glitches in its ad platform around that time would have a roll-on effect into 2020.

Costs will continue to climb this year, with plans to add 20pc more staff. Meanwhile, R&D costs for the platform grew by 40pc to $198m in Q4. Twitter expects its operating income and sales in the first quarter of this year to total between zero to $30m and $825m to $885m, respectively.

The company was recently under scrutiny after it was found that advertisers on Twitter could specifically target white supremacists, neo-Nazis, and vulnerable groups such as young people with eating disorders.

Twitter responded at the time saying it does ban certain sensitive words from its ad tool but the particular examples were an “error” and it has now fixed the issue.

Colm Gorey is a senior journalist with Siliconrepublic.com

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