As Twitter continues to try to find the right balance between making its platform easier to use while also less prone to toxicity and abuse, the social media company reported mixed earnings for Q4. Twitter posted $1.01 billion in sales — notable because it is the first time its revenues have broken past the billion-dollar mark — due to a strong quarter in advertising sales.
However, net income and EPS were both significant drops on the same period a year ago: net income came in at $119 million, with a diluted earnings per share of $0.15. In comparison, a year prior in Q4 2018, Twitter made net income of $255 million with diluted EPS of $0.33. Operating income for the current Q4 was $153 million.
(Twitter’s partial explanation was the fact that it had an “income tax benefit from the release of deferred tax assets valuation allowance in the same period last year” and that without it “net income was $135 million, with adjusted net margin of 15% and adjusted diluted EPS of $0.17… but those are still higher numbers than this quarter’s.)
Analysts had on average expected revenues of $997 million (up 9.7% on the same quarter a year ago) with earnings per share of $0.29, slightly lower than Twitter reported in the same period a year ago. Twitter itself said in Q3 that it expected revenues to be between $940 million and $1.01 billion, with operating income between $130 million and $170 million, meaning its results were in line with what it had forecast.
Overall, the numbers paint a brighter picture after a troubled Q3, when Twitter missed both on revenues and earnings after identifying several costly advertising-related glitches.
But the company remains a bit of a rollercoaster when it comes to financials. Twitter’s forecast for next quarter is looking like it might be another challenging one in terms of margins and overall sales. Twitter’s forecasting revenue to be between $825 million and $885 million and operating income to be between $0 million and $30 million.
Looking back at Q4, monetizable daily active users — Twitter’s own metric for measuring its audience size that it introduced after finding its growth story too challenging to tell amid flat or declining overall numbers — were up by 21% in the quarter and are now at 152 million, which Twitter attributed to improvements that it made in its algorithmic timeline to present more relevant content to users (and, presumably, more promoted and sponsored Tweets), as well as improved notifications.
The numbers were up both on last quarter as well as a year ago. The company has been introducing a number of other features, like Topics, to spur more subject-based, targeted consumption of Twitter.
“Now, even if people don’t know which accounts to follow, we recommend relevant Topics so people can see the best Tweets regarding those Topics, regardless of whether they follow the person that Tweeted,” Twitter noted in its letter to shareholders, which was posted today alongside the Q4 earnings.
Twitter added that as of December 31, 2019, there were more than 1,700 Topics that people could follow in six languages. Topics get suggested automatically in people’s timelines, or they can browse all Topics. Alongside those, Twitter also revamping Lists as a new kind of alternative timeline approach that can be created by other Twitter users, which Twitter also bumps up with suggestions and the ability to share lists with other users.
Apart from noting that some of the mDAU bump arose from new features on the platform, Twitter did not disclose actual engagement metrics on either Lists or Topics. We’ll be tuning into the earnings presentation in a little bit to see if any numbers come up there and will be updating this post with those details if we can get them.
Advertising remains the mainstay of the company’s revenue, totalling $885 million, up 12% year-over-year, with total ad engagements up 29% year-over-year and cost per engagement (CPE) down 13% year-over-year. Data licensing and other revenue totaled $123 million, up just 5% year-over-year. The US remains Twitter’s largest market in terms of revenue, if not audience: it generated $591 million, an increase of 17% year-over-year, but accounts for just 31 million mDAUs.
More to come.