Twitter misses earnings expectations across the board, authorizes $4 billion in share buybacks

Twitter misses earnings expectations across the board, authorizes $4 billion in share buybacks

A person in a mask walks by the New York Twitter offices after they announced they will close their re-opened offices effective immediately in response to updated CDC guidelines during the outbreak of the coronavirus disease (COVID-19) in Manhattan, New York City, U.S., July 29, 2021.

Andrew Kelly | Reuters

Twitter reported earnings for the fourth quarter on Thursday that missed analyst estimates on earnings, revenue and user growth.

The company’s shares initially rose on the report and were up during its earnings call in premarket trading. But they fell 2% by the end of trading Thursday.

Here are the key numbers:

  • Earnings per share: 33 cents, adjusted vs 35 cents expected, according to a Refinitiv survey of analysts
  • Revenue: $1.57 billion vs $1.58 billion expected, according to Refinitv
  • Monetizable Daily Active Users (mDAUs): 217 million vs 218.6 million expected, according to StreetAccount

The company provided revenue guidance for the next quarter ranging from $1.17 billion to $1.27 billion, while analysts had expected about $1.26 billion, according to Refinitv.

Twitter also announced a new $4 billion share buyback program. Half of that will be an accelerated share repurchase with the remaining being repurchased over time, the company said.

Despite the miss in user growth numbers, CFO Ned Segal said in a statement in the earnings release that its previously stated goals of reaching 315 million mDAUs in Q4 2023 and at least $7.5 billion in revenue in 2023 remained the same.

Segal said revenue in Q4 was impacted by a slowdown in advertiser spending in the last couple of weeks of the period. But he said spending has picked up moving into Q1.

The report is the first under new CEO Parag Agrawal after Jack Dorsey stepped down from the role in November. Agrawal, who previously served as chief technology officer, had been a key player in the company’s efforts to create a decentralized protocol for social media through Project Bluesky.

Agrawal said he brings a sense of urgency and focus on execution to the role, with an eye on metrics. He also wants to accelerate Twitter’s work to bring new products to customers.

The new CEO has inherited Dorsey’s aggressive internal goals, including growing Twitter to 315 million monetizable daily active users by the end of 2023.

Agrawal said on Twitter’s earnings call that the company still believes it can meet those 2023 goals because it’s seen a significant increase in new account sign-ups and reactivations. The company said it’s seen 25% year-over-year growth in new account sign-ups or reactivation and a 35% year-over-year increase in daily sign-ups.

Segal told analysts on the company’s earnings call that the surge in new sign-ups is driven in part by strategies like encouraging users to sign in when they come to Twitter from a different platform. Overall, he said the new users “look a lot like the people who have come to Twitter in the past, there’s just more of them.”

Twitter’s report follows those from Facebook owner Meta and Snap, which both reported some macroeconomic challenges like supply chain disruptions weighing on advertiser budgets.

But they reported different degrees of impact from Apple’s privacy update on iOS that makes it harder to narrowly target ads on iPhones. While Meta said it expected to take a $10 billion revenue hit as a result of the changes, Snap said its direct response advertising business was recovering more quickly than expected.

Twitter said last quarter that the Apple changes had less of an impact in the period than expected, and this quarter said in its shareholder letter that the impact “remained modest” in Q4.

“Although retooling our revenue products in light of Apple’s privacy-related iOS changes took additional time, energy, and resources in 2020 and 2021, we believe that our product improvements have helped reduce the impact on Twitter,” the company wrote.

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