Twitter Reports Mixed Earnings as Profit and Sales Top Views, but User and Guidance Numbers Miss

By Adriaan Brits Friday, April 30, 2021

Twitter stock plunged more than 10% in after-hours trading Thursday after the social media business giant reported mixed Q1 earnings results.

Closeup of Twitter app icon on a smartphone.

Slowing Growth Hurts Outlook

Social media business reported higher-than-expected results for key metrics but fell short of user growth estimates and Q2 revenue guidance. The company said that profit and business revenue in Q2 were slightly higher than consensus estimates as it posted adjusted earnings per share of $0.16 versus the expected $0.14. Business sales came in at $1.04 billion, compared to the $1.03 billion consensus.

“We want to make it easier for people to find what they are looking for when they come to Twitter by better organizing content around Topics and Interests. In Q1, we launched more than 700 new international Topics and deepened coverage in popular English categories like Food, Science, and Entertainment, to provide a more tailored experience,” the social media company said in a statement.

However, the social media business missed on analysts’ views as it reported monetizable daily active users (DAUs) of 199 million to miss on the 200 million forecast. It also missed on a guidance front as it said it expects business sales between $980 million and $1.08 billion versus analysts’ expectations of $1.06 billion on average.

While monetizable daily active users missed estimates in the first quarter, the client base grew 20% compared to last year. The social media company reported ad revenue surged 32% compared to Q1 2020 to $899 million and the total ad engagement climbed 11% during the same period.

Twitter also noted that the integration of Apple’s SKAdNetwork helped boost the number of iOS devices the company can reach with its Mobile Application Promotion (MAP) by 30%.

Its main rivals, namely Google and Facebook, both smashed Q1 profit estimates driven by high ad spending. Some market analysts believe this is because these two companies have more ad formats and more efficient ad targeting capabilities compared to Twitter.

When asked why Twitter failed to deliver similar results to Google and Facebook, Twitter CFO Ned Segal said the company relies heavily on brand advertising and usually has a slow start after the holidays in terms of performance. He added the Capitol riot on January 6 has additionally weighed on the company.

The social media business said it hopes it will retain the new users it welcomed amid the COVID-19 pandemic. In February, Twitter promised it will double its yearly revenue to $75 billion in 2023, compared to $3.7 billion last year.

The company is testing a number of new products, including the live audio feature named “Spaces” that will compete with Clubhouse. It is also exploring ways to help users find topics of interest more easily and is expected to roll out new solutions for content creators to make money on the platform, such as including “super follows” where fans will pay to see exclusive content from their favorite creators.

Twitter recently acquired newsletter platform Revue and podcast company Breaker.

Summary

Twitter stock plunged more than 11% in after-hours trading Thursday after the social media company reported worse-than-expected user growth estimates and business revenue guidance for Q2.

About the Author


Headshot for author Adriaan Brits

As an analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in Advanced Analytics & Media.

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