On Thursday, Twitter Inc revealed lower-than-expected quarterly advertising income and user growth, as well as revenue forecasts that fell short of Wall Street projections, signaling that the company's recovery strategy has yet to yield results.
Nonetheless, the social networking site stated that it has made "significant progress" toward its target of reaching 315 million users and $7.5 billion in annual revenue by the end of 2023, and that user growth in the United States and worldwide should quicken this year.
After the results, shares of the San Francisco-based corporation jumped more than 8 per cent, but the gains were erased in morning trading.
Twitter has been exploring large projects such as audio chat rooms and newsletters in order to break out of a long period of stagnation and attract new users and advertisers.
However, the quarterly earnings sparked concerns about Twitter's strategy, as analysts had anticipated faster evidence of growth.
According to IBES data from Refinitiv, monetizable daily active users, or users who view advertising, increased 13 per cent to 217 million in the fourth quarter ended Dec. 31, which was lower than the consensus projections of 218.5 million. This was an increase from the previous quarter's 211 million users.
A new $4 billion share repurchase program was also announced by Twitter, which would replace a previous $2 billion program that expired in 2020.
"Twitter's stock buyback plan is helping investors overlook the company's relatively weak results and outlook," said Jesse Cohen, senior analyst at Investing.com.
There was a 22 per cent year on year rise in advertising revenue to $1.41 billion, which also was lower than analysts' expectations of $1.43 billion.
During the quarter there was also a gain in the number of users by Twitter. But the company will still need to add more than 12 million per quarter for the next two years to reach its target of 315 million users by the end of 2023, according to Jasmine Enberg, principal analyst at Insider Intelligence, who described it as an "incredibly lofty goal."
The quarterly results are the first since CEO Parag Agrawal took over in November. After co-founder Jack Dorsey stepped down as CEO, his appointment suggested a greater emphasis on engineering and adopting cryptocurrencies and blockchain technologies.
During an earnings call with analysts, Agrawal stated that he was focused on making faster decisions and "doing less things."
"I see a strong urgency to improve our focus and execution but also a lot of confidence in our strategy and our team," he said.
For the first quarter, the company expects to clock total revenues of between $1.17 billion and $1.27 billion. However, the mid-point of that range is lower than the average Wall Street target of $1.26 billion.
The growth in user number was in sync with the guidance of Twitter made in the previous quarter, company’s Chief Financial Officer Ned Segal said in an interview while adding that the company was working towards increasing user activity through promotion of people to follow topics that they say they are interested in while they sign up for their account.
During the last few weeks of the fourth quarter last year, the demand for advertisement was not as robust as during the beginning of the holiday season. During the quarter, there was a 12 per cent fall in total ad engagements, which include clicks.
(Source:www.businesstimes.com.sg)
Nonetheless, the social networking site stated that it has made "significant progress" toward its target of reaching 315 million users and $7.5 billion in annual revenue by the end of 2023, and that user growth in the United States and worldwide should quicken this year.
After the results, shares of the San Francisco-based corporation jumped more than 8 per cent, but the gains were erased in morning trading.
Twitter has been exploring large projects such as audio chat rooms and newsletters in order to break out of a long period of stagnation and attract new users and advertisers.
However, the quarterly earnings sparked concerns about Twitter's strategy, as analysts had anticipated faster evidence of growth.
According to IBES data from Refinitiv, monetizable daily active users, or users who view advertising, increased 13 per cent to 217 million in the fourth quarter ended Dec. 31, which was lower than the consensus projections of 218.5 million. This was an increase from the previous quarter's 211 million users.
A new $4 billion share repurchase program was also announced by Twitter, which would replace a previous $2 billion program that expired in 2020.
"Twitter's stock buyback plan is helping investors overlook the company's relatively weak results and outlook," said Jesse Cohen, senior analyst at Investing.com.
There was a 22 per cent year on year rise in advertising revenue to $1.41 billion, which also was lower than analysts' expectations of $1.43 billion.
During the quarter there was also a gain in the number of users by Twitter. But the company will still need to add more than 12 million per quarter for the next two years to reach its target of 315 million users by the end of 2023, according to Jasmine Enberg, principal analyst at Insider Intelligence, who described it as an "incredibly lofty goal."
The quarterly results are the first since CEO Parag Agrawal took over in November. After co-founder Jack Dorsey stepped down as CEO, his appointment suggested a greater emphasis on engineering and adopting cryptocurrencies and blockchain technologies.
During an earnings call with analysts, Agrawal stated that he was focused on making faster decisions and "doing less things."
"I see a strong urgency to improve our focus and execution but also a lot of confidence in our strategy and our team," he said.
For the first quarter, the company expects to clock total revenues of between $1.17 billion and $1.27 billion. However, the mid-point of that range is lower than the average Wall Street target of $1.26 billion.
The growth in user number was in sync with the guidance of Twitter made in the previous quarter, company’s Chief Financial Officer Ned Segal said in an interview while adding that the company was working towards increasing user activity through promotion of people to follow topics that they say they are interested in while they sign up for their account.
During the last few weeks of the fourth quarter last year, the demand for advertisement was not as robust as during the beginning of the holiday season. During the quarter, there was a 12 per cent fall in total ad engagements, which include clicks.
(Source:www.businesstimes.com.sg)
Homepage
Send to a friend
Printable version
Share
