Twitter Inc. reported fourth-quarter revenue that topped analysts’ estimates, capitalizing on a robust holiday season for digital advertising, though the social network added fewer new users than projected and warned that audience gains in 2021 will slow compared with last year’s pandemic-fueled surge.
Revenue rose 28 percent to $1.29 billion, compared with the $1.19 billion average analyst prediction, according to data compiled by Bloomberg. Twitter on Tuesday cited “strong brand advertiser demand in the US as a driver of ad sales in the fourth quarter, according to the company’s shareholder letter. Net income rose to $222 million, or 27 cents a share.
Twitter reported 192 million daily active users, 26 percent growth from a year earlier but shy of estimates for 193.4 million. Overall for 2020 the company added 40 million new daily users, crediting the gains to both “product improvements and a series of major events that drew in audiences, including the US presidential election and discussion around the global Covid-19 pandemic.
It was a strong quarter for digital advertising companies in general, which were buoyed by the push toward online shopping during the pandemic. Facebook Inc., Alphabet Inc.’s Google, Snap Inc. and Pinterest Inc. all reported better-than-expected revenue for the period. Still, Twitter’s lackluster user additions could reignite concerns about long-term growth, especially after the company permanently banned US President Donald Trump from the service in January after his comments were seen as encouraging a mob at the US Capitol.
Twitter has long argued that Trump’s presence on the platform didn’t meaningfully impact user growth, but it did raise Twitter’s public profile during his four years in office. Analysts and investors will need to wait until Twitter’s first-quarter numbers are reported to better understand whether Trump’s ban has had any impact on business.
In the recent period, Twitter added 1 million new users in the US, and now has 37 million average daily users in its most profitable market.
Shares were little changed in extended trading following the report after closing at $59.87. The stock has gained about 62 percent in the past year, reaching its highest level since 2014.
User growth, which has come in above 20 percent for the past five quarters, will slip to a percentage in the “low double digits starting in the second quarter, Twitter said in a statement. “Looking beyond Q1, the significant pandemic-related surge we saw last year continues to create challenging comps, the company wrote in its letter to shareholders, with gains forecast to be about 20 percent in the first quarter.
Twitter projected first-quarter revenue of $940 million to $1.04 billion. Analysts estimated Twitter’s first quarter revenue would be $983.4 million.