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.
Bloomberg reports revenue rose 28 per cent to US$1.29 billion, compared with the US$1.19 billion average analyst prediction, according to data compiled by Bloomberg. Twitter on Tuesday cited “strong brand advertiser demand in the U.S.” as a driver of ad sales in the fourth quarter, according to the company’s shareholder letter. Net income rose to US$222 million, or 27 cents a share.
Twitter reported 192 million daily active users, 26 per cent 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 U.S. 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 U.S. President Donald Trump from the service in January after his comments were seen as encouraging a mob at the U.S. 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.
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