Twitter inks revenue record, but frets about iOS 14 | Light Reading

Twitter inks revenue record, but frets about iOS 14 | Light Reading

Did the election kill the social media star?

Twitter’s users didn’t quite meet analysts’ expectations for the second quarter running in particular for the average number of logged-in users who can be showed advertising.

This is a measure Jack Dorsey’s company calls average monetizable daily active users. And for Twitter turning a profit, it is a hugely important one. It reached 192 million by the end of 2020, an increase of 27% over the end of 2019. A lot, but Wall Street had expected 194 million.

Bye to a bigly account

So, a “small but measurable negative impact,” said the San Francisco company, came from its changes ahead of the US presidential election to remove bots and misinformation. Twitter has taken high-profile actions to remove tweets and in some cases users it viewed as inciting violence.

The platform’s former most visible user was an example-in-chief, when it removed Donald Trump’s account after his supporters stormed the US Capitol building on January 6.

Twitter’s decision to ban Donald Trump had prominent critics. Germany’s chancellor Angela Merkel called the permanent ban “problematic” on grounds of freedom of speech. She believed parliaments should make these decisions, by legislative frameworks balancing freedoms of expression against the dangers of hate, explained her spokesman, Steffen Seibert. So, these shouldn’t be decisions for social media platforms.

Another critic of Twitter banning Trump was Russian opposition leader Alexey Navalny. If Western tech companies engage in censorship, then the precedent will be richly exploited by “enemies of freedom of speech around the world, in Russia as well,” Navalny said.

All this election messiness may at least have now blown over for Twitter. But the company warns its user growth will continue to slow in 2021, as the coronavirus boost to online activity starts to cool, too.

Hashtag rising revenue

But for all this, Twitter saw its revenue in the last three months rise to a record new high of $1.3 billion, up 28% from the same quarter in 2019, and beating analysts’ consensus of $1.2 billion. This, says the company, comes down to rolling out new advertising formats and features that allow brands to target viewers.

Advertising demand was “stronger than expected throughout the quarter,” chief financial officer Ned Segal told a conference call.

Altogether, advertising revenue came in at $1.15 billion in the last quarter, up 31% overall. This dwarfs Twitter’s other revenue chiefly from data licensing which totted up to $134 million (up 9% year on year).

Want to know more about 5G? Check out our dedicated 5G content channel here on
Light Reading.

Before tax, Twitter made a small loss of $50.94 million in 2020, compared with a $390.14 million profit in 2019. Its research and development spending was up 25% year-on-year. And Twitter says in the coming year it plans to splash out over $900 million in capital spending, including on building a data center. But all that R&D spend isn’t a necessarily bad thing.

Twitter has in the last year “finally started to crank up new features and products,” says Rohit Kulkarni, executive director of MKM Partners, an equities research firm in Connecticut. And Kulkarni and his colleagues “believe that there are several low-hanging fruits” for Twitter to attract ad dollars, including by adding more self-service features for advertisers, he says.

Chirp off the old block

In the year ahead, Twitter’s revenue should outgrow its expenses, “assuming an easing pandemic and modest impact from iOS 14,” says a team of analysts from financial services firm Wells Fargo in a research note.

But there’s the rub.

The analysts “remain cautious on uncertainty relating to iOS 14, “which “could have an array of unforeseen impacts.” The big worry, of course, is that app developers’ obligation to get consent from users to share their data could dent Twitter’s newfound skill in leveraging user data for advertisers.

That said, in a shifting online ad market, Twitter’s advertising products could even become more valuable.

Which is to say, #watchthisspace.

Related posts:

Padraig Belton, contributing editor, special to Light Reading

No Comments

Sorry, the comment form is closed at this time.

error: Content is protected !!