Twitter Inc (TWTR.N) reported weaker-than-expected quarterly advertising revenue and user growth on Thursday and forecast revenue short of Wall Street targets. That indicates that its turnaround plan has yet to bear fruit.
Twitter has been pursuing big projects such as audio chat rooms and newsletters to end long-running stagnation and attract new users and advertisers. But the quarterly results raised questions about Twitter’s plan as analysts had expected faster signs of progress.
Monetizable daily active users, or users who see ads, grew 13% to 217 million in the fourth quarter ended Dec. 31, missing consensus estimates of 218.5 million, according to IBES data from Refinitiv. That was up from 211 million users in the previous quarter.
Fourth Quarter 2021 Operational and Financial Highlights
Q4 revenue totaled $1.57 billion, an increase of 22% year over year or 23% on a constant currency basis.
Q4 costs and expenses totaled $1.40 billion, an increase of 35% year over year. This resulted in an operating income of $167 million and an 11% operating margin, compared to operating income of $252 million and 20% operating margin in the same period of the previous year.
Stock-based compensation (SBC) expense grew 38% year over year to $177 million and was approximately 11% of total revenue.
Q4 net income was $182 million, representing a net margin of 12% and diluted EPS of $0.21. This compares to a net income of $222 million, a net margin of 17%, and diluted EPS of $0.27 in the same period of the previous year.
Net cash used in operating activities in the quarter was $528 million due primarily to the cash payment of a litigation settlement announced in Q3, compared to $330 million of net cash provided by operating activities in the same period last year. Capital expenditures totaled $138 million, compared to $292 million in the same period last year, reflecting our latest data center buildouts, as well as delays in equipment delivery in Q4’21 due to supply chain disruptions.
The average mDAU was 217 million for Q4, compared to 192 million in the same period of the previous year and compared to 211 million in the previous quarter.
Other News
Twitter also announced a new $4 billion share buyback program. Half of that will be an accelerated share repurchase with the remaining being repurchased over time, the company said.
Despite the miss in user growth numbers, CFO Ned Segal said in a statement in the earnings release that its previously stated goals of reaching 315 million mDAUs in Q4 2023. At least $7.5 billion in revenue in 2023 remained the same.
Segal said revenue in Q4 was impacted by a slowdown in advertiser spending in the last couple of weeks of the period. But he said spending has picked up moving into Q1.
The report is the first under new CEO Parag Agrawal after Jack Dorsey stepped down from the role in November. Agrawal, who previously served as a chief technology officer. He had been a key player in the company’s efforts to create a decentralized protocol for social media through Project Bluesky.
Agrawal said he brings a sense of urgency and focus on execution to the role, with an eye on metrics. He also wants to accelerate Twitter’s work to bring new products to customers.
