Early Reaction To Twitter's Q4 Earnings (NYSE:TWTR)

Early Reaction To Twitter's Q4 Earnings (NYSE:TWTR)

Twitter reported that the number of monthly active users is declining.

Offering some detail on the economics of advertising on its platform, Twitter said: "Total ad engagements increased 33%, resulting primarily from increased demand and improved CTR [click-through rates], which grew on a year-over-year basis across the majority of ad types, as our ad prediction models and video ad product performance continues to improve".

The increase in daily user numbers is a positive for driving revenues from more engaged users. Something that analysts and investors have been pushing Twitter to do for quite some time. Its daily active users (DAUs), disclosed for the first time, rose 9% to 126 million. That's a pretty small number compared to Facebook, Twitter's main competitor.

Monthly users averaged 321 million in the fourth quarter, down 9 million from the year-ago period. And given that this chart obviously looks better than that steadily descending MAU one, Twitter has decided that this is the only user metric it's going to provide moving forward.

Twitter, which has struggled to keep up with fast-growing rivals like Facebook and Instagram, said it changed the measure for its user base to reflect "our goal of delivering value to people on Twitter every day and monetising that usage". Putting Twitter firmly in last place, when it comes to daily active users. Contributing to Twitter's monthly user count woes, the company has cracked down on bots and purged hundreds of fake accounts from Iran, Russia, and Venezuela that were believed to be targeting the 2018 midterm elections.

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Twitter, like other social networks, has been working to weed out fraudulent accounts that are used for abuse, harassment and political influence campaigns. Something that was desperately needed to be done. In the second quarter, Twitter had 336 million MAUs.

As far as the actual money, for the quarter.

Revenue grew 24 percent to $909 million. About $791 million was due to ads, while the rest was from licensing. Net income was $255m for the quarter and full year profit was $1.2bn.

Twitter's regularly disappointing monthly stats go counter to the story it's trying to tell investors about its moneymaking potential. So, where does that it leave Twitter in increasing DAUs from a shrinking pool, points out R.W. Baird analyst Colin Sebastian, who has a Neutral rating and $35 price target on Twitter shares. That is not quite as bad as it was after the previous quarter's earnings call, where it dropped close to 20-percent (thanks to some help from Facebook). That number is 126 million. The rest are from other countries that Twitter is available in (read: not China). This is a real problem for Twitter. He hinted at new features that would make conversations happen faster and put the ability to follow interests in the forefront of a user's experience on Twitter.

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