×

Twitter Posts Strong Q4 Results, Stock Plunges on Forecast of Weak Revenue and Higher Costs

Twitter beat Wall Street financial expectations for fourth-quarter 2018, but the company’s stock fell on a weak Q1 revenue outlook — and after Twitter said it’s going to stop reporting monthly user counts, in favor of “monetizable” daily active users.

The social network’s Q4 revenue totaled $909 million, up 24% year-over-year, with video ads again representing more than half of its ad sales. It was the fifth quarter in a row Twitter reported a profit: Net income was $255 million versus $91 million in the year-prior period, or adjusted earnings per share of 31 cents. Analysts on average expected revenue of $869.5 million and adjusted EPS of 25 cents.

For the first quarter of 2019, Twitter expects total revenue to be between $715 million and $775 million (compared with the Wall Street consensus estimate of $762 million), with operating income of $5 million-$35 million. In addition, the company said it expects full-year 2019 operating expenses to be up 20% year-over-year as it increases investment in areas including improving safety and eliminating spam and other bad actors, as well as product, sales and platform. That disappointed investors, with Twitter’s stock dropping as much as 8% in premarket trading.

Twitter also is changing the user metrics it reports to Wall Street, and will report only “average monetizable daily active users,” or  “mDAU,” in the future. That’s partly because its daily active user base continues to grow — while monthly user counts have stalled or declined, as Twitter continues to purge fake and other suspect accounts.

For the fourth quarter, Twitter reported 126 million mDAU, compared with 115 million in the same period of the previous year and 124 million in Q3 of 2018. Average monthly active users for Q4 fell 5 million sequentially to 321 million, which is down from 330 million in the year-earlier period.

Twitter’s 126 million mDAUs for the most recent quarter, the first time it’s reported an actual number for daily users, is well below Snapchat’s 186 million DAUs for Q4 — but Twitter says the comparison isn’t apples-to-apples. “Our mDAU are not comparable to current disclosures from other companies, many of whom share a more expansive metric that includes people who are not seeing ads,” Twitter said in its letter to investors.

In announcing the decision to disclose monetizable daily active users, Twitter said, “We want to align our external stakeholders around one metric that reflects our goal of delivering value to people on Twitter every day and monetizing that usage.”

Twitter CEO Jack Dorsey claimed the full-year 2018 results are proof the company’s long-term strategy is working.

“Our efforts to improve health have delivered important results, and new product features like a single switch to move between latest and most relevant tweets have been embraced by the people who use Twitter,” Dorsey wrote in announcing the Q4 results. “We enter this year confident that we will continue to deliver strong performance by focusing on making Twitter a healthier and more conversational service.”

Twitter ended 2018 with over 3,900 employees, growing its global headcount by 16% (or nearly 550 employees).

One of Twitter’s biggest problems has been dealing with bad actors on the platform — and specifically, curbing abusive behavior on the platform. Dorsey again reiterated that the platform’s “health” is the No. 1 priority for Twitter. The company touted a 16% decrease in abuse reports last year from users “who had an interaction with their alleged abuser on Twitter.”

In 2019, Twitter said, it will take “a more proactive approach to reducing abuse and its effects on Twitter, with the goal of reducing the burden on victims of abuse and, where possible, taking action before abuse is reported.” It’s also planning to beef up login and sign-up processes to make it “more challenging for bad actors to take advantage of accounts for abusive or malicious purposes.”

Popular on Variety

More Digital

  • Spotify logo is presented on a

    Spotify Triples Free-Trial Period on Premium Service

    Spotify today extended the free-trial period for its Premium service from one month to three, tripling the amount of time listeners can take full advantage of the streaming giant’s offerings without paying for them. According to the announcement, the offer is “always-on/not limited time,” and will roll out across Spotify Premium plans globally: Individual and [...]

  • Moviepass

    MoviePass Confirms Security Issue With Customer Records

    MoviePass, the struggling movie ticket subscription service, has confirmed a security issue may have exposed customers’ records. In a statement, MoviePass said Wednesday that the security lapse was recently discovered and its system was immediately secured. News of the data breach was first reported Tuesday by TechCrunch, which alleged that tens of thousands of customer [...]

  • Tycho weather app

    This Website Creates Spotify & Apple Music Playlists Based on Your Local Weather

    Electronica musician Tycho launched a clever promotional website for his new album “Weather” this week: Visitors of Tycho’s website can use a web app to generate a playlist based on their local weather. Playlists can be saved to both Spotify and Apple Music, and consist of 25 songs, both from Tycho’s catalog as well as [...]

  • AT&T TV

    AT&T TV: An Unskinny Streaming Bundle That Looks a Lot Like Traditional Pay TV

    AT&T this week launched AT&T TV, a new subscription streaming television service that uses an Android-based internet set-top, in 10 markets. But the way it’s priced and packaged looks very similar to cable and satellite TV services — in other words, AT&T TV isn’t targeted at the cord-cutter crowd. It’s basically designed as a way [...]

  • Sofia Wylie arrives at Variety's Power

    Disney Channel Enlists Duplass Brothers for YouTube Hip-Hop Dance Series Starring Sofia Wylie

    Disney Channel’s first original scripted series made exclusively for release on YouTube is “Shook,” a hip-hop dance short-form series starring Sofia Wylie, produced by Mark Duplass and Jay Duplass. “Shook” will debut Saturday, Sept. 28, on Disney Channel’s YouTube channel. The scripted single-camera show centers on 15-year-old Mia (Wylie), who yearns to dance professionally but [...]

  • YouTube logo

    YouTube Is Getting Rid of Messaging Feature

    YouTube is killing off a feature that allowed users to share videos and other messages with each other. YouTube Messages, which was first introduced in January of 2017, will be turned off by September 18, the company announced this week. “We’re constantly reevaluating our priorities and have decided to discontinue YouTube’s native direct messaging feature [...]

  • Yara Shahidi

    Audible Teams Up With Big Names as Audio-Only Storytelling Expands

    Hobnobbing with the likes of Reese Witherspoon, Kate McKinnon and Yara Shahidi isn’t typically the gloss applied to the cerebral audiobook set, but Audible is putting the humble audio story through its own movie-makeover montage, inking high-profile development deals with entertainment names like “The Walking Dead” comics creator Skybound Entertainment, Witherspoon’s Hello Sunshine and Lorne [...]

More From Our Brands

Access exclusive content