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Twitter reached the $1 billion sales mark in the fourth quarter of 2019 — a company record — and netted more daily active users than Wall Street expected, but higher costs led to a miss on profits.

Revenue in Q4 reached $1.01 billion, up 11% and topping analyst forecasts, which reflected “steady progress on revenue product and solid performance across most major geographies, with particular strength in U.S. advertising,” the company said. It posted adjusted net income of $195.6 million (down 20%), translating into adjusted earnings per share of 25 cents vs. analysts targets of EPS of 29 cents.

Twitter reported 152 million average monetizable daily active users (mDAUs) for Q4, up 21% year over year and a net increase of 7 million over 145 million in the prior quarter. That was a bigger jump than the 147.5 million analysts pegged for the year-end 2019 quarter. Average U.S. mDAUs grew more slowly, to 31 million for Q4 (up from 30 million in Q3).

Shares of Twitter shot up more than 15% in early trading Thursday on the user lift and revenue gains.

Half of the 26 million daily active users Twitter added in 2019 were “directly driven by product improvements,” Twitter CEO Jack Dorsey said in announcing results. Those included enhancements in machine-learning algorithms that are designed to provide more relevant content in users’ timelines and notifications, according to the company.

Dorsey added, “Entering 2020, we are building on our momentum — learning faster, prioritizing better, shipping more and hiring remarkable talent. All of which put us in a stronger position as we address the challenges and opportunities ahead.”

Twitter’s monetizable daily active users (mDAUs) is its proprietary metric for tracking users that it can sell ads against, which is a narrower definition than others in the industry use.

The company, after suffering ad-tech glitches that hurt Q3 results, said it made progress in Q4 on working to rebuild its core ad server. Twitter said it is focused on “completing our ad server rebuild in the first half of 2020.”

During the quarter, Twitter’s costs rose 22% to $854 million. Cost of revenue grew 17% to $314 million, which the company said was driven by higher revenue-sharing expenses associated with increased video content and infrastructure expenses. R&D costs jumped 40% to $198 million, “primarily due to higher personnel-related costs as we continue to focus our investments on engineering, product, and design.”

Twitter said costs will weigh on earnings for Q1: The company expects revenue to be $825 million-$885 million, with operating income of between “$0 million and $30 million” (vs. $93.7 million in the year-ago quarter).

According to Twitter, safety and the “health” of activity on the platform are continued priorities. In Q4, those efforts resulted in a 27% decline in user reports on tweets that violate the terms of service, the company claims.

The company is heading into 2020 and the pivotal U.S. presidential election after banning political campaign ads. Twitter also took steps in Q4 to address what it called “protecting the integrity of election-related conversations”; that included reintroducing Election Labels, first launched for the 2018 U.S. midterms, that identify candidates who qualify for the primary ballot for House, Senate and gubernatorial races.

Twitter said it plans to boost headcount by at least 20% in 2020, especially in engineering, product, design and research. That would add nearly 1,000 staffers to its payroll, after the company ended 2019 with more than 4,800 (up 24% last year). Dorsey, on the earnings call, said Twitter will “strive to be a far more distributed workforce,” saying that “Our concentration in San Francisco is not serving us any longer.”

Dorsey was asked on the call about his previously announced plans to spend up to half the year in Africa. He said he hasn’t made any travel plans for 2020 as yet but “I do expect I will travel.” He added, “We need to figure out how to build a company that is distributed and not burdened by time zones but advantaged by them.”

In Twitter’s shareholder letter, it touted ongoing focus on adding live and on-demand video content across sports, entertainment, news and politics. The company called out a multiyear deal extension with the NBA and Turner Sports to live-stream the second halves of at least 20 NBA on TNT games (focusing on a single user-voted player) and its deal with ABC and the Academy of Motion Picture Arts and Sciences to exclusively live-stream the “Oscars All Access” official red-carpet show on Feb. 9.

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