Twitter fell short of Wall Street’s user growth expectations but topped analysts’ revenue and earnings estimates when it posted its fourth quarter results on Tuesday afternoon. Altogether, the Q4 report got an initial thumbs up from investors, with Twitter’s stock price enjoying a nice boost in after-hours trading.
Between October and the end of December, Twitter added 5 million daily active users, bringing the company to 192 million DAUs overall. That marked an increase of 27% year-over-year. Analysts had expected that be closer to 193 million DAUs. After adding a company-record 20 million daily users during Q2, Twitter added a combined 6 million new daily users during the second half of 2020.
On the financial side, Twitter posted its second quarter ever with $1 billion in sales or more, with the company bringing in $1.29 billion during Q4, beating analyst projections of $1.20 billion. Sales were up 28% compared to the same time last year. Earnings per share of $0.38 also topped projections of $0.31 EPS.
Most of Twitter’s Q4 revenue, as usual, stemmed from its ad business, with ads accounting for $1.16 billion in sales. Earlier this week, Bloomberg reported Twitter is looking to add new revenue streams, including an option to tip users for exclusive content, in an effort to move beyond being so reliant on ad sales.
“2020 was an extraordinary year for Twitter. We are more proud than ever to serve the public conversation, especially in these unprecedented times,” Twitter CEO Jack Dorsey said in a letter to shareholders. “We reported a 27% year-over-year increase in mDAU in Q4 2020, reaching an average of 192 million. Our product changes to date are promoting healthier conversations for those who use our service, including advertisers and partners, and we are excited about our plans to continue innovating in 2021.”
Investors seemed excited about Twitter’s Q4 performance, too, with the company’s stock price jumping 2.30% in after-hours trading to $61.23 per share. Twitter had already been on a bit of a hot streak, with the company closing Tuesday’s normal trading session at its 52-week high of $59.87 per share. If Tuesday’s momentum is sustained, Twitter will be within striking distance of its all-time high of $73.31 per share — a level it hasn’t hit since late 2013.
Notably during the fourth quarter, Twitter made the decision to block users from sharing reports from the New York Post on Hunter Biden, son of then-presidential nominee Joe Biden. Twitter claimed the Post’s initial report — which said Hunter Biden introduced his dad to a “top executive” at a Ukrainian energy company, before pressuring Ukrainian lawmakers to fire a prosecutor looking into the company a year later — was “potentially harmful.” Twitter also said the report violated its rules against sharing “hacked materials,” although it wasn’t clear the reports were based on hacked information. The decision, which came weeks before the 2020 election, was skewered by many who felt Twitter’s censorship polices had gone too far. Dorsey later admitted the company’s handling of the ordeal was “unacceptable.”
Later, during the early days of Q1 2021, Twitter permanently banned Donald Trump from its platform, citing “the risk of further incitement of violence.” The decision came after supporters of then-President Trump stormed the U.S. Capitol on Jan. 6.
“After close review of recent Tweets from the @realDonaldTrump account and the context around them we have permanently suspended the account due to the risk of further incitement of violence,” Twitter said at the time.
Twitter did not reference its New York Post-Biden decision or its Trump ban in its letter to shareholders.
Moving forward, Twitter said it expects Apple’s upcoming privacy changes to iOS14 will have a “modest impact” on its business. The San Francisco-based company said it expects revenue between $940 million and $1.04 billion during the first quarter.