Twitter Exceeds Sales Estimate, Suffers Slow User Growth

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Following report from the fourth-quarter, Twitter revenue topped analysts’ estimation. The company, which capitalizes on a robust holiday season for digital advertising, was able to boost its revenue.

Although, Twitter revenue grew, the social network added fewer new users than projected.

Analysts also warned that audience gains in 2021 will slow compared with last year’s pandemic-fueled surge.

The microblogging site’s revenue rose 28% to $1.29 billion, compared with the $1.19 billion predicted by analyst, according to data compiled by Bloomberg.

According to the company’s shareholder letter, Twitter noted that “strong brand advertiser demand in the U.S.” were the driver of ad sales in the fourth quarter.

Twitter reported 192 million daily active users, totalling about 26% growth from a year earlier, although the company fell shy of the 193.4 million users estimated for the year.

In 2020, the company added about 40 million new daily users. The gain in users is credited to “product improvements” and series events that drew in audiences, like the U.S. presidential election, and the discussion around the global Covid-19 pandemic.

The push towards online shopping during the pandemic made the Q4 a strong quarter for digital advertising companies.

Companies like Facebook Inc., Alphabet Inc.’s Google, Snap Inc., and Pinterest Inc., all recorded revenue that beats expectations for the period.

Twitter’s user additions could reignite concerns about long-term growth, especially after the company permanently banned U.S. President, Donald Trump from the service in January, after his comments were seen as encouraging a mob that breached the U.S. Capitol.

Twitter has long argued that Trump’s presence on the platform didn’t meaningfully impact user growth, but it did raise Twitter’s public profile during his four years in office.

Twitter CEO, Jack Dorsey told analysts that Twitter is a “platform that is obviously much larger than any one topic or any one account.”

Jack Dorsey added that the majority of Twitter’s users are outside the U.S., and that the service has more than 50 accounts with over 25 million followers.

He also pointed out that daily active users will likely grow more than 20% in the first quarter, which is when Trump was banned.

In the recent period, Twitter added 1 million new users in the U.S., and now has 37 million average daily users in its most profitable market.

Twitter has been exploring subscription services to add revenue streams other than advertising.

Multiple internal teams are researching subscription products, though Twitter executives have said that such initiatives are still a long way off.

The company did not mention subscriptions in its shareholder letter, and Chief Financial Officer, Ned Segal, said there was “nothing new to report” when asked about subscriptions on the call.

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