May 28, 2022

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Twitter sees user growth as new CEO takes the reins

Twitter reported fourth quarter and full year results early Thursday. 


James Martin/CNET

Twitter saw an increase in its daily users in the last three months of 2021, a period in which a new CEO stepped in to lead the social media company. 

A total of 217 million people logged onto the platform daily in the fourth quarter, a 13% jump compared with the same period a year earlier, Twitter said in its earnings statement Thursday. 

CEO Parag Agrawal, who took over the top job from Twitter co-founder Jack Dorsey in November, attributed the performance to behind-the-scenes improvements in Twitter’s operations.

“My focus has been on improving our execution,” Agrawal said in a conference call Thursday with Wall Street analysts. Along with an increased focus on accountability in house, he said, “I bring a strong amount of urgency to this role, very focused on metrics … and being able to understand what’s working for our customers and what’s not working for our customers.”

Agrawal expressed confidence that Twitter is on track to hit an ambitious goal of $7.5 billion in annual revenue and 315 million daily users by 2023. Twitter’s revenue for all of 2021 was $5.08 billion. 

Twitter’s performance contrasted with Facebook parent Meta. Last week, Meta posted disappointing earnings that suggested its growth might be plateauing, prompting investors to chop more than a quarter from its market valuation. For the first time in its history, Facebook’s daily active users fell. The company had 1.93 billion daily users in the fourth quarter, down slightly from 1.92 billion users in the third quarter.

In the fourth quarter, Twitter racked up $1.57 billion in revenue, just shy of expectations of $1.6 billion. The company earned 21 cents per share, above estimates of 16 cents per share, according to analysts surveyed by Thomson Reuters. Excluding certain expenses, Twitter earnings 23 cents per share compared with the 35 cents per share expected. The company also announced a $4 billion stock buyback program.

For the first quarter of 2022, Twitter expects revenue of $1.17 billion to $1.27 billion. Analysts on average were expecting $1.26 billion, according to Yahoo Finance.

CFO Ned Segal said on the conference call that advertisers got rolling right away this quarter with planning for events like the Olympics, along with product launches and awards shows. “We feel like we’re off to a good start.”

In early trading Thursday, Twitter shares were down some 3% to around $36.40.

Like other social media companies, Twitter faces challenges promoted by changes in Apple’s privacy policies that make it tougher for advertisers to measure the effectiveness of their marketing campaigns. The Apple feature asks users of iPhones and iPads to grant permission to apps that want to track them. Meta partly blamed Apple’s changes for its disappointing fourth-quarter earnings.

Twitter has been experimenting with features that allow it to generate revenue outside of ads, which make up the bulk of its revenue. The company, for example, launched a new subscription service called Twitter Blue that allows people to undo a tweet and read ad-free news articles for $3 per month.

Agrawal indicated that early users of Twitter Blue have responded favorably but that there’s still a long ways to go. “It’s a very small part of where we are today,” he said. “It’s not critical to how we deliver the $7.5 billion of revenue in 2023 but creates massive opportunities for us as we move beyond that.”

He also spoke about Web3, the notion of building a new version of the web based on blockchain technology. “What you notice is this incredible amount of developable energy which is interested in solving problems,” he said, adding that Twitter has a small internal team looking at where those efforts might lead.

Social networks are also facing more competition In its report, Meta noted competition from TikTok, which has continued to grow in popularity. Meta’s short-form video product, Reels, doesn’t generate as much revenue as the company’s News Feed or its Stories feature, which lets people post content that vanishes in 24 hours.

Snap, the parent company of ephemeral messaging app Snapchat, posted its first quarterly net profit last week, sending its stock surging by more than 50%. The company said its ad business recovered more quickly than the company expected from Apple’s privacy changes. 

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