Twitter Shares Plunge As Revenues, Profits Outpick, But User Count Loses Expectations

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Twitter Inc. reported an increase in quarterly revenue on Thursday thanks to strong ad sales, but its number of users fell short of expectations. The San Francisco-based company said its average daily monetizable active users increased 20% year-over-year to 199 million, but analysts had expected that number to grow to 200 million. Twitter TWTR, shares of -0.93% fell as much as 8.5% after hours, after a 0.9% drop in the regular session to close at $ 65.09.

The microblogging company reported first-quarter net income of $ 68 million, or 8 cents per share, compared to a loss of $ 8.3 million, or 1 cent per share, in the same period last year. Adjusted for share-based compensation and other expenses, earnings were 16 cents per share. Revenues increased to $ 1,040 million from $ 807.6 million in the prior year quarter. Analysts surveyed by FactSet had forecast adjusted earnings of 14 cents a share on revenue of $ 1.03 billion. Advertising revenue increased 32% year-over-year to $ 899 million. The company said its user growth in the United States was 13% and 22% internationally. While US revenue outpaced international revenue from $ 556 million to $ 480 million, revenue growth followed the trend of user growth, with US revenue growing by 19% and 41% annual increase in international revenue. Ned Segal, Twitter’s CFO, said on the company’s earnings call that revenue growth, which declined sequentially in the U.S. More than last year, was affected by the COVID-19 pandemic. “Remember that COVID had a varied impact in different parts of the world at different times of the year,” he said. When asked how big the US market can grow for Twitter, Chief Executive Jack Dorsey said in the call with analysts that he thinks it can be “pretty big.” He said the company hasn’t done enough to get people to what they’re interested in fast enough, but with new products like Themes, “all we’re doing is providing services. [the] two main tasks ”of informing users about what is happening and allowing them to talk about it. Twitter expects a second quarter GAAP loss of $ 170 million to $ 120 million on revenue of $ 980 million to $ 1.08 billion. Analysts had forecast adjusted earnings of 16 cents a share and a GAAP loss of 4 cents a share on revenue of $ 1.06 billion. Shares of Twitter are up 20% so far this year and are up almost 127% in the last 52 weeks. By comparison, the S&P 500 SPX Index, + 0.68% has risen about 12% year-to-date, and is up nearly 45% in the last year.