Twitter's Pace of Revenue Growth Slows Due to Technical Bugs that Hurt Ads
Twitter announced Thursday that they had reached 45 million daily users an increase of 6 million from the second quarter. The spike followed changes designed to serve users more relevant content and enable them to follow topics of interest easier. Despite the growth that beat forecasts, revenue and profit fell short of Wall Street expectations.
Third-quarter profit totaled $37 million, or 5 cents a share, down from $789.2 million, or $1.02 a share, in the prior-year period; the 2018 third quarter included a large tax benefit. Revenue rose 9% to $824 million from last year, the smallest annual increase since late 2017, and below the $873.9 million that analysts were expecting. Twitter blamed software malfunctions associated with its ability to target ads and share user data with advertisers.
Profit was 14 cents a share, down from 21 cents a share a year earlier. Analysts had expected an adjusted profit of 20 cents a share.
“There’s nothing in the quarter that changes our strategy or the long-term fundamentals of Twitter,” said Ned Segal, Twitter’s chief financial officer. “We’re continuing to invest to drive audience growth and deliver for advertisers.”
Shares of Twitter have gained 35% this year through Wednesday’s close compared with a 20% gain the S&P 500.
For the fourth quarter, Twitter said it expects revenue of between $940 million and $1.01 billion, compared with $909 million in the final quarter of 2018.
The company said it anticipates the issues that plagued the ad business in the July through September period to continue in the current quarter. Analysts were expecting $1.05 billion in revenue.