Twitter misses 4th quarter earnings expectations, announces new share buyback program

Twitter reported earnings for the fourth quarter of 2021 Thursday that missed analyst estimates on earnings, revenue and user growth.

Shares popped more than 5% during premarket trading. Earnings per share were 33 cents, adjusted vs 35 cents expected, according to a Refinitiv survey of analysts.

The company earned $1.57 billion revenue vs $1.58 billion expected, according to Refinitv

There were 217 million Monetizable Daily Active Users (mDAUs) vs 218.6 million expected, according to StreetAccount.

The company provided revenue guidance for the next quarter ranging from $1.17 billion to $1.27 billion, while analysts had expected about $1.26 billion, according to Refinitv.

Twitter also announced a new $4 billion share buyback program. Half of that will be an accelerated share repurchase with the remaining being repurchased over time, the company said.

Despite the miss in user growth numbers, CFO Ned Segal said in a statement in the earnings release that its previously stated goals of reaching 315 million mDAUs in Q4 2023 and at least $7.5 billion in revenue in 2023 remained the same.

The report is the first under new CEO Parag Agrawal after Jack Dorsey stepped down from the role in November. Agrawal, who previously served as chief technology officer, had been a key player in the company’s efforts to create a decentralized protocol for social media through Project Bluesky.

Agrawal said he brings a sense of urgency and focus on execution to the role, with a focus on metrics and how to accelerate Twitter’s work to bring new products to customers more quickly.

Agrawal has inherited Dorsey’s aggressive internal goals, including to grow Twitter to 315 million monetizable daily active users by the end of 2023.

Agrawal said on Twitter’s earnings call that the company still believes it can meet those 2023 goals because it’s seen significant increase in new account sign-ups and reactivations.

The company said it’s seen 25% year-over-year growth in new account sign-ups or reactivation and 35% year-over-year increase in daily sign-ups.

Twitter’s report follows those from Facebook-owner Meta and Snap, which both reported some macroeconomic challenges like supply chain disruptions weighing on advertiser budgets.

But they reported different degrees of impact of Apple’s privacy update on iOS that makes it harder to narrowly target ads on iPhones. While Meta said it expected to take a $10 billion revenue hit as a result of the changes, Snap said its direct response advertising business was recovering more quickly than expected.

Twitter said last quarter that the Apple changes had less of an impact in the period than expected, and this quarter said in its shareholder letter that the impact “remained modest” in Q4.

“Although retooling our revenue products in light of Apple’s privacy-related iOS changes took additional time, energy, and resources in 2020 and 2021, we believe that our product improvements have helped reduce the impact on Twitter,” the company wrote.

SOURCE: CNBC