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Twitter Beats Expectations in Fourth Quarter; Shares Drop Amid User Reporting Changes, Downbeat Outlook

9:28 AM, Feb 7, 2019 — Twitter (TWTR) reported better-than-expected results for the fourth quarter, but shares in the social-media company sank as it said it would stop disclosing monthly active user numbers and offered a downbeat view on first-quarter revenue.

Non-GAAP diluted net income rose to $0.31 per share from $0.19 a year ago, better than the consensus on Capital IQ for $0.24 a share. Revenue jumped 24% to $909 million, well ahead of the analysts’ expectations for $865 million.

In a statement Thursday, Twitter said monetizable daily active users — those who log in and access the platform on any given day through its website or other applications that are able to show ads — will be “the metric we use to show the side of our audience and engagement going forward.” Monthly active users, or MAU, won’t be given after the first quarter of 2019.

“This change in disclosure does not impact the objectives which bring advertisers to Twitter or the information to which they have access today,” the company said in a letter to shareholders. “Advertisers come to Twitter because we have one of the most valuable audiences when they are most receptive, and we generate a high return on investment against their campaign objectives.”

In the fourth quarter, MAU fell to 321 million from 330 million in the same period of 2017. Average US monthly users dropped to 66 million from 68 million a year ago, while international users were down to 255 million from 262 million.

Average monetizable daily active users rose to 126 million the fourth quarter from 115 million a year ago. The US figure was up to 27 million from 25 million and international climbed to 99 million from 89 million, Twitter said.

“We made a number of product improvements in the fourth quarter, including making it easier to see the latest Tweets when people want to see what’s happening in the moment,” Twitter said in the investor letter.

The company said it sees first-quarter revenue between $715 million and $775 million, while the consensus on Capital IQ was for $768.7 million. For 2019, the company said it sees GAAP and cash operating expenses to be up approximately 20% year-over-year “as we support our existing priorities of health, conversation, revenue product and sales, and platform.” Shares in the company sank more than 7% in early trading Thursday.

“Our efforts to improve health have delivered important results, and new product features like a single switch to move between latest and most relevant Tweets have been embraced by the people who use Twitter,” said Chief Executive Jack Dorsey. “We enter this year confident that we will continue to deliver strong performance by focusing on making Twitter a healthier and more conversational service.”

Companies: Twitter, Inc.
Price: 31.32 Price Change: -2.84 Percent Change: -8.31

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