Published: Fri, February 08, 2019
Markets | By Otis Pena

Twitter 1Q revenue forecast misses estimates

Twitter 1Q revenue forecast misses estimates

Twitter shares tanked almost 10 percent Thursday after the company warned of weaker-than-expected revenue and said it will stop reporting its closely watched monthly active user metrics. Management's decision to prioritize the health of its platform is part of its commitment to remove "questionable accounts".

However, higher operating operating expenses are expected to cut into Twitter's margins and profits "considerably" this year, Clement Thibault, analyst at global financial platform Investing.com, wrote in an email to Barron's.

Twitter also expects capital expenditure of between $550 million and $600 million in 2019, well above analysts' average estimate of $415 million.

The number of average monetizable daily active users rose to 126 million in the fourth quarter from 115 million a year ago and 124 million in the previous quarter.

The switch to a monetisable daily user count enables Twitter to put a more positive spin on how it's doing, but even there, Twitter gives off the impression that it's trying to paint a slightly rosier picture than reality - at least when it comes to the competition.

After years of withholding the figure, choosing instead to just share its monthly userbase, Twitter reported what it called "monetizable" daily active users in its fourth-quarter earnings report.

Shares were down more than 10 percent at $30.56 in midday trading.

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In a statement, Twitter said that an mDAU is a user who is accessing its service "on any given day" and is able to be shown ads. The company says it will not include the monthly count in future reports, saying, "We want to align our external stakeholders around one metric that reflects our goal of delivering value to people on Twitter every day and monetizing that usage".

Total advertising revenue rose 23 percent to $791 million.

Investors' concerns over the weak forecast overshadowed strong fourth-quarter results for the social media company that included a 24 percent jump in total revenue, helped by growth in its video advertising business.

FILE PHOTO - A 3D-printed logo for Twitter is seen in this picture illustration January 26, 2016.

Overall revenue rose to $909 million (roughly Rs. 6,500 crores) in the quarter, beating Wall Street's average estimate of $868.2 million (roughly Rs. 6,200 crores). $791 million of that figure comes from advertising revenue, split $425 million in the U.S. compared to $366 internationally - while data licensing making up the other $117 million.

Profit, excluding some costs, was 31 cents a share, compared with the average estimate of 25 cents.

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