Twitter Inc. climbed after reporting third-quarter sales and user growth that met analyst expectations, indicating that the company’s advertising business is surviving Apple Inc.’s new consumer data collecting restrictions.
Apple’s privacy tracking rules, which require users to opt in to data sharing, would have a “modest” impact on sales, according to Twitter. Rivals Facebook Inc. and Snap Inc. had previously stated that the software improvements had harmed their businesses by making it more difficult to monitor the efficacy of advertisements.
Twitter said in a letter to shareholders on Tuesday that it is still too early to judge the long-term impact of Apple’s privacy-related iOS changes, although the revenue impact in Q3 was smaller than projected. Sales increased by 37% to $1.28 billion. In comparison to a year ago, “ad engagements,” or the number of user interactions with paid messaging, climbed by 6%. Unlike Facebook, Twitter makes the majority of its revenue from brand advertising, which involves less personal targeting and is more broadly measured.
Bloomberg said in its report that in the third quarter, Twitter stated it had 211 million daily users, up 5 million from the previous quarter and up 13% from a year ago. The surge was attributable to ongoing product improvements and worldwide debates surrounding current events, according to the social media service.
The findings suggest that Twitter has been able to maintain constant growth throughout last year, thanks to a fractious US election and interest in the global pandemic. While Snap and Facebook struggle to react to Apple’s adjustments, several features of Twitter’s advertising business that appeared to be a weakness earlier this year — such as its reliance on brand advertising — may now appear to be an asset.
Ned Segal, Twitter’s chief financial officer, said the firm is “closely following” global supply chain challenges, but that they may be “less of an issue” for Twitter because of how advertisers utilise the site.
He claims that services and digital goods account for more than half of Twitter’s ad revenue. Some of the world’s largest advertisers provide products and services, and the ads you see on Twitter are frequently for their services.
Snap said last week that supply chain constraints would impact its fourth-quarter revenue because companies are hesitant to market things they can’t create or deliver.
Twitter expects revenue of $1.5 billion to $1.6 billion in the current quarter. According to data provided by Bloomberg, analysts anticipated $1.58 billion on average.
According to the shareholder letter, the firm anticipates its user base to increase “at or above” the third-quarter rate during the holiday season. Operating income is expected to range between $130 million to $180 million.
After closing at $61.43 in New York, shares increased approximately 2.5 percent in extended trade. This year, the stock has increased by 13%.
The company recorded a net loss of $536.8 million, or 67 cents per share, in the third quarter, compared to a net profit of $28.7 million, or 4 cents per share, a year ago. The loss includes a $766 million one-time litigation-related expense due to the settlement of lawsuits, including a shareholder class action suit accusing Twitter of excessively optimistically portraying its prospects in 2014.
In addition, Twitter warned it would not recoup a revenue loss of $200 million to $250 million in 2022 from the sale of MoPub, the company’s advertising platform, while it reassigns personnel to new roles. Twitter announced earlier this month that it would sell MoPub for $1.05 billion to AppLovin Corp. The purchase is expected to finalise in the first quarter, according to the business.
The growth of Twitter Blue, a new subscription option, was not mentioned in the company’s shareholder letter. Twitter is attempting to diversify its revenue streams by introducing subscriptions. Advertising accounts for over 90% of the company’s revenue.
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