Twitter investors breathed a sigh of relief that it reported only a “modest” impact from the Apple privacy changes that thwarted Facebook owner Meta’s performance last week, as the short-form social media company reported a 22 per cent rise in sales.
Shares in Twitter initially rose by as much as 9 per cent in pre-market trading on Thursday, boosted by an expanded $4bn share buyback scheme, though they later pared some of those gains as investors digested more muted growth in user numbers.
Tech stocks have been particularly volatile during the industry’s earnings season this month. Meta’s stock lost more than 25 per cent — or $220bn of its market value — after poor results, which it blamed on restrictions to advertising targeting on iPhones, as well as increased competition from TikTok.
Shares in Snapchat’s parent Snap and Pinterest were also highly volatile last week, reversing losses in the wake of Meta’s results to record strong one-day gains after their latest results turned out to be better than Wall Street had feared.
Twitter reported a 22 per cent rise in sales to $1.57bn in the fourth quarter of 2021, roughly in line with consensus estimates, as the company has expanded into new revenue streams such as subscriptions.
The group also announced a $4bn share repurchase programme, $2bn of which it intends to acquire on an accelerated basis. This replaces a previously announced $2bn share buyback programme in 2020, of which there was $819mn remaining.
The San Francisco-based company said it expected Apple’s iOS changes to have an “ongoing modest impact” into the first quarter of this year, saying it was “confident” it could “navigate future potential changes”.
“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 said in its letter to investors.
However, Twitter’s overall push to build new products faster — under increasing pressure from investors — meant costs and expenses rose 35 per cent to $1.4bn in the quarter as the company ramped up hiring. This squeezed operating income, which fell 34 per cent year on year to $167mn, below consensus estimates of $175mn.
The earnings are the first since Jack Dorsey stepped down as chief executive in November, with former chief technology officer Parag Agrawal taking the helm. The handover had been planned behind closed doors for more than a year, as part of a truce between the company and the activist investor Elliott Management, which had agitated for Dorsey’s removal.
Twitter’s average monetisable daily active users — logged-in users to whom it shows advertising — increased 13 per cent year on year to 217mn, just shy of Wall Street expectations of 218mn.
Twitter said it expected a rise in revenues to between $1.17bn and $1.27bn in the current quarter — broadly in line with consensus.
