Twitter admitted to overstating its audience figures by nearly 2mn users for almost three years, as it reported its first quarterly results since the social media company agreed a $44bn buyout from Tesla chief Elon Musk.
It is the second time that Twitter has miscalculated its user numbers, after discovering in 2017 that a similar error had gone unnoticed for three years.
The latest mistake was revealed just days after Twitter agreed a leveraged buyout by Musk. The entrepreneur has hinted at plans to reshape Twitter’s business model, which currently relies on advertising for more than 90 per cent of its revenues.
Given the deal, Twitter’s first-quarter earnings report offered minimal commentary and did not include any guidance for the rest of the year. The company is also forgoing its usual conference call with analysts.
First-quarter revenues of $1.2bn came in slightly below Wall Street’s forecasts, which Twitter blamed on “headwinds associated with the war in Ukraine”.
However, Twitter’s monetisable daily active users (mDAU), its own unique metric for tracking its audience, came in better than investors expected at 229mn, with year-on-year growth of 6.4 per cent in the US and 18.1 per cent in the rest of the world.
Net income jumped to $513mn, thanks to a one-off benefit from the $1bn sale of its mobile advertising unit MoPub to AppLovin, which closed in January.
Shares in Twitter rose about 1 per cent to $49.05 in early trading, below the $54.20 per share price at which Musk has agreed to buy the company.
Twitter also revealed what it described as an “error” introduced in the first quarter of 2019 that “resulted in an overstatement of mDAU” that went undiscovered for almost three years.
The difference between the figures Twitter reported over the past year and the true count ranged between 1.4mn-1.9mn, it said, or just below 1 per cent of the total. It did not provide a reconciliation for 2019 or most of 2020.
Advertisers rely on accurate estimates of audience size when planning their campaigns.
“In March of 2019, we launched a feature that allowed people to link multiple separate accounts together in order to conveniently switch between accounts,” the company explained. “An error was made at that time, such that actions taken via the primary account resulted in all linked accounts being counted as mDAU.”
Fake or spam accounts represented “fewer than 5 per cent” of its mDAU during the quarter, Twitter said, after an internal review. Musk has said that he plans to crack down on “bots” or fake accounts when he takes over.
In 2017, Twitter had to lower its previously reported user figures since 2014 by as much as 2mn per quarter, after it discovered it had been mistakenly counting activity from third-party applications as unique users.
