Twitter warned of rising costs in the year ahead and issued tepid revenue guidance despite benefiting from a broader surge in digital advertising spending during the pandemic.
The San Francisco-based social media company said its first-quarter revenue increased 28 per cent year on year to $1.04bn, slightly ahead of analysts’ expectations of $1.03bn.
Twitter shares dropped almost 9 per cent in after-hours trading.
The company has recently revamped its offering to advertisers amid a wider boom in digital ad spending reported by larger rivals Facebook and Google. However, Twitter said it expected revenues in the second quarter of this year to come in between $980m and $1.08bn, at the lower end of consensus estimates of $1.05bn.
It also said total costs and expenses would rise by at least 25 per cent year-over-year in 2021, ramping up over the course of the year.
Twitter has been investing in several forthcoming features in a bid to boost engagement and diversify its revenue sources beyond advertising following concerns over its sluggish product innovation.
“We continue to expect total revenue to grow faster than expenses in 2021, assuming the global pandemic continues to improve and that we see modest impact from the rollout of changes associated with iOS 14.5,” Twitter said, referencing Apple’s forthcoming privacy changes to its iPhone operating system, which will make ad tracking more difficult.
“How much faster will depend on various factors, including our execution on our direct response road map and macroeconomic factors.”
Monetisable daily active users — a homegrown metric that counts the number of logged-in users to whom the platform shows advertising — rose 20 per cent year-on-year to 199m, just shy of the 200m analysts were expecting.
Net income rose to $61m, compared with a net loss of $8m in the same quarter last year.