Twitter warns of slowing user growth as pandemic surge fades

Twitter’s user growth fell short of expectations for the second quarter in a row and it warned that the pace of growth would slow in 2021 as a pandemic-related boost wears off. 

The San Francisco-based social media company said that revenues in its fourth quarter rose 28 per cent year-on-year to $1.3bn, beating analyst consensus of $1.2bn, which it attributed to the rollout of new advertising formats and targeting capabilities for brands.

Net income rose to $222m, with diluted earnings of 27 cents a share.

However, average monetisable daily active users — a homegrown metric that counts the number of logged-in users to whom the platform shows advertising — reached only 192m, a 27 per cent increase year-on-year. Wall Street had expected that to reach 194m.

Twitter cited a “small but measurable negative impact” from a number of policy and enforcement changes that it introduced ahead of the US election to prevent the spread of misinformation and encourage healthier “thoughtful” discussions on the platform. 

Twitter said it expected user growth of 20 per cent year-over-year in the first quarter, compared with a 24 per cent growth rate in the first quarter of 2020. It said that “the significant pandemic-related surge we saw last year continues to create challenging comps” as it projected “low double digits” growth in the quarters for the rest of the year.

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