Twitter shares were down eight per cent this afternoon as it announced mixed full year results peppered with strong financials for 2018 but weak forecasts for the year ahead.
The social media giant was under pressure to beat analyst expectations after strong report cards from Facebook and Snap. But despite succeeding for the year ending 31 December, its outlook for the coming quarter spooked shareholders.
The firm made $1.2bn profit in 2018, up on losses of $108m the previous year, but it was the fifth quarter in a row in which the firm reported profit. Revenue was $3.04bn (£2.34bn), up 24.5 per cent on $2.4bn in 2017.
Meanwhile it reported $852m cash flow, up 55 per cent on $550m last year.
Why it matters
Investors were less than pleased with the firms expectations for the coming quarter, however, with total revenue shaping up to be between $715m and $775m according to the firm. Wall Street’s consensus was around $762m, sending Twitter’s stock falling in early US trading.
Twitter also said it would stop reporting monthly user counts, instead reporting so-called monetisable daily active users. This is in part because its active daily users continues to grow, but monthly user counts have not, as Twitter removing fake or suspect accounts.
The decision is strongly at odds with Facebook’s recent announcement that it will merge metrics across its selection of apps including Whatsapp and Instagram, no longer reporting its individual Facebook figures.
What Twitter said
Chief executive Jack Dorsey: “2018 is proof that our long-term strategy is working. Our efforts to improve health have delivered important results, and new product features like a single switch to move between latest and most relevant Tweets have been embraced by the people who use Twitter.”
“We enter this year confident that we will continue to deliver strong performance by focusing on making Twitter a healthier and more conversational service.”
What analysts said
Josh Krichefski, chief executive of Mediacom, said: “Twitter’s strong Q4 revenue growth comes down to three key things: its commitment to cleaning up the platform; its investment in new media partnerships; and its renewed focus on building more engagement and conversations between users. And the platform is clearly putting quality not quantity at the heart of its future growth plans.
“What the results ultimately show is that 2019 is set to be a crucial year for Twitter, and if it can deliver the innovation, safety and value that it has promised both users and advertisers, we can almost certainly expect to see more positive results from the company.”