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Twitter’s Q4 Earnings: Better Or Worse After Jack Dorsey’s Departure?

Twitter missed on earnings and user numbers but reported strong advertising revenue in its Q4 earnings call — how will it perform long term?

Twitter (NASDAQ: TWTR) fell just short of expectations in its Q4 earnings but it’s not all doom and gloom. Despite the main man, Jack Dorsey, departing earlier this year, CEO Parag Agrawal has kept to his growth expectations, still aiming for 315 million monetizable daily active users (mDAUs) and over $7.5 billion in revenue by the end of 2023. 

Twitter’s Q4 earnings

Twitter increased total revenue in the quarter by 22% to $1.57 billion and reported $5.08 billion in revenue for its full-year 2021 results. Although Twitter was hoping for figures that were a little higher, the company made progress by hitting over 217 million average mDAUs by the end of the quarter, a 13% jump year-over-year (YoY).

With this growth, Twitter also faced higher operational expenses than usual, but this is just a temporary surge due to investment in the company’s workforce, employee remuneration, and the construction of a brand new data center — all of which should provide the business with long term benefits.

Finally, Twitter announced that it will be engaging in the repurchase of $4 billion worth of its shares, half of which will be part of an “accelerated share repurchase (ASR)” plan. This certainly looks to be a good indication that management is still quite confident it can achieve its tactical plan given the size of the purchase. In fact, it looks like it believes its valuation is being discounted at these levels.

What you might have missed in Twitter’s earnings

Facebook got hammered in its earnings. Snapchat had one of its largest intraday jumps of all time after its report. Twitter, though, was somewhere in the middle. Apple’s iOS update hasn’t affected the core advertising business quite as much as you’d think, however.

Three product initiatives made in relation to website traffic campaigns — site visits optimization, aggregated measurement, and the events manager — maintaining a focus on privacy made all the difference. This on-the-feet thinking has meant making quick product adjustments, but it will win out in both the short and long term.

Another interesting development is the launch of ‘Twitter for Professional’ this quarter, a new method that which businesses, influencers, and creators can open up their content to the social media platform. Professional accounts were only made openly available in Q3 2021, but since then, Twitter has already garnered 2 million sign-ups. This could be an avenue the company looks to pursue much further in the future, following in the footsteps of Pinterest, TikTok, Spotify, and YouTube, all of which are working towards optimizing their reward systems for the creator economy to boost user numbers.

Lastly, there was Twitter’s first test of its Live Shopping events. Walmart was the first to kick off this under review feature, which actually appears to have been quite successful — 2 million accounts tuned in to see what the fuss was about. Another promising opportunity to draw new people to the platform.

Conclusion

So while the earnings could have been better, there’s still a lot of work going on behind the scenes at Twitter. There’ll be peaks and troughs in the short term, but under new management, Twitter’s future looks game plan looks clearer than ever before.

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