Latest News by Industry
• Twitter said Apple’s privacy rule
changes would have a ‘modest’ impact on its ads business
• Dull revenue outlook is partly due to
the sale of ad platform MoPub
Twitter Inc (NASDAQ: TWTR)
reported that its sales jumped over 21% in the fourth quarter, suggesting that
its digital advertising business has held up even as Apple Inc (NASDAQ: AAPL)
made changes in the data-collection process in iPhones that have hurt some
larger rivals.
Although the company missed earnings expectations across
the board, the earnings were not as disappointing as Facebook’s parent company
Meta Platforms Inc (NASDAQ: FB).
The microblogging platform announced a $4 billion share
buyback program. Twitter also said it expects to earn between $1.17 billion to
$1.27 billion in the next quarter, while analysts had expected about $1.26
billion, which is a bit lackluster.
Twitter dropped over 4% after Wednesday’s market close but
jumped 8% on Thursday early trading, recovering most of its losses, as the
accelerated share repurchase program helped buoy shares.
Shares fluctuated between a slightly positive and slightly
negative later trading session on Thursday.
‘Modest’ impact on ad business
The social network said Apple’s privacy rule changes would
have a “modest” impact on its business moving forward, as Twitter makes most of
its money from brand advertising, requiring less targeting data.
Changes in the privacy policy now force companies with apps
on the Apple store to explicitly ask for permission before collecting data from
users on iPhones.
Twitter, Facebook and other online platforms use data
collected from mobile devices to target users with advertising.
Last week, in its earnings report, Meta, which also owns
Instagram, estimated that the privacy changes would cost the company $10 billion in
advertising revenue in 2022.
While Twitter’s focus on brand advertising is currently
helping the company avoid major disruptions, it is also trying to build more
demand for direct response ads, which are more lucrative, and currently
comprises just 15% of Twitter ads.
Revenue hit due to MoPub divestment
Sales in the quarter ended on December 31 rose to $1.57
billion, compared with the $1.58 billion analysts had predicted.
Twitter added 6 million new users between October and
December, bringing the average daily active users (DAUs) to 217 million, a 12%
jump from a year earlier, at the end of the fourth quarter.
The lackluster revenue outlook is partly due to Twitter’s
recent sale of ad platform MoPub, Ned Segal, the chief financial officer, on
Thursday said in the statement.
“We think we can make up some of that in 2022,” he said,
referring to the revenue hit from the sale of MoPub, which brought in $281
million revenue last year. “But we should be able to make up all of it in
2023.”
In October, Twitter sold MoPub to AppLovin for $1.05 billion
in an all-cash deal closed on January 1.
San Francisco-based social media company has entered a new
chapter, following the unexpected resignation of co-founder Jack Dorsey as CEO in
November and naming the former Chief Technology Officer Parag Agrawal to take
the helm.
Twitter is feeling pressure to move faster in building new
products and set ambitious revenue and user growth goals last year to convince
skeptical investors that it’s serious about expanding the business.
The company has shown steady growth for years, but its
stock gains have lagged behind industry peers.
Picture Credit: Tech Xplore