Starship Capital managing partner John Meyer talks about the future of Twitter and Lyft, following their recent earnings reports
After expelling former President Donald Trump from his platform a month ago, Twitter announced on Tuesday that it gained more daily users in January than the average it added that month for the past four years.
While some critics expected a drop in the number of users after Trump’s ban, Twitter CEO Jack Dorsey told analysts on Tuesday: “We are a platform that is obviously much bigger than any topic or account.”
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While most of Twitter’s earnings disclosure was devoted to the last quarter of the year, where the company raised more than $ 1 billion in revenue, Twitter took the unusual step of offering user growth guidance for the current quarter. The company did this because of the circumstances surrounding the suspension of the former president of the platform after the January 6 attack on the United States Capitol by groups of his supporters and after two tweets that he did that the company said violated its policy of glorification of violence.
Although it does not offer a number for new users added in January, the company noted that daily users rose from 187 million to 192 million in the third quarter, helped by one million new users in the United States. The domestic market also accounted for most of the fourth quarter’s revenue of $ 1.29 billion. The US accounted for $ 733 million, an increase of 24% over the previous year.
International revenue increased 34% to $ 556 million, with revenue from Japan, the social media giant’s second largest market, increasing 26% to $ 176 million, or 14% of total revenue.
As for advertising revenue, the company reported an increase of 31% to $ 1.15 billion in the quarter, with total ad engagement growing by 35% in the same period. Data licensing and other revenues increased 9% to a total of $ 134 million. Mobile app promotion (MAP) ads totaled more than $ 300 million in fiscal 2020, virtually stable year on year. However, MAP revenue for the quarter increased 50% year on year. The company also announced the launch of its rebuilt MAP offering and goal of clicks on websites, which, according to the company, “will increase our accessible market and diversify our customer base”.
After-hours trading saw the stock rise more than 2%.
Operating revenue totaled $ 252 million, or 20% of total revenue, compared to $ 153 million, or 15% in the same period in 2019.
Total quarterly costs and expenses increased to $ 1.04 billion in the fourth quarter, with the cost of revenue driven by traffic acquisition costs, share of partnership revenue and public cloud-related expenses, growing 38% for US $ 433 million, research and development expenses growing 25% to $ 248 million due to higher personnel-related costs, sales and marketing expenses growing 1% to $ 244 million due to increased external services and higher sales-related expenses, and expenses of general management growing 12% to $ 112 million, mainly due to higher personnel costs.
In addition, stock-based compensation expenses grew 27% to $ 128 million, representing approximately 10% of total revenue.
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Twitter ended the fourth quarter with more than 5,500 employees worldwide and approximately $ 7.47 billion in cash, cash equivalents and marketable securities.
Net cash in the quarter was $ 330 million, an increase of $ 277 million in the same period last year, while capital expenditures for the quarter totaled $ 292 million, compared to $ 150 million in the same period last year, driven by “investments in data center infrastructure developments to support audience growth and product innovation. Adjusted free cash flow for the quarter was $ 38 million, compared to adjusted $ 127 million free cash flow in the quarter. same period last year.
| Ticker | Safety | Last | change | Change % |
|---|---|---|---|---|
| TWTR | TWITTER INC. | 59.87 | +1.67 | + 2.87% |
In addition, the company initiated a share buyback program in the fourth quarter, bringing in a total of $ 251 million of its shares during the quarter. The company plans to repurchase a total of $ 2 billion in Twitter shares over time to “maintain an adequate capital structure, compensate for the dilution of the shares and return the capital to shareholders”.
“Our pace in the coming quarters is likely to be slower and may vary based on the operating environment, our capital requirements and market conditions,” said Twitter in its letter to shareholders.
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Looking ahead, the company expects to increase its workforce by more than 20% in 2021, especially in the areas of engineering, product, design and research. However, the company expects total costs and expenses to grow by 25% or more in 2021.
Twitter expects total revenue for 2021 to grow faster than spending, assuming the pandemic continues to improve and taking into account an expected “modest impact” from Apple’s privacy changes to iOS 14. Q1 2021 , the company estimates that revenue will grow between $ 940 million and $ 1.04 billion and operating revenue between a loss of $ 50 million and break-even. For fiscal year 2021, Twitter expects stock-based compensation expenses to be between $ 525 million and $ 575 million and capital expenditures between $ 900 million and $ 950 million.