Twitter Earnings Fall Short as Company Admits Overstating User Numbers

Twitter Earnings Fall Short as Company Admits Overstating User Numbers

Via Breitbart:

Social media platform Twitter recently published its earnings report for the first quarter of 2022, falling short of expectations. The Company also admitted it had overstated its daily active users for several years, supposedly by error.  The earnings report is expected to be Twitter’s final report as a public company following Elon Musk’s successful bid to take the company private.

CNBC reports that Twitter has reported earnings for the first quarter of 2022 amidst Elon Musk’s successful bid to purchase the company and take it private. CNBC has summarized the report which can be seen below:

• Earnings per share: 61 cents, not comparable to estimates
• Revenue: $1.2 billion vs $1.23 billion expected, according to Refinitiv
• Monetizable Daily Active Users (mDAUs): 229 million vs 226.9 million expected, according to StreetAccount

Shares of Twitter traded up around one percent following the report. Twitter missed analyst revenue estimates reporting 1.2 billion compared to the 1.23 billion that analysts expected. The company further reported 61 cents earnings per share.

Twitter aid that the 229 million mDAUs it reported represents a 15.9 percent increase from the same period last year. The company reported that in the United States, mDAUs were up by 6.4 percent compared to the same period last year, reaching 39.6 million. International mDAUs were up 18.1 percent at 189.4 million.

Twitter also corrected previous mDAU numbers that overcounted accounts between Q1 2019 and Q4 2021. Twitter stated that the error incorrectly reported 1.4 million to 1.9 million extra mDAUs per quarter during that timeframe due to the introduction of a feature that allowed users to easily switch between accounts. This meant that all linked accounts were counted as mDAUs when an action was made by the users’ main account.

In the earnings report, Twitter stated:

In March of 2019, we launched a feature that allowed people to link multiple separate accounts together in order to conveniently switch between accounts.

An error was made at that time, such that actions taken via the primary account resulted in all linked accounts being counted as mDAU.

This resulted in an overstatement of mDAU from Q1’19 through Q4’21.

The table below provides updated values for mDAU from Q4’20 to Q4’21 alongside historical reported values for those same time periods. We are including one decimal place for both the absolute values and growth rates to give more detail around the magnitude of the changes.Note that recast data is not available prior to Q4’20 due to data retention policies,but our estimates suggest the prior period adjustments are not likely to be greater than those in Q4’20.

Although it is likely to take months for Elon Musk’s purchase of Twitter to close, the company has canceled its planned earnings conference call following the acquisition news. Twitter will also not be providing forward-looking guidance and is withdrawing earlier goals and outlooks.