SAN FRANCISCO/BENGALURU (Reuters) – Twitter Inc (TWTR.N) posted worse-than-expected quarterly revenue and profit on Thursday, plagued by unusually low demand over the summer and technical issues that hurt its advertising, sending its shares down about 19%.
Chief Financial Officer Ned Segal said the company’s ad platform encountered bugs, or glitches, that hindered its ability to target ads and share data with partners.
“These issues were in our control and we will work to do better,” said Segal on a call with analysts.
Twitter’s revenue rose 9% from a year earlier, but fell short of Wall Street expectations as total advertising revenue missed estimates.
Analysts tracking Twitter said the company’s financials would take at least a few more quarters to stabilize, with a quick turnaround looking increasingly unlikely.
“Not expecting a quick rebound in Twitter’s financials for at least a few quarters, as shortfall likely will carry into 2020,” said analyst Craig Huber of Huber Research Partners.
However, the social media platform managed to record a rise in daily users who see ads on the site, beating analyst estimates.
Twitter has stopped disclosing its monthly active users figures, instead reporting mDAU, a metric it created to measure users exposed on a daily basis to advertising through the site or Twitter applications that are able to show ads.
Chief Executive Officer Jack Dorsey said growth in monetizable daily active usage (mDAU) was driven by product improvements, including making the site easier to navigate and more proactively identifying abusive content to remove.
The company’s average mDAU hit 145 million, beating analyst expectations of 141 million, according to IBES data from Refinitiv. This alternative metric was up 17% year-over-year.
In July, Twitter launched a more personalized desktop Twitter.com as part of a plan to make the platform better for conversations. It has also experimented with the ability to follow topics, and has recently expanded testing for a feature to hide replies.
Recently, the company made a six-second video bidding available for global advertisers and it has continued to expand its live and on-demand video partnerships, including deals with NBC Olympics and Eurosport for coverage of the 2020 Tokyo Games.
Twitter and other social media platforms have also recently come under scrutiny over their ad policies.
Twitter, Facebook Inc (FB.O) and Alphabet Inc’s (GOOGL.O) Google this month was criticized by U.S. democratic presidential candidates, including former Vice President Joe Biden, for allowing politicians to run ads containing false or misleading claims.
In August, Twitter announced it would no longer accept advertising from state-controlled news media outlets, shortly after it came under fire for showing ads from Chinese state-controlled media that criticized the Hong Kong protesters.
The company also faced heat over its handling of user data when it said in October that email addresses and phone numbers uploaded by users to meet its security requirements may have been “inadvertently” used for advertising purposes.
For the quarter, net income fell to $37 million from $789 million, or $106 million when adjusted to exclude certain items. Analysts had expected net income of $161.5 million.
Total operating expenses, including cost of revenue, rose by 17% year-over-year to $780 million, partly due to plans to hire more employees.
Twitter expects fourth-quarter revenue to be between $940 million and $1.01 billion. Wall Street on average expects $1.06 billion.
Reporting by Elizabeth Culliford in San Francisco and Ambhini Aishwarya in Bangalore; Editing by Peter Henderson, Christopher Cushing and Anil D’Silva
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