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Twitter reported revenue of of $1.28 billion in the third quarter of 2021, including advertising revenue of $1.14 billion. While ad revenue was up more than 40 percent year over year, the company missed Wall Street expectations on revenue and earnings per share, with a one-time $800 million lawsuit settlement pushing the company to a loss in the quarter of $537 million.
The lawsuit, which settled in September, alleged that the company provided misleading engagement numbers to investors.
Twitter’s key subscriber metric, monetizable daily active users (mDAU) hit 211 million in the quarter, up 13 percent from a year ago. U.S. mDAUs were flat from Q2.
As has been typical in recent quarters, advertising was Twitter’s top business line, though growth slowed in Q3 compared to Q2. The company said that large and mid-tier advertising clients comprised a majority of its ad business. The slowdown in growth was due in part fo Apple’s crackdown on tracking, with the company telling investors in its quarterly shareholder letter that “the revenue impact we experienced from ATT in Q3 increased on a sequential basis but remained modest.”
“The mitigations we have put in place, and the speed with which we have adopted new standards, like SKAdNetwork and resulting changes across our technical stack, have contributed to minimizing the impact to us,” it added.
Speaking on the company’s earnings call, CFO Ned Segal also added that “part of it is the Olympics, which we think went better than we expected a little bit.”
Going forward, the company plans to invest in new ad formats, including shopping formats and creator-focused revenue streams.
However, strategically, the company plans to lean more into personalization.
“Our greatest opportunity and potential for growth is around personalization and relevance,” CEO Jack Dorsey said on the call. “We intend to put a lot more emphasis here. This mainly speaks to our machine learning and general AI. But it also lends itself to the new products, services, and capabilities that we have been talking about.”
Dorsey added that users won’t just see more relevant advertising, “but you’ll start seeing more relevant tweets also.”
In Q2, Twitter reported 206 million monetizable active daily users, and handily beat Wall Street expectations with $1.19 billion in revenue. Advertising revenue in Q2 totaled $1.05 billion.
Looking forward, Twitter told shareholders that “we continue to expect total revenue to grow faster than expenses in 2021,” excluding the legal settlement, and it will continue to pour that cash into the company. As such, the company expects Q4 revenue to be between $1.5-$1.6 billion, with GAAP operating income between $130 million and $180 million.
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