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Twitter tops user, sales expectations for 4Q

Twitter (TWTR) posted fourth-quarter revenue and user growth that exceeded consensus expectations, driven by a jump in ad sales from the company’s home market. Fourth-quarter earnings and guidance for the current quarter, however, were short of consensus estimates.

Here were the main metrics from the report, compared to consensus estimates compiled by Bloomberg:

  • Revenue: $1.01 billion vs. $994.5 million expected

  • Adjusted earnings per share: 17 cents vs. 28 cents expected

  • Average monetizable daily active users: 152 million vs. 148.1 million expected

Twitter’s average monetizable daily active users (mDAU) jumped 21% in the fourth quarter, more than doubling the 9.6% gain in mDAU the company posted in the same quarter last year. For the last three months of 2019, U.S. mDAU grew 15% to 31 million, while international mDAU grew 22% to 121 million.

Shares of Twitter rose 8% to $36.10 each during the pre-market session, as of 7:24 a.m. ET.

For the fourth quarter, Twitter’s overall revenue growth was driven by a 12% increase in ad revenue to $885 million. This was led by U.S. ad sales, which grew 20% to $509 million. Japan was again Twitter’s second largest market, comprising $139 million in overall sales, or 14% of quarterly revenue. Twitter also touted its improving ad engagements, which rose 29% in the fourth quarter, while cost per engagement declined 13% as video ads became a larger share of ad products.

But while Twitter’s sales grew in the fourth quarter, its expenses also rose as it invested more in hiring and in optimizing the platform to remove content it deemed “unhealthy” to the Twitter conversation. Headcount rose by 24%, or about 900 employees, in 2019 to more than 4,800 workers, and Twitter plans to grow headcount by another 20% in 2020.

POLAND - 2020/01/06: In this photo illustration a Twitter logo seen displayed on a smartphone. (Photo Illustration by Omar Marques/SOPA Images/LightRocket via Getty Images)

Twitter’s total costs and expenses were up 22% to $854 million in the fourth quarter, which was driven in part by the social media platform’s investments in building out machine learning models to detect content that violated Twitter’s terms of services. And as part of Twitter’s election-integrity initiatives, the company reintroduced Election Labels to clearly identify candidates for U.S. congressional and gubernatorial races, and launched the Twitter Privacy Center as a hub for its privacy and data protection work.

For the current quarter, however, Twitter’s sales guidance was slightly light of expectations. The company sees revenue in a range of $825 million to $885 million for the first quarter of 2020, with the midpoint of this below the $868.9 million anticipated by Wall Street.

Heading into earnings results, analysts were preparing for Twitter to deliver strong revenue guidance given this year’s packed slate of global events, which are poised to drive higher user engagement and ad sales. These events, however, are primarily taking place in the second half of the year, and include the Euro 2020, Tokyo Summer Olympics and U.S. presidential election.

Twitter’s results come on the heels of mixed reports from other internet companies that also rely heavily on ad sales.

Last week, Facebook (FB) shares declined after showing slowing growth in North America, where the bulk of its ad sales derive. Snap (SNAP) missed quarterly sales expectations in results delivered earlier this week, with closely watched average revenue per user disappointing. And while Alphabet-owned Google (GOOGGOOGL) grew sales in its advertising business, its company-wide revenue fell short of expectations.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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