With sales and user growth in line with analysts’ expectations in the third quarter, Twitter Inc. shows that its advertising business can survive Apple Inc.’s new constraints on consumer data collecting.
As a result of Apple’s opt-in data-sharing requirements, Twitter claims that the company’s revenues will be impacted in a “modest” way for the foreseeable future. Rivals Before the software adjustments, Facebook Inc. and Snap Inc. both indicated that they were hurting their businesses since it was now more difficult to gauge the efficacy of an ad.
Twitter said in a statement to shareholders on Tuesday that it is “still too early for Twitter to estimate the long-term impact of Apple’s privacy-related iOS changes.” Still, the Q3 revenue impact was smaller than expected. At $1.28 billion, sales were up 37% over the previous year. There was a 6% year-over-year increase in “ad engagements,” or the number of times users interacted with paid messages. With less personal targeting and a broader measurement approach than Facebook, Twitter makes most of its revenue from brand advertising.
With 211 million daily users, Twitter reported a 5 million-user rise over the prior quarter and a 13-per cent year-over-year growth rate. As a result of “ongoing product upgrades and worldwide dialogues surrounding current events,” the social media site saw an increase in users.
The data suggest that Twitter has maintained stable growth since last year’s expansion due to a fractious U.S. election and interest in the global pandemic. Some features of Twitter’s advertising strategy, including its emphasis on brand advertising, may have seemed like a weakness earlier this year. But may now benefit the company’s competitors like Snap and Facebook, which are having to respond to Apple’s adjustments.
While Chief Financial Officer Ned Segal said the firm constantly monitors global supply chain issues, he speculated that they may be “less of an issue” for Twitter given how advertisers use the platform.
According to him, services and digital items account for more than half of Twitter’s ad revenue. In fact, many of the advertisements you see on Twitter from these advertisers are promoting their services, not their products.
According to Snap, businesses are reluctant to market things they can’t create or fulfil. It started last week that supply chain constraints would harm its fourth-quarter revenue.
Twitter expects to earn between $1.5 billion and $1.6 billion in the current quarter. According to data provided by Bloomberg, analysts put the value at an average of $1.58 billion.
Shareholders are told in a letter that the firm expects its user base to expand at “or above” the third-quarter rate throughout the holiday season. Profit will range between $130 and $180 million.
After closing at $61.43 in New York, shares increased approximately 2.5 percent in extended trade. This year, the stock price has risen by 13%.
However, it posted a net loss of 536.7 million dollars or 67 cents per share in its third quarter of last year. This compares to a net profit of 287.1 million dollars or 4 cents per share. $766 million of the loss came from the settlement of lawsuits, including a shareholder class-action suit alleging Twitter had painted an unrealistic future vision in 2014.
There’s a good chance Twitter could lose $200 million or more in revenue by 2022 due to the sale of MoPub, the company’s advertising platform because it’ll be reassigning staff to other projects during that time. For $1.05 billion in cash, Twitter said earlier this month that it will sell MoPub to AppLovin Corp. According to a statement released by the firm on Tuesday, the purchase is expected to be finalized in the first quarter.
Twitter Blue, a new subscription service, received no mention in the company’s shareholder letter. Twitter is trying to increase revenue by offering paid subscriptions. Advertising revenue accounts for almost 90% of total revenue.