Twitter's advertising revenue crosses $1 billion in Q4

Overall top line grows by 28% and operating income by nearly 65%, even as pandemic sees company's net loss swell.

Twitter's advertising revenue for the fourth quarter crossed a billion dollars to hit $1.15 billion or a 30% year-over-year increase, as total ad engagements increased 35% in this period and cost per engagement decreased 3%. For the last three months of 2020, the social-media platform's overall revenue was up 28% YOY and operating income rose nearly 65% to $252 million, despite costs swelling over $1 billion. 

For its full financial year, however, the impact of the COVID-19 pandemic could be felt. The company stated that while 2020 revenue was $3.7 billion, or an increase of 7% YOY, and operating income was $27 million, its net loss for the fiscal year ballooned to $1.1 billion. The company cited "deferred tax asset valuation allowance of $1.1 billion" and said that without this, its net loss for the quarter was only $34 million, the firm stated.

"We made significant progress with new ad formats, stronger attribution and improved targeting in Q4 and that momentum continues in Q1," Twitter's CEO Jack Dorsey told analysts in a post-results call. "These improvements allow us to serve...advertisers of all sizes with better performance. It puts us in a much stronger position to drive accelerating revenue growth in 2021 and beyond." Revenue from its Mobile Application Promotion service, a piece of its direct response ad unit, grew 50% YOY in Q4. 

In a quarter where social media platforms including Twitter were caught up censoring—and eventually ejecting—former President Donald Trump, average daily active users swelled to 192 million overall in Q4, compared to 152 million in the corresponding quarter last year. International user numbers drove this growth, with 155 million for Q4, compared to 121 million in the same period of the previous year and compared to 152 million in the previous quarter. In the US, average US MDAUs (mobile daily active users) reached 37 million for Q4, compared to 31 million in the same period of the previous year and compared to 36 million in the previous quarter.


"We are a platform that is obviously much larger than any one topic or any one account," Dorsey said. "Eighty percent of our audience is outside the U.S. and we have more than 50 accounts with over 25 million followers. The increase in average absolute mDAU through the end of January was above the historical average from the last four years and we expect to see mDAU growth of approximately 20% year-over-year in Q1."

In terms of its forecast for 2021, Twitter stated it would grow headcount by more than 20% in 2021, especially in engineering, product, design and research. For Q1 2021, Twitter expects total revenue to be between $940 million and $1 billion and operating income to be between a loss of $50 million and break even.

Twitter finance chief Ned Segal confirmed to analysts that the platform would be going ahead with plans to strengthen its non-advertising revenue in the coming year, especially from a subscription service.

"While still early, we’re also laying the foundation for more revenue from small and medium businesses as well as non-advertising subscription based revenue streams that will experiment with this year and see revenue come in a more meaningful way next year," he said. 

This story first appeared on Campaign Asia-Pacific.

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