Twitter’s technological performance might have suffered this last quarter (with multiple shutdowns and outages), but the platform’s financial report looks healthier than ever. The company has announced its Q3 results for the year 2020, noting a 14% growth in revenue at $936 million, and a 29% increase in Average Monetizable Daily Active Users (mDAU), a parameter that Twitter created for itself.
Twitter, much like every other social media platform that relies on advertising, had a rough time in the earlier quarters of the year, due to the industry taking a hit from the pandemic. However, now that advertising is back on its feet (which is evident by Alphabet and Facebook‘s return to form), Twitter has also managed to show exceptional growth, and looks to be in good shape for the rest of the year.
“Advertisers significantly increased their investment on Twitter in Q3, engaging our larger audience around the return of events as well as increased and previously delayed product launches, driving revenue to $936 million, up 14% year over year,” said Ned Segal, Twitter’s CFO. “We also made progress on our brand and direct response products, with updated ad formats, improved measurement, and better prediction. We remain confident that our larger audience, coupled with ongoing revenue product improvements, new events and product launches, and the positive advertiser response to the choices we’ve made as we have grown the service, can drive great outcomes over time.”
Out of the total chunk of $936 million, advertising made up for $808 million, up 15% year over year. Moreover, total ad engagement grew by 27% over last year, and cost per engagement (CPE) decreased by 9%. The rest of the $128 million came from Data licensing and other revenue sources, which is also a 5% improvement year-over-year.
U.S., as usual, made up for most of the company’s revenue geographically, bringing in $513 million(up by 10% over the year), while the international market managed to add in another $424 million to Twitter’s revenue (an increase of 18%).
The total cost of the company ended up being $880 million, an increase of 13% year over year. This left an operating income of $56 million and 6% operating margin, compared to operating income of $44 million or 5% operating margin in the same period of the previous year.
The net income, however, has decreased over the year, and stood at $29 million, with a 3% profit margin and diluted EPS of $0.04. Compared to 2019’s $37 million revenue, a net margin of 4% and diluted EPS of $0.05, Twitter saw a noticeable downfall.
Nonetheless, perhaps the most important parameter of all, mDAU increased over the year, standing at 187 million, compared to 145 million in 2019. However, the bump was not very significant if you note that Twitter had 186 million mDAUs last quarter. Average mDAU in Twitter’s largest market, the US, stood at 36 million, showing no growth over the last quarter, and very minimal growth over last year’s 30 million. The report was similar in international markets, where mDAU stood at 152 million, a negligible improvement over last quarter’s 150 million.
While the company has unequivocally grown, the unimpressive mDAU figures suggest that Twitter failed to use the advertising boom in the quarter to its full extent.
“Given improving business conditions, we also intend to continue investing in our most important work and expect total GAAP costs and expenses to grow closer to 20% year over year in Q4. Remember, that was our intention for the full year before the pandemic. We expect SBC expense to be relatively flat sequentially and we expect capex to remain over $250 million in Q4 as a result of our ongoing data center build-out,” the company said in its press release.