Twitter Inc reported a 14% year-over-year increase in quarterly revenue, surpassing expectations by reaching $936 million in the quarter ended September 30. The boost in revenue can be attributed to the return of sports and other events, which led to increased ad sales. Twitter expressed optimism that this positive trend could continue or even improve in the current quarter. However, the company fell short on user growth, adding fewer users than anticipated by Wall Street, with 187 million monetizable daily active users (mDAU) reported in the third quarter, missing the consensus estimate of 195.2 million users.

Ned Segal, Twitter’s Chief Financial Officer, acknowledged that the growth in revenue was mainly due to updated advertising formats, improved ad measurement, and the resumption of events that were put on hold due to the pandemic. Twitter has gained popularity among advertisers due to its ability to engage with major cultural moments and discussions, such as sports events. The platform faced technical glitches last year that affected its ad targeting capabilities, but those issues have been resolved. Third-quarter ad revenue rose by 15% to $808 million, surpassing estimates of $645.95 million.

Despite the positive financial performance, Twitter experienced higher costs and expenses, which increased by 13% to $880 million. This increase was attributed to infrastructure-related expenses. The company acknowledged that many companies reduced their ad spending during the second quarter due to the widespread protests following the death of George Floyd in May. Twitter also expressed concern that a similar dynamic may occur with the upcoming U.S. presidential election on November 3, where advertisers might pause their ad spending.

Although Twitter’s revenue exceeded expectations and demonstrated strong growth, the lower than anticipated user growth is a potential concern for the social media platform. Nevertheless, the company remains optimistic about its future prospects, especially with the potential for continued revenue growth and upcoming events, including the U.S. presidential election, which could drive increased engagement on the platform.

Links:
1. CNBC – Twitter Q3 2020 Earnings
2. Reuters – Twitter Exceeds Revenue Expectations in Q3