Twitter stock price up after meeting revenue, user growth expectations

Twitter's Q3 data licensing sales came to $143 million, up 12% from a year ago, and its ad revenue climbed 41% year over year to $1.14 billion.

Twitter delivered better-than-expected third-quarter earnings on Tuesday, reporting solid growth in revenue, advertising sales and user numbers.

Twitter reported an operating loss of $537 million for the third quarter due to a one-time litigation-related net charge of $766 million.  Twitter reported a 54-cent loss per share on revenue of $1.28 billion, up 37% from a year ago. The $766 million charge is related to a settlement the company was forced to pay in September after allegedly giving investors misleading user growth metrics. 

Wall Street was expecting Twitter to report non-GAAP earnings of 15 cents a share on revenue of $1.28 billion.

Elsewhere on the balance sheet, Twitter's Q3 data licensing sales came to $143 million, up 12% from a year ago, and its ad revenue climbed 41% year over year to $1.14 billion.

According to Twitter, monetizable daily active users (mDAU) were 211 million in the second quarter, up from 187 million a year ago. 

In the US, the average mDAU tally came 37 million for Q3, compared to 36 million in the same period of the previous year and 37 million in the previous quarter. 

For the fourth quarter, Twitter projected revenue between $1.5 billion and $1.6 billion. with an operating income between $130 million and $180 million. 

"I am proud of our third-quarter results. We're improving personalization, facilitating conversation, delivering relevant news, and finding new ways to help people get paid on Twitter," said Twitter CEO Jack Dorsey. 

"Average monetizable DAU (mDAU) reached 211 million, up 13% year over year in Q3, accelerating from 11% year over year growth in Q2, driven by ongoing product improvements and global conversation around current events."

Twitter CFO Ned Segal said the revenue growth of 37% reflected the company's "strength across all major products and geographies." 

"We continued to drive increased value for our advertisers' thanks to revenue product innovation, including progress on our brand and direct response offerings, strong sales execution, and a broad increase in advertiser demand. These factors contributed to 41% year-over-year growth in ad revenue in Q3," Segal said. 

In the letter to shareholders, Twitter said it continues "to see opportunities around personalization on Twitter as we better leverage our unique signal to improve people's experience and show them more effective ads across both brand and direct response." 

Twitter said Apple's iOS changes would also have an effect on Q4 earnings. Other social media sites have reported being issues since the release of iOS 14's privacy features.

"The revenue impact we experienced from ATT in Q3 increased on a sequential basis but remained modest. The impact of ATT is likely to vary across ad platforms given the unique mix of ad formats, signal, and remediations on each, as well as other factors. The mitigations we have put in place, and the speed with which we have adopted new standards, like SKAdNetwork and resulting changes across our technical stack, have contributed to minimizing the impact to us," the company explained. 

"Since the launch of ATT in April, we have invested in supporting SKAdNetwork, opening up 30%+ more inventory and scale on iOS, and launched support for view-through attribution and SK-campaign ID management features in the Twitter Ads Manager. It is still too early for Twitter to assess the long-term impact of Apple's privacy-related iOS changes, but the Q3 revenue impact was lower than expected, and we have incorporated an ongoing modest impact into our Q4 guidance. We have seen our revenue product development, both related to and distinct from ATT, improve the performance of our products, and we expect that to continue."

Shares of Twitter were up more than 3% after hours.