Twitter shares up despite disappointing results and guidance

Twitter Inc (NYSE: TWTR) on Thursday said its Q4 profit and revenue came in shy of Wall Street estimates. Shares are still up 5.0% as sales growth and strength of its advertising business suggested it wasn’t as hard hit due to Apple’s privacy changes as peer Meta Platforms Inc.

Highlights of the Q4 report

Twitter reported $489 million in adjusted Q4 profit or 33 cents on a per-share basis. Its sales jumped 22% YoY to $1.57 billion, as per the earnings press release. According to FactSet, experts had forecast about $499 million of adjusted profit and $1.58 billion in sales.

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Advertising revenue was up 22%, slightly missing estimates. Twitter had 217 million monetizable DAUs on average in Q4, 1.5 million short of expectations but up 25 million from a year-ago. On CNBC’s “Squawk Box”, CFO Ned Segal said:

We came in at top half of the revenue guidance, in line with the audience outlook. We’re set up for a strong 2022. We’d grow revenue low- to mid-20s and expenses in mid-20s. We’ve done some important resource reallocation to hold things to that level. Advertisers are off to a big start in Q1.

Future outlook and stock repurchase

For the current quarter, Twitter forecasts to fall between $1.17 billion and $1.27 billion versus the FactSet consensus of $1.26 billion. The board also authorised $4.0 billion stock repurchase – $2.0 billion accelerated and the rest over time. Segal added:

We ended the year with $6.5 billion of cash. We added a billion in early January from MoPub sale, which allowed us to focus more of our resources on the adds opportunity. With $7.5 billion of cash, we can continue to invest in growth opportunities but also return cash to shareholders.

In the earnings press release, Twitter said iOS changes didn’t hurt it much because direct-response ads account for only 15% of its business. Total ad engagement was down 12% but the finance chief said it was still a sign of success in the company’s direct-response ads format.