Twitter shares fell 7 per cent in pre-market trading on Thursday after it said it would have to spend more to improve “health, conversation, revenue product and sales, and platform” this year.
The social media company beat expectations to report a 26 per cent rise in revenues to $909m in the fourth quarter, excluding currency effects. Ad sales, which make up the bulk of the company’s revenues, increased by a quarter to $791m. Net income was $255m as the company marked its first full year of profitability.
Twitter guided that revenues in the first quarter of 2019 would be between $715m and $775m compared with $665m in the same period last year.
Twitter’s results came after upbeat earnings from rivals Snap and Facebook in the run-up to Christmas, which both shrugged off last year’s controversies to report better than expected user numbers and advertising figures.
But investors balked at news that operating expenses would increase 20 per cent in 2019 as Twitter steps up its spending after controversies over online abuse, hate speech and misinformation.
Monthly user numbers also continued to fall, for the third consecutive quarter, to 321m. Twitter also revealed its daily active user number for the first time, saying that it has 126m daily users, compared with the 186m users reported by Snapchat this week.
Twitter has purged millions of users as it fights against trolls and automated bots to improve the experience for users and reassure advertisers that it is getting rid of fake accounts and abuse.
The threat of tougher regulation has forced social media companies to take responsibility for content by hiring staff and moderators and developing technology that can parse their vast networks for abuse.
Jack Dorsey, Twitter chief executive, said the company would spend even more this year to improve the “health” of conversations: “A big focus for us is to remove the burden from victims of abuse and harassment . . . by being more proactive in promoting healthy conversations.”
But Jessica Liu, an analyst at Forrester, said cleaning up the platform required “significant investment in time, resources, money, and innovation”.
She added: “The work will never be done for Twitter (and all social networks for that matter).”
Ned Segal, chief financial officer, denied that the increase in spending was a defensive move. “We don’t feel like any of the investments we are making this year are coming with a defensive lens,” we said. “We feel really good about our strategy . . . health is a number one priority, not just from an investment perspective, but a mindset perspective.”
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