Twitter warns user growth to slow, expenses to increase

Twitter warned Tuesday that the rate of user growth will slow after a boost attributed to the pandemic and recent election, while expenses may increase this year. 

The company said in a report of its earnings from the end of 2020 that average monetizable daily active usage reached 192 million in the fourth quarter of 2020, up 27 percent from the same time period the year before. Twitter said the growth came from ongoing product improvements, as well as the global conversation around the U.S. election and the coronavirus pandemic. 

Twitter said it expects user growth in the next quarter to slow to about a 20 percent increase, potentially followed by quarterly growth rates in the “low double digits” in the following three quarters of the year. 

Twitter also told shareholders it expects total costs and expenses to grow 25 percent or more in 2021. 

“Assuming the global pandemic continues to improve and that we see modest impact from the rollout of changes associated with iOS 14, we expect total revenue to grow faster than expenses in 2021. How much faster will depend on our execution on our direct response roadmap and macroeconomic factors,” Twitter said in the report. 

Apple said it will roll out an update to its iOS 14 operating system in early spring that will include a privacy feature that will limit the reach of targeted ads. The feature will require platforms to ask users permission before tracking their data across websites. Facebook, in reporting in its quarterly earnings last month, also noted challenges it may face due to the planned update.  

Twitter overall reported a “strong finish” to last year with a revenue of $1.29 billion, up 28 percent year over year. 

The company also reported $1.15 billion in ad revenue, an increase of 31 percent. 

Twitter’s revenue product lead, Bruce Falck, said in a statement Monday that the company is looking to possibly add subscription-based features as Twitter looks to diversify its revenue beyond ads. 

The company is still in “very early exploration,” though, and doesn’t expect to see any “meaningful revenue” attributed to those features this year, he said.