Published: Thu, October 26, 2017
Business | By Max Garcia

Twitter admits to overstating users for years

Twitter admits to overstating users for years

Q3 non-GAAP income of $78M or $0.10 per share vs. $61M and $0.09 a year ago.

"This quarter we made progress in three key areas of our business: we grew our audience and engagement, made progress on a return to revenue growth, and achieved record profitability", said Twitter's CEO Jack Dorsey said in a statement.

The company's number of total monthly users, at 330 million for the quarter, returned to growth, after shrinking in the fourth quarter. The company added 4 million MAUs since last quarter in light of the adujustments, a growth rate of 4 percent year over year.

Announcing its quarterly financials, Twitter admitted that it had over-counted the number of users it had, but said that the error amounted to less than 1%.

"We're proud that the improvements we're making to the product continue to bring people back to Twitter on a daily basis", chief executive Jack Dorsey said.

Twitter slashed expenses by 16% vs. a year earlier. One factor was stock-based compensation, which declined 36 percent year-over-year, but Twitter said the cuts were broad-based, covering sales and marketing and research and development. Average Daily active usage or DAU grew 14% year-over-year, an increase from 12% year-over-year growth in the prior quarter and marking the fourth consecutive quarter of double-digit growth. So despite President Donald Trump's active use of the platform, it seems that more people aren't rushing to sign up for Twitter.

Twitter shares surged after third-quarter earnings beat expectations, while investors shrugged off a company mistake that resulted in an over-estimation of monthly active users going back three years.

The most recent quarter was the third time revenue has declined since Twitter's debut as a public company in 2013, as two of Silicon Valley's giants, Facebook and Google, have come to dominate the business of internet ads. The company says it previously overstated MAUs - by 2M in Q2, 2M in Q1, and 1M in 2016 Q4. Twitter has pledged to make political advertising more transparent on its service.

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