Twitter overstated user metrics for nearly three years

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In what could be one of Twitter’s last reports as a public company, the social media firm reported a 16% rise in users, but a slow down in revenue growth and a reporting error.

Twitter’s revenue growth rate slowed in the first quarter of 2022 compared to prior quarters, and the social media company admitted to a reporting error — during what could be one of its last reports as a public company.

Twitter overstated its user numbers for nearly three years, from the first quarter of 2019 to the fourth quarter of 2021, it revealed in its Q1 financial report released on Thursday (April 28).

The miscount was caused by a feature introduced in March 2019 that allows users to link multiple separate accounts together in order to more conveniently switch between them. From then to the end of 2021, Twitter was counting all linked accounts as separate monetizable daily active users (mDAU).

Twitter published its corrected mDAU values for the two-year period versus its previously reported metrics, showing it overstated in a range of 300,000 users up to 1.9 million users. 

In the first quarter, the social media company reported revenue growth of 16% year-on-year to $1.2 billion in Q1, shy of analyst expectations by around $30 million, and an operating loss of $128 million — days after its board agreed to sell to Elon Musk for $44 billion.

Revenue growth decreased from 22% in the prior quarter and 28% in Q1 2021. The results are reflective of similar muted performances from other tech companies — with AlphabetMeta and Snap all reporting headwinds in Q1.

Twitter stated in its financial report that its revenue performance reflects “headwinds associated with the war in Ukraine” No other insight was given since Twitter canceled its call with investors for its first quarter results, which it said is “customary during the pendency of an acquisition.” It did not issue a shareholder letter nor provide forward looking guidance.

Average mDAUs for the first quarter of 2022 rose 15.9% year-on-year to 229 million. The platform performed strongest outside of the U.S., where users grew 18.1% to 189.4 million, compared to 6.4% in the U.S.

Revenue was offset in the quarter by a ramp up in costs and expenses, by 35% year-on-year to $1.33 billion, resulting in its operating loss.

Advertising revenue increased 23% to $1.11 billion, while subscription and other revenue decreased 31% to $94 million. The vast majority of decreases in subscription and other revenue was due to Twitter’s sale of mobile ad platform MoPub, which AppLovin purchased for $1.05 billion in January.

The MoPub sale pushed Twitter’s net income to $513 million in Q1, compared to $68 million the prior year. 

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