Twitter Announces $4 Billion Share Buyback, Posts 22% Revenue Growth

Twitter Inc announced a $4 billion share buyback on Thursday, which helped bolster its shares amid an otherwise lackluster earnings report.

Holiday quarter revenue rose 22% to $1.57 billion, slightly less than analysts had expected, but suggesting the company has weathered Apple Inc.’s recent changes better on data privacy than some big rivals.

Sales for the current period will reach $1.27 billion, Twitter said in a statement Thursday, while the average projection was $1.26 billion. The company added six million new users in the fourth quarter, bringing the average number of daily active users to 217 million. This is a 13% increase over the previous year.

The lackluster revenue forecast is partly due to Twitter’s recent sale of advertising platform MoPub, Chief Financial Officer Ned Segal said. MoPub generated $281 million in revenue last year, including $51 million in the first quarter. Twitter sold MoPub to AppLovin Corp for $1.05 billion in cash in a deal it reached on Jan. 1. Employees who worked on MoPub began developing other advertising products, Segal said.

“We think we can offset some of that in 2022,” he said, referring to falling revenue. “But we should be able to catch up in 2023.” Twitter said it expects full-year revenue growth of between 20% and 20% in 2022, excluding MoPub sales. Wall Street analysts on average estimate that Twitter’s revenue will grow 20% in 2022.

Twitter shares gained as much as 9.8% in premarket trading in New York before paring much of those gains. The stock is down 12% so far this year.

San Francisco-based Twitter is entering a new chapter, following the unexpected resignation of co-founder Jack Dorsey as CEO in November and the appointment of former chief technology officer Parag Agrawal to fill the top job. raised. Pressure is on Twitter to ramp up new products, and the company set ambitious revenue and user growth targets at an analyst day last year to convince skeptical investors it was serious. for the expansion of its activities. While Twitter has seen steady growth for years, its stock gains have lagged behind its industry peers.

Speaking on a call with analysts, Agrawal said he felt “urgency” to execute on the new strategy. He is sticking to the targets set last year, but what is changing is the pace, he said. He is committed to increasing accountability, making decisions faster and improving product execution.

The social network said recent changes to Apple’s privacy policies, which now require companies like Twitter to explicitly seek permission before collecting data from users on Apple devices, will have a “moderate” impact on the future of business. Twitter, Meta Platforms Inc.’s Facebook and other online platforms use information collected from mobile devices like iPhones to target users with advertising.

Unlike social media competitors Meta and Snap Inc., Twitter makes most of its money from branded advertising, which requires less targeting data than other types of online advertising, known as ad ads. direct response, which are aimed at a specific result – such as an app install. Meta, which also owns Instagram, estimated last week that the privacy changes will cost the company $10 billion in ad revenue this year.

While Twitter’s focus on brand advertising may help avoid major disruption, the company is also trying to create greater demand for direct-response ads, which can be more lucrative. Eventually, the company hopes that 50% of its advertising revenue will come from these types of highly targeted ads. Today, only 15% of Twitter ads are considered direct responses.

The $4 billion share buyback authorization will replace a $2 billion plan approved a few years ago that was just over halfway completed. In the new plan, $2 billion will be an “accelerated share buyback,” according to a letter to shareholders.

Bloomberg Intelligence analyst Mandeep Singh said the accelerated takeover was likely due to pressure from activists, which also led to the CEO change. “The buyback seems timely given the compression in valuation multiples we’ve seen across social media names since January,” Singh said.

Agrawal will address analysts on his first earnings call as CEO on Thursday morning.