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Twitter earned substantially less in the fourth quarter than it did a year ago, the result of a surge in expenses. That reality didn’t much dampen investors’ mood on Thursday as they sent the shares up 7% in pre-market trading. (By comparison, the Nasdaq is about flat.)
The company had $ 182 million in fourth-quarter net income, down from 222 million. It didn’t offer any specifics about what led to the surge in costs: Expenses topped 1.4 billion, a 35% increase. Wall Street had figured Twitter’s profit would actually increase — to $ 290 million.
Sales, though, matched Wall Street expectations: $ 1.7 billion, which will likely further ease concerns that changes to Apple’s iOS software will hurt Twitter’s digital ads business, still its core business.
One factor taking the sting out of the unexpected profit decline for shareholders: Twitter says it has authorized a $ 4 billion stock buyback program, which follows 2 billion earmarked for the same purpose in 2020. Share purchases are meant to buy investor confidence and signal to shareholders. that the company believes its stock is cheaply valued.
For the year, Twitter stayed in the red, losing $ 220 million — down over $ 1 billion last year — while bringing in $ 5.1 billion in sales.
Twitter is a company in transition. In November, founder Jack Dorsey departed the CEO role, turning over the job to Parag Agrawal, the chief technology officer. Agrawal faces the responsibility of following through on Dorsey’s bid to greatly increase Twitter’s revenue and daily users, growing the latter to over 300 million by the end of next year. To accomplish both, Twitter is experimenting with several new subscription-based services, including features like Spaces (audio chat) and Super Follows (a subscription paywall around content).
“I believe we can enable more content — more content around a long-range of topics: politics, sports, entertainment and music,” Agrawal said on a call with analysts on Thursday morning. In keeping with a shift at Twitter over the last several years. Agrawal said he was focused on “how we go faster — how we ship more products to our customers to give them more value. I bring a strong sense of urgency. “
For growth, Twitter is making some progress. In the fourth quarter, Twitter’s users grew 13% to 217 million.
