Twitter's revenue and earnings grew faster than Wall Street expected in the third quarter, as the US election and the coronavirus pandemic encouraged people to remain glued to the social network. But the social network didn't grab new users as quickly as it has in the past.
In the July-September quarter, Twitter posted $936.2 million in revenue, beating the $777.15 million in revenue that analysts surveyed by Thomson Reuters expected. The company earned 4 cents per share, beating the loss of 10 cents per share Wall Street anticipated.
Twitter's audience, which has been growing since the onset of COVID-19 earlier this year, jumped to 187 million monetizable daily active users, up 29% from a year earlier, but missed analyst expectations of 195.19 million users. Twitter shares declined 16% in after-hours trading to $44.00.
CEO Jack Dorsey said Topics, a product that allows users to follow topics the way they follow individual accounts, would help get more people involved in Twitter. "It just further ... shows like all the conversations that are possible on Twitter," he told analysts in a call, adding that niche topics tended to do "extremely well."
The earnings report, which came a day after CEO Jack Dorsey testified at a Senate committee, comes as Twitter, Facebook and other social media companies find themselves the target of complaints ahead of the Nov. 3 election. Republicans have said the companies censor conservative voices, an allegation Twitter and Facebook deny. Democrats have said the companies don't do enough to combat hate speech and other objectionable content.
The election loomed over Twitter for much of the third quarter, which opened inauspiciously for the social media site. In July, hackers took over several high-profile accounts, including those of Democratic presidential nominee Joe Biden and former president Barack Obama, as part of a cryptocurrency scam. The massive hack raised concerns about whether Twitter was doing enough to safeguard security ahead of the US elections.
Twitter has started ramping up security for high-profile political users, such as members of Congress, journalists and presidential campaigns. The company enabled by default a setting that requires these accounts to confirm a stored email and phone number before their password can be reset.
Preparing for the US election
Twitter has been rolling out new features aimed at combating political information.
The company adds labels to tweets that contain misleading information about voting, coronavirus and other topics. Twitter users who try to retweet a misleading tweet that's been labeled see a prompt that says the tweet is "disputed." The prompt includes a "Find out more" button directing them to credible information. The company, which also has an online hub for election information, has been pointing users to authoritative sources on the site's homepage and within search results.
Twitter touted those efforts in its shareholder letter accompanying the earnings release. "In the run-up to the 2020 US election, we have made significant changes to both product and enforcement to increase context and encourage more thoughtful consideration before Tweets are amplified," the company said.
But Twitter's efforts to moderate political content have also sparked scrutiny from lawmakers. This month, the company blocked links to a New York Post article that contained allegations about Biden's son Hunter, reigniting complaints that Twitter censors conservative speech. Twitter has repeatedly denied it's politically biased. The company said the article violated its policies against sharing hacked materials and private information. Under political pressure, the company changed its hacked materials policy and stopped blocking the link.
Dorsey is scheduled to testify before the Senate Judiciary Committee about the 2020 election and allegations of anti-conservative bias on Nov. 17.