Twitter sees revenue stall as it wrestles with misinformation ahead of US campaign
The company misses expectations even as it makes progress in becoming a healthier place.
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's efforts to make itself a healthier place helped it rake in users even as controversy over its policies heats up with the US moving into a new election cycle. The user growth, however, didn't translate into strong revenue or profit gains.
On Thursday, Twitter said that 145 million users logged in and were shown ads daily during the third quarter, up 17% from the 124 million monetizable daily active users the company reported in the same quarter a year earlier. The social network cited its efforts to clean up the health of the platform, including the use of automation to remove malicious tweets before users reported them. CEO Jack Dorsey said that more than half of all tweets taken down were removed that way.
"Health is going to be an ongoing initiative for us," Dorsey said in a conference call Thursday. "It's going to be our No. 1 priority for quite some time."
Watch this: Twitter to start hiding tweets that violate policies, Zuckerberg speaks out on doctored video
Twitter's bump in users, however, couldn't offset weakness in revenue or profit growth. The company missed analyst expectations on both measures, sending the company's shares plummeting. In the three months ended Sept. 30, Twitter reported $823.7 million in revenue, up 9% from a year earlier but well below the $873.9 million analysts surveyed by Thomson Reuters had expected. The company earned 5 cents per share, missing Wall Street's expectations of 20 cents per share.
Twitter didn't give investors reason to be hopeful. In a letter to shareholders, Twitter cited "a number of headwinds" including "revenue product issues" and seasonal advertising fluctuations in July and August that were greater than expected. The company forecast revenue of between $940 million and $1.01 billion for the current quarter, below analysts' expectations of $1.06 billion.
Shares dropped 19% to $31.41 in early trading.
"Twitter's momentum from the past several quarters has cooled," said eMarketer senior analyst Jasmine Enberg in a statement. The revenue miss, blamed on issues with its ad product, could impact the company's growth in the fourth quarter, she said.
In October, Twitter said that phone numbers and emails users provided to safeguard the security of their accounts may have been used for advertising purposes. The company said as of Sept. 17, it has addressed this issue and no longer use this information for ad targeting.
The company has been focusing on new features aimed at making it easier for users to find what they're looking for and to control their experiences on the social network. In September, Twitter began allowing people in the US and Japan to hide their replies as part of an experiment to fuel more positive conversations. Dorsey said Thursday that Twitter wants to add more controls to help people find the content about events, topics and interests.
Twitter, like other social networks, has struggled to enforce rules against misinformation, hate speech and other offensive content. Controversy over those policies has heated up as the US heads into the 2020 presidential election cycle. Earlier this month, Sen. Kamala Harris, a Democrat from California, asked Twitter to suspend President Donald Trump's account, arguing his tweets violated the site's rules against bullying. In a letter sent to the company, Harris cited several tweets from Trump, including some she said targeted a whistleblower whose complaint about Trump's call with Ukraine's president led to an impeachment inquiry.
Over the summer, Twitter said it would place a notice over tweets from elected and government officials who break the company's rules. Twitter, which hasn't used the new notice yet, said people won't be able to like, reply, share or retweet these tweets.
This week, Twitter said it planned to make policy changes to address manipulated media, including deepfake videos that use artificial intelligence that can make it seem someone is doing or saying something they aren't.
Dorsey said Twitter will continue to be on guard against misinformation. That means identifying forms of manipulation used to amplify misleading information, increasing transparency around ad purchases and targeting, and challenging suspicious logins and account creation
"Our No. 1 priority within elections," Dorsey said on the call, "is making sure we're protecting the integrity of the conversation around the election."
Originally published at 4:11 a.m. PT. Updated 6:47 a.m PT: Adds information from Twitter's conference call. Updated 8:11 a.m. PT: Adds analyst remarks.