Emily Tan
Oct 27, 2017

Twitter overestimated user numbers by up to 2 million, for three years

Twitter's daily active users have grown 14% from last year, but its revenue still fell by 4% in the third quarter of 2017.

Twitter CEO Jack Dorsey
Twitter CEO Jack Dorsey

In its latest quarterly result statement, Twitter admitted it had been overestimating its monthly active user numbers by up to two million since the end of 2014.

Twitter discovered that since the fourth quarter of 2014, it had been including users of some third-party applications as monthly active users when they should not have been.

"These third-party applications used Digits, a software development kit of our now-divested Fabric platform, that allowed third-party applications to send authentication messages via SMS through our systems, which did not relate to activity on the Twitter platform," the statement said.

The corrected figures show that Twitter's MAU for Q4 2016 should have been 318 million, rather than 319 million.

The first two quarters of 2017 were overestimated by 2 million per quarter, and have now been corrected to 327 million and 326 million respectively. This means that in the second quarter of the year, Twitter's MAUs dropped by a million.

The error primarily affects Twitter's international MAU numbers.

Third quarter results

Twitter's daily active users have grown 14% from last year, but its revenue still fell by 4% in the third quarter of 2017.

The company posted third-quarter revenues of $590 million and a loss of $21 million.

In a letter to its shareholders, Twitter said revenue was driven by improved sales execution and growth in its video and direct response ad formats.

Adjusted Ebitda was $207 million or 35% of total revenue, compared to $181 million or 29% of total revenue in the same period last year.

Advertising revenue totalled $503 million, a drop of 8% from the third quarter last year.

However, its revenues from data licensing and other revenue rose 22% to $87 million, indicating a growing new revenue stream.

Twitter's international revenue is also another point of growth. In contrast to US revenues, which dropped 11% to $332 million, its international revenues rose 6% to $258 million.

A reason to be optimistic about Twitter's future is growth in its daily active user numbers (making it the fourth consecutive quarter of growth) and a corresponding 4% growth in monthly active users to 330 million.

The social platform also reported a 99% increase in total ad engagements from last year.

As a result, Twitter is forecasting a profitable fourth quarter. 

"This quarter we made progress in three key areas of our business: we grew our audience and engagement, made progress on a return to revenue growth, and achieved record profitability," Jack Dorsey, Twitter's chief executive, said in a statement.

The focus going forward will be to keep Twitter's users informed about what's happening in the world and making the service faster, easier to use, and more relevant, Dorsey concluded.

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