Twitter misses Q3 estimates with revenue of $823.7M, up 9% YoY vs. $874M expected; 145M monetizable DAUs, up 17% YoY
and the internet surveillance economy in general — that ending privacy-violating settings dented Twitter's ad sales? https://www.bloomberg.com/... https://twitter.com/... Tim O'Brien / @timobrien : “Essentially, Twitter said it took a financial hit because it stopped abusing people's personal privacy choices.” - @shiraovide https://www.bloomberg.com/... @twitterir : Q3 revenue was $824M, +9%, reflecting Sep strength in US, as well as headwinds incl rev product issues and greater-than-expected advertising seasonality in Jul/Aug. Op income of $44M reflects lower-than-expected revenue + no significant changes to our ongoing investments. $TWTR @reuters : Twitter posts worse-than-expected third-quarter revenue and profit because of advertising problems including product bugs and low demand over the summer https://www.reuters.com/... $TWTR https://twitter.com/... Graham Cluley / @gcluley : I'll say it again. I would pay Twitter an annual subscription if they gave me an ad-free feed. (I'd pay even more if they kicked off the likes of Piers Morgan and Katie Hopkins.) They'd earn much more out of me this way than through ads. https://twitter.com/... Tom Gara / @tomgara : Holy shit, twitter has been this awful for everyone else all this time? https://twitter.com/... Steve Kovach / @stevekovach : Have you noticed more ads on Twitter recently? That was by design. Twitter turned on the money fountain. https://twitter.com/... Shira Ovide / @shiraovide : Twitter stopped ignoring users' expressly stated privacy preferences, and it hurt revenue growth by several percentage points. This is discouraging both about the state of the internet ad economy, and Twitter's financial transparency. https://www.bloomberg.com/... @twitterir : Total ad revenue was $702M, up 8%. In Q3, we discovered, and took steps to remediate, bugs that primarily affected our legacy Mobile Application Promotion (MAP) product, impacting our ability to target ads and share data with measurement and ad partners. $TWTR @twitterir : Cost per ad engagement (CPE) was down 12%, reflecting a mix shift from MAP to video ad formats (which have lower CPEs) and like-for-like price decreases across most ad formats. $TWTR @twitterir : We ended Q3 with >4,600 employees, up 21%. We now expect FY19 headcount growth to be slightly above 20%. SBC grew 8% to $99M and was approximately 12% of total revenue compared to 11% in the prior quarter. $TWTR @twitterir : We announced a partnership w/ NBC Olympics in the US to amplify their vast coverage of the 2020 Tokyo Games via a live daily, original program (AM); a daily poll that lets fans choose one live look-in to broadcasts (PM); and short form video highlights throughout the day. $TWTR pic.twitter.com/zbujaIskPq Craig Silverman / @craigsilverman : Twitter has steadily been increasingly its ad load, resulting in more low quality ads showing up in people's feeds. After this earnings miss, that trend will probably accelerate. https://www.cnbc.com/... Dare Obasanjo / @carnage4life : In case you were wondering why you now see more ads on Twitter, their Q3 numbers are out and they missed revenue estimates by $50M. Stock down 15-20% in pre-market trading. 📉 On a positive note daily active users up 17% year over year. 🚀 https://techcrunch.com/... See also Mediagazer
Context & Ripple Effects
Twitter entered this print off a Q4 2018 report that beat on revenue ($909M, up 24%, ad revenue up 23%) even as MAUs declined year over year — a company monetizing a shrinking audience well. Q3 2019 inverts the trade: mDAUs are up 17% to 145M, yet revenue growth halved to 9% and missed the $874M consensus by roughly $50M. Twitter attributes the shortfall to bugs in its legacy Mobile Application Promotion product that impaired ad targeting and data sharing with measurement and ad partners, and Bloomberg's Shira Ovide framed it bluntly: Twitter took a financial hit because it stopped abusing people's privacy choices.
First-order effects
- Twitter's stock fell 18%+ on the miss, and Q3 operating income compressed to $44M against revenue that came in ~$50M short of the $874M expected.
- Advertisers get cheaper inventory: cost per engagement fell 12% on a mix shift to video formats and like-for-like price decreases, while the MAP remediation simultaneously cut the targeting signal and data sharing available to measurement and ad partners.
Second-order effects
- Measurement and ad partners that built campaigns on MAP's data sharing lose a signal Twitter itself disabled, forcing them to rework attribution and targeting on the platform.
- Headcount grew 21% YoY to over 4,600 with FY19 growth guided slightly above 20%, while revenue grew 9% and stock-based compensation hit $99M (~12% of revenue) — a widening cost-to-revenue squeeze that pressures margins into Q4.
Third-order effects
- The corpus pattern — a Q4 2018 MAU decline, this quarter's targeting pullback, and Twitter's later Q2 2020 miss with ad revenue down 23% — shows an ad-only model repeatedly missing estimates even as mDAUs climb, pointing toward sustained pressure to diversify revenue beyond targeted advertising.
- If privacy-driven limits on ad targeting keep biting revenue, the industry-wide question becomes whether platforms can grow users faster than monetization per user falls — a gap visible again in Twitter's Q4 2021 results, where revenue rose 22% but net income dropped to $182M.
The trend: As privacy-driven limits on ad targeting spread, ad-dependent platforms face a widening gap between audience growth and revenue per user, forcing a search for non-advertising revenue models.