What drove Twitter’s Q4 Revenue to Record High?

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 What drove Twitter’s Q4 Revenue to Record High?

Summary

  • Twitter has reported an outstanding Q4 in its extraordinary year 2020.
  • The social media giant delivered a record revenue in the last quarter of 2020.
  • The company is hoping that the pandemic situation will continue to improve, and revenue would grow faster than the expenses.

Social media giant Twitter had an outstanding 2020. The company registered a robust increase in its revenue and average monetizable daily active usage (mDAU) in the last quarter of 2020.

Q4 2020 Financial highlights

Revenue - 2020 revenue stood at USD 3.72 billion, representing an increase of 7% year over year. Revenue for the last quarter of the year was USD 1.29 billion, an increase of 28%. The record revenue in the quarter has been attributed to better-than-expected performance across all major products and geographies.

In Q4, advertising revenue stood at USD 1.15 billion, representing an increase of 31% including total ad engagements (up 35%) and cost per engagement (down 3%).

US revenue grew by 24%, international revenue was up by 34%, and other revenue, including data licensing, totalled at USD 134 million, up by 9%.

Monetizable daily active user base or mDAU - mDAU increased by 27% y-o-y during the quarter. Average mDAU was 192 million as against 152 million during the PCP and 187 million in the previous quarter.

Moreover, the average US mDAU stood at 37 million, up from 31 million in Q4 2019 and 36 million in Q3 2020. Average international mDAU totalled at 155 million against 121 million in PCP and 152 million in Q3.

Other Key Metrics

  • In Q4, costs and expenses were USD 1.04 billion, up by 21%
  • Operating income stood at $252 million and operating margin was 20%.
  • Q4 net income represented a net margin of 17%. It stood at USD 222 million and diluted EPS was USD 0.27.
  • Net cash generated through operating activities in Q4 stood at USD 330 million as against USD 277 million during PCP. 
  • Capital expenditure was USD 292 million as against USD 150 million in the same period a year ago.

Also read: Is Twitter right in its attempt to censor Donald Trump?

The Outlook

Twitter expects its total revenues to increase more than the expenses. The social media company is also planning to hire more people in research, engineering, design, and product with plans to increase headcount by 20 per cent this year. Consequently, the cost and expenses are expected to increase by 25% in 2021.

Expectations from Q1 2021: Total revenue is anticipated between the range of USD 940 million and USD 1.04 billion. GAAP operating income is expected between a loss of USD 50 million and break even.

Expectations from 2021: Stock-based compensation cost is expected in the range of USD 525 million to USD 575 million. Capital expenditure is anticipated between USD 900 million and USD 950 million.

Also read: Tech Giants Apple, Amazon, and Google suspend Twitter rival 'Parler' from their platform

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