Twitter Inc. added users and revenue in the third quarter, but its profit and daily active-user gains fell short of analyst expectations, sending its shares sharply lower in after-hours trading.
shares fell 12% in the extended session Thursday after closing the regular session up 8% to $52.43.
The San Francisco-based company said its average monetizable daily users increased to 187 million, up 1 million from the previous quarter and 145 million in the year-ago period. Analysts surveyed by FactSet had expected the social network’s daily user count to hit 195 million.
“I’m pleased mDAU grew 29% year over year to 187 million, driven by global conversation around current events and product improvements,” said Jack Dorsey, Twitter’s chief executive, in a statement. He noted that the company has grown its daily audience by 42 million in the past year.
Other social networks, such as Pinterest Inc.
and Snap Inc.
recently reported results and attributed their gains to the boycotts of Facebook over the summer, sparking optimism around the industry. Chief Financial Officer Ned Segal said on a conference call it was “hard to unpack,” and instead cited Twitter’s own decisions and product improvements for its uptick.
The company reported third-quarter net income of $29 million, or 4 cents a share, compared with $47 million, or 5 cents a share, in the year-ago period. Analysts surveyed by FactSet had forecast earnings of 6 cents a share on revenue of $777.3 million. Adjusted earnings were 19 cents a share, adjusted for stock-based compensation, income taxes and more.
Revenue rose to $936.2 million from $823.7 million in the year-ago quarter. Ad revenue rose 15% year over year to $808 million, according to the company’s filing.
“Advertisers significantly increased their investment on Twitter in Q3, engaging our larger audience around the return of events as well as increased and previously delayed product launches,” Segal said in a statement. According to Twitter’s letter to shareholders, those events included live sports and entertainment.
Twitter, which had stopped accepting political advertising in the run-up to the November election, did not provide a forecast for the fourth quarter. It warned in its earnings report that the election makes it “hard to predict how advertiser behavior could change.”
The fourth quarter also includes the holidays. Segal said on the call that the “strength and timing of the holiday season is likely to play out differently. It could be more digital than ever.”
In response to an analyst’s question about what may be coming next from Twitter, Segal hinted that the company is working on subscriptions and commerce.
Twitter shares have risen nearly 64% so far this year, and were trading at a five-year high ahead of its earnings report.