Twitter Posts Record $1.29 Billion Revenue, Will Increase Headcount by 20% in 2021

Mandatory Credit: Photo by Action Press/Shutterstock (11700960c)Donald Trump blocked on TwitterOn January 9th, 2021, US President Donald Trump was permanently banned from Twitter.
Action Press/Shutterstock / Action Press/Shutterstock

Twitter reported its earnings for the fourth quarter of 2020 and beat both earnings per share and revenue estimates, posting a record $1.29 billion in revenue.

The news might be unexpected for some, given that after shutting down Trump’s 89-million-follower account permanently last month following the Capitol insurrection, Twitter’s stock price dropped by 12%, erasing $5 billion from its market capitalization.

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The company reported year-over-year total revenue growth of 28% to $1.29 billion and earnings per share of $0.38, compared to a consensus EPS estimate of $0.31 and a consensus revenue estimate of $1.19 billion, according to Seeking Alpha.

“2020 was an extraordinary year for Twitter. We are more proud than ever to serve the public conversation, especially in these unprecedented times,” Jack Dorsey, Twitter’s CEO said in the earnings statement. “Our product changes to date are promoting healthier conversations for those who use our service, including advertisers and partners, and we are excited about our plans to continue innovating in 2021.”

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Ned Segal, Twitter’s CFO, added that the company “delivered record revenue of $1.29 billion in Q4, up 28% year over year, reflecting better-than-expected performance across all major products and geographies.”

Total US revenue was $733 million, an increase of 24%. Total international revenue was $556 million, an increase of 34%, and revenue from Japan, the company’s second largest market, increased 26% to $176 million or 14% of total revenue.

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In addition, total advertising revenue was $1.15 billion, an increase of 31%, while data licensing and other revenue totaled $134 million, an increase of 9%. The company says in a letter to shareholders that advertising revenue was mostly driven by strong brand advertiser demand in the US for most of the quarter.

“We saw a dip in US advertiser spend during a short period bracketing the US presidential election on November 3, followed by a strong resumption in demand that continued through the holidays,” according to the letter.
Twitter Revenue Hits Record High

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The company also noted that in 2020, growth from product improvements reached an all-time high, with additional benefit from “increased global conversation around COVID-19, the run-up to US elections, and other current events.”

“In Q4, we helped new and reactivated accounts build a more durable and sustainable connection with Twitter by using real-time signals around interest and intent to significantly improve content personalization and discovery in their first few days on Twitter,” it says.

In terms of its financial outlook for 2021, Twitter says it expects to grow headcount by more than 20% in 2021, “especially in engineering, product, design, and research.”

“Assuming the global pandemic continues to improve and that we see modest impact from the rollout of changes associated with iOS 14, we expect total revenue to grow faster than expenses in 2021. How much faster will depend on our execution on our direct response roadmap and macroeconomic factors.”

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For the first quarter of 2021, the company expects total revenue to be between $940 million and $1.04 billion, according to the letter – another decent earnings report for big tech.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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