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  • MaryGrace Lerin

Twitter Reaches $5 Billion In Total Revenue For The Year As it Gains 6 Million Users In Q4

The first quarter appears to have gone well for Twitter, with the site adding 6 million new users and a 22% increase in revenue year over year. The key points from Twitter's Q4 2021 earnings reports show that it's still a ways away from its lofty aspirations, but there are some encouraging indicators.

To begin with, in terms of users, Twitter increased its user base by 6 million in the quarter, bringing its total to 217 million mDAU.

With only 1 million US users added in the last year, the great majority of Twitter's growth has come from other regions, as seen here. Indeed, since the beginning of 2020, after Twitter hit 36 million users in the United States its usage has been almost stagnant.

It's hovered between 36 and 38 million since then, but it hasn't been able to garner a significant following in the United States. And knowing that most of its earnings stem from users in the United States, this is a matter of great concern.

For the quarter, Twitter generated $1.57 billion in revenue, with $1.41 billion of it coming from advertising.

However, the company's lack of growth in the United States continues to be a problem, although it is gaining traction in India and Asia, which have historically been the company's lower-earning markets. The stats are still impressive despite such conditions, considering that in the latest quarter, Facebook lost a million daily users in the United States, while Pinterest's popularity continues to plummet in comparison.

It appears that in the major markets, social media has reached a saturation point, with individuals either signing up or not at all. TikTok goes against the grain as it proceeds to gain traction, but other platforms are halting or losing in western markets, requiring them to source future growth from outside the US, as well as establish better income options in these areas.

In keeping with the development goals made under Dorsey and disclosed in February last year, Twitter is still seeking to gain 100 million more users by 2023.

In 2020, Dorsey was pressured by an activist investor group that essentially purchased board seats on Twitter to force the company to dismiss him.

Although it was uncertain whether these goals would be maintained after Dorsey's departure in November, Twitter has reaffirmed them in today's announcement:

“We made meaningful progress in 2021 against our 2023 goals: doubling development velocity by the end of 2023, delivering at least 315 million mDAU in Q4’23, and delivering $7.5 billion or more in revenue for the full year of 2023.”

That is, as previously stated, a large percentage of that growth will have to come from countries other than the United States, which is the company's largest earning market.

Twitter, for example, attracted 18 million new users in 2021, with another 98 million needed in the next two years to reach a total of 315 million active users (mDAU). As such, the company needs to nearly double its annual user growth rate (+49 million), which looks like a long way off, especially given that its recent trials aren't likely to attract a large number of new users shortly.

The majority of Twitter's new projects, such as Super Follows and Twitter Blue, are largely centered on revenue growth (Twitter's full-year revenue was $5.08 billion), but it is also seeking to increase user relevance and discovery through the development of Topics, while Spaces remains a significant emphasis for improving user engagement.

In principle, Topics might be a winner in terms of usage growth, and Twitter has steadily improved its Topic capabilities, which could also help advertisers:

“In Q4, we began integrating signals from organic Topic follows on Twitter into our ads targeting algorithm, with early results showing an almost 10% increase in the average targetable interest segment size.”

According to Twitter, 280 million accounts currently follow at least one Topic, and the app currently has over 14,500 Topics available in 11 languages to follow.

Improvements in relevancy might help the platform increase interaction, which in turn could lead to more people signing up, and it's also worth thinking about how Topics can be used as a marketing and segmentation tool. However, it's still unknown how Twitter intends to increase its user base by 98 million over the next two years.

Over 2 million profiles have already converted to Professional Accounts, which helps to classify business users and highlight new prospects for potential ad clients, while Twitter is also testing using search query data as an additional advertising targeting tool, which helps to serve relevant ads to users who search for specific themes.

Twitter is also testing live-stream purchasing, just like every other social media platform:

“Walmart kicked off Cyber Week with the first-ever Live Shopping event on Twitter, driving 2M+ total livestream views and exceeding engagement expectations.”

It's tough to say what these features have in store, but it's worth noting Twitter's optimism for its new ad targeting and business possibilities, which might see them gain more attention as part of its overall growth strategy.

Although it is unclear whether Twitter will be able to meet its 2023 growth targets and where that growth will derive from, it is a positive report card for the platform that indicates emerging areas of promise. Unless it can get into a critical market sector or use case and interact with a whole new audience as a result, its new elements are unlikely to become important drivers of usage growth as they're still in the early stages of development.

It's unlikely to occur, so while Twitter's growth appears to be steady and reasonable, it's essentially beating itself up by pursuing these lofty goals. The shareholders and board of directors of Twitter, even after Dorsey's departure, continue to hold the company subject to these objectives, and if they aren't met, more change will follow.

No one can say for sure how Twitter's doing right now, but it's not doing better than it would want even though it appears to be performing quite well over the years.

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