Twitter Rises to 211 Million Active Users, Though Longer-Term Growth Targets Looking Harder to Reach

Twitter has released its Q3 2021 financial results, which indicate consistent growth in both users and revenue. However, since the platform's lofty development goals and its continued investment in new projects aren't paying off as well as it would have anticipated, steady may not be enough.

To begin with, Twitter's Monetizable Daily Active User count has risen to 211 million, an increase of 13% year over year. Twitter tries to hide its statistics by providing direct YoY comparisons instead of a quarter-by-quarter chart, but here are the 2021 Q2 and Q3 mDAU stats side by side for reference.

As you can see, Twitter added no new users in the United States, with the entire 5 million unique users coming from outside North America. This isn't necessarily a negative thing since Twitter still has lots of room to develop in many nations, but it could be a source of concern for investors, considering that US users account for the vast majority of the platform's revenue. Again, Twitter utilizes a skewed year-over-year comparison rather than quarterly performance, but for context, Twitter made $1.19 billion in revenue in Q2 2021, which means it made an additional $94 million in Q3, with the majority of income coming from the United States.

Any growth is positive, but it's interesting to see how Twitter's usage statistics move about its growth targets, which the company published in February. Twitter stated during its Analyst Day presentation that it aimed to reach 315 million monthly active users (mDAU) by Q4 2023, with revenue reaching $7.5 billion.

In the first quarter of this year, Twitter had 199 million monthly active users (mDAU), which increased to 206 million in the second quarter (+7 million) and is presently at 211 million in the third quarter (+5 million). It will require an annual growth rate of roughly 38.6 million mDAU to reach 315 million by 2023. So far, it isn't entirely on track, and its revenue statistics will also require a significant bump to get the platform to those levels (Twitter is on course to exceed $5.1 billion in revenue this year).

It must achieve this, or it will face significant change. Last year, a group of activist investors purchased their way onto Twitter's board of directors to pressure incumbent CEO Jack Dorsey to resign, claiming that he is not maximizing the platform's potential. Based on these lofty growth targets, Twitter's management team was able to secure a stay of execution for Dorsey, but if Twitter fails to fulfill them, you can bet that calls for Dorsey's dismissal would rise again, potentially causing a significant shift at the platform. That's why Twitter has been so eager to try new things and throw fresh ideas at the wall, which has been a welcome shift for the platform, which has long been chastised for its lack of innovation. Nonetheless, the data, at least for the time being, do not indicate that these new additions will result in a significant increase in usage, with many of the projects falling flat or failing to acquire considerable traction in the early stages.

For example, Twitter's Fleets option was shut down in July due to a lack of user interest, Twitter Blue hasn't provided any radical new functionality to justify the monthly cost, despite Twitter's attempts to position 'undo send' as an alternative for a tweet editing functionality, and its Communities group tweeting process appears to run counter to many of the platform's key engagement opportunities. Of course, Twitter is still working on these features, which is a byproduct of launching quickly and iterating on the fly, but while Twitter is doing more things, we haven't seen any 'game-changing' or massive usage-boosting capabilities as a result of these tests. This leads us to Spaces, the platform's main hope for capitalizing on the audio, social trend, which is already starting to fade in many ways.

Twitter has been striving to raise awareness of Spaces chats to enhance interaction with the feature and add Spaces topics to help users find the most relevant talks. Spaces could yet become a significant part of the tweet experience, but will that be enough to get Twitter to the 315 million monthly active users it needs by 2023?

Overall, Twitter's stats are satisfactory - revenue figures surpassed market expectations. The company has stated that its ad business has not been adversely affected by Apple's data privacy change, which was expressly mentioned as a stumbling block in Facebook and Snapchat's reports. However, when considering the company's overall path, some significant obstacles remain. That's not to suggest that Twitter won't meet these goals or that nothing will change if it doesn't, but it's unclear how much benefit the platform will derive from its different upgrades and whether they'll be enough to spur the more powerful usage platform requires. Unless eCommerce, which is another focus in the app, can provide a significant boost.

Is it possible for eCommerce sales via Twitter to add a considerable amount to the company's bottom line while also increasing usage?