Twitter's revenue growth and operating profit fell short of expectations in the third quarter. The company blamed 'bugs' in its mobile app promotion product as well as other problems with data and personalisation settings and summer seasonality, which held back ad revenue growth. While Q4 is seasonally stronger, the problems will continue to weigh on results.
The company continued to grow user numbers in the period, with annual growth accelerating to 17 percent year-on-year. Twitter ended the period with 145 million daily active users, up by 6 million from the previous quarter.
Total revenues in Q3 rose 9 percent year-on-year to USD 824 million, at the low end of its guidance. Twitter estimates the product problems took 3 percent points off revenue growth and will dampen Q4 sales growth by another 4 percent. The app promotion problems affected particularly Japan, Twitter's second-largest market, where revenues fell 1 percent in Q3.
The company said fewer bigger events in July and August compared to 2018 also affected revenues. However, ad revenue rebounded to double-digit growth in September, led by the US market, Twitter said.
The revenue shortfall led to operating profit below guidance, at USD 44 million versus USD 92 million a year ago. That's just below the company's outlook of USD 45-80 million. Twitter said it made no change to its investment spending to try to offset the lower revenues, with total costs up 17 percent to USD 781 million.
The investment included growing headcount to over 4,600 employees at the end of September, up 21 percent from a year ago. For the full year, staff numbers are expected to be up around 20 percent.
Twitter's cash position remained a healthy USD 5.8 billion at the end of September, and the company said it paid off USD 935 million in convertible notes due in September. Adjusted free cash flow fell to USD 167 million in Q3 from USD 327 million a year earlier.
For the fourth quarter, the company expects revenues of USD 940 million to USD 1.01 billion, and operating profit is estimated at USD 130-170 million. Capex will be at or near the low end of its previous guidance of USD 550-600 million over the full year.
