Twitter reported a strong finish to 2020, with fourth-quarter revenues up 28 percent year-on-year to USD 1.29 billion. Helped by interest in the US elections and the ongoing pandemic, the number of daily active users increased 27 percent from a year earlier and rose by 5 million from the previous quarter to 192 million.
New ad formats, stronger attribution, and improved targeting resulted in a 31 percent annual increase in ad revenue to USD 1.15 billion. The sales growth translated into better-than-expected profits as well. Operating profit rose 20 percent year-on-year to USD 252 million, and net income jumped 87 percent to USD 222 million.
Twitter expects a further improvement in margins in 2021 as revenues grow faster than operating costs. This assumes the upcoming changes in Apple's iOS affecting advertising have only a modest impact and the company executes on its product roadmap. The outlook also includes an around 20 percent increase in headcount and projected 25 percent rise in operating costs in 2021.
Capital expenditure is estimated at USD 900-950 million over the full year, up from USD 864 million last year. After a 62 percent increase in capex in 2020, mainly to build a new data centre, adjusted free cash flow fell to USD 129 million from USD 769 million in 2019.
For the first quarter, revenue is estimated at USD 940 million to USD 1.04 billion. The operating result is forecast between a loss of USD 50 million and breakeven.
