Algorithm And Privacy Changes At Apple Make Twitter Ad Revenue Soar

Twitter experiences an increase in ad revenue. (photo: doc. unsplash)

JAKARTA—Twitter Inc on Tuesday, October 26, reported that its quarterly revenue grew 37 percent and avoided the burden of Apple Inc's privacy changes on advertising that hobbled its rivals, sending its shares up 3%.

The social networking site has been working to add new features such as audio chat rooms to attract users, and has also rolled out upgrades to its advertising capabilities to achieve its goal of doubling annual revenue by 2023.

Twitter ad revenue now totaled $1.14 billion during the third quarter ended September 30, in line with consensus estimates.

The company said it saw a "modest" impact on ad revenue because of the privacy changes Apple rolled out, which prevent advertisers from tracking users on their devices without their consent.

Investors had expected Twitter to be relatively protected against losses from the changes, as most of its advertisers did not rely on highly targeted ads.

As the San Francisco-based company continues to expand its targeted advertising business, the company is introducing more features such as topics that users can follow on Twitter.

These tools provide data about people's interests that can ultimately be used to help deliver relevant ads, said Twitter's Chief Financial Officer, Ned Segal, during a conference call with analysts. "Many of these are opportunities that are in front of us," Segal said, as quoted by Reuters.

Tech partners Twitter, Snap and Facebook also said Apple's changes had undermined their ability to target and measure digital ads, citing the update as a reason why the company failed to meet revenue expectations.

Twitter said its monetizable daily active users, its term for users receiving ads, was 211 million during the third quarter, missing analyst estimates of 212.6 million, according to IBES data from Refinitiv.

While Twitter increased its number of users outside the United States by 5 million from the previous quarter, its base in the US remains flat.

Total revenue, which also includes money Twitter makes from data licensing, was $1.28 billion, also in line with Wall Street's target.

Twitter said this year's costs from hiring and investing in new data centers will flow into next year, resulting in a mid-20% increase in total costs for 2022. The company expects fourth-quarter revenue to be between $1.5 billion and $1.6 billion.

Twitter previously announced it would sell its advertising technology unit MoPub, and the deal is expected to be finalized in the first quarter of 2022.

The company said it doesn't expect to recoup next year's revenue loss from sales of MoPub, which is estimated to be between $200 million and $250 million, although it added the sale doesn't affect Twitter's goal of doubling annual revenue by 2023.