Skip to main content

The context you need, when you need it

When news breaks, you need to understand what actually matters — and what to do about it. At Vox, our mission to help you make sense of the world has never been more vital. But we can’t do it on our own.

We rely on readers like you to fund our journalism. Will you support our work and become a Vox Member today?

Join now

Twitter has been miscounting user growth since 2014. It still delivered for Wall Street.

Twitter thinks it might achieve profitability by the end of the year.

Annual Allen And Co. Investors Meeting Draws CEO’s And Business Leaders To Sun Valley, Idaho
Annual Allen And Co. Investors Meeting Draws CEO’s And Business Leaders To Sun Valley, Idaho
Photo by Drew Angerer/Getty Images

Twitter added four million new users last quarter, in line with the kind of user growth Wall Street was expecting.

But in a weird twist, the company’s overall user base grew by just two million total users over the number it reported in Q2, not the four million users you would expect. It turns out Twitter has been incorrectly calculating its user base since 2014, and had to adjust its monthly active user total in Q2 from 328 million users down to 326 million.

The company now claims 330 million total users.

It’s a bizarre scenario in what was an otherwise modest earnings report. Twitter reported $590 million in revenue for the quarter, a decline of 4 percent year over year. That marks the third straight quarter of year-over-year revenue declines. Wall Street expected the company to generate $587 million last quarter.

One positive sign: It finally expects to turn a profit by the fourth quarter — that’s bottom line profit. It stands to reason since Twitter reported the lowest quarterly loss in Q3, about $21 million, than it has in three years.

One big reason for potential profitability: Twitter is spending much less on stock-based compensation for employees than it was a year ago. Twitter spent $101 million on stock-based compensation last quarter, down 36 percent from a year ago.

Another positive sign: Twitter’s daily active user growth was up 14 percent over last year. That’s the fourth consecutive quarter of double-digit growth, though Twitter doesn’t share its actual DAU number.

Back to Twitter’s user growth: The company claims that it has been mistakenly counting users who were using the company’s “Digits” product, a way for users to sign into third-party apps using just their phone number. That product was sold off to Google earlier this year, and even before that, using Digits didn’t mean users were using Twitter. So Twitter cut those users from their total count, hence the adjustment.

Twitter’s user growth woes date back more than two years, since before Jack Dorsey returned as CEO in 2015. The company has added an average of just three million new users per quarter over the past eight quarters, and it seems clear at this point that there isn’t a product (Moments, live video) or even a user (President Trump) who can jumpstart Twitter’s user growth.

Twitter stock is up more than 8 percent in early trading.


This article originally appeared on Recode.net.

More in Technology

Podcasts
Are humanoid robots all hype?Are humanoid robots all hype?
Podcast
Podcasts

AI is making them better — but they’re not going to be doing your chores anytime soon.

By Avishay Artsy and Sean Rameswaram
Future Perfect
The old tech that could help stop the next airborne pandemicThe old tech that could help stop the next airborne pandemic
Future Perfect

Glycol vapors, explained.

By Shayna Korol
Future Perfect
Elon Musk could lose his case against OpenAI — and still get what he wantsElon Musk could lose his case against OpenAI — and still get what he wants
Future Perfect

It’s not about who wins. It’s about the dirty laundry you air along the way.

By Sara Herschander
Life
Why banning kids from AI isn’t the answerWhy banning kids from AI isn’t the answer
Life

What kids really need in the age of artificial intelligence.

By Anna North
Culture
Anthropic owes authors $1.5B for pirating work — but the claims process is a Kafkaesque messAnthropic owes authors $1.5B for pirating work — but the claims process is a Kafkaesque mess
Culture

“Your AI monster ate all our work. Now you’re trying to pay us off with this piece of garbage that doesn’t work.”

By Constance Grady
Future Perfect
Some deaf children are hearing again because of a new gene therapySome deaf children are hearing again because of a new gene therapy
Future Perfect

A medical field that almost died is quietly fixing one disease at a time.

By Bryan Walsh