Twitter said it reached 145 million of what the company calls “monetizable daily active users” in the third quarter, up 17% from the same period a year ago. But the company badly undershot Wall Street expectations due to technical glitches in its advertising technology.
Total revenue of $824 million rose 9% over the 2018 period, but fell well short of Wall Street analysts’ consensus for $874 million. Adjusted earnings per share of 5 cents missed the consensus forecast of 20 cents.
The company said its overall results in the quarter reflected “a number of headwinds,” the company said in a letter to shareholders. The issues included “revenue product issues and greater-than-expected advertising seasonality in July and August.”
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Bugs in Twitter’s advertising offering flared up in the quarter, the company said, and will hamper results in the upcoming quarter. Investors hammered the company’s stock in pre-market trading, sending shares down as much as 20%, to $32 a share. The stock had made steady progress in 2019, rising more than 20%.
“In Q3 we discovered, and took steps to remediate, bugs that primarily affected our legacy Mobile Application Promotion (MAP) product, impacting our ability to target ads and share data with measurement and ad partners,” the company said in its shareholder letter. “We also discovered that certain personalization and data settings were not operating as expected. We believe that, in aggregate, these issues reduced year-over-year revenue growth by three or more points in Q3.”
In a conference call with investors, CEO Jack Dorsey said there were “bugs” in the social network’s advertising platform. He said the company is addressing the problems, which limited targeting and data insights for advertisers, describing the glitch as “still painful but no longer existential as it was in our past.”
Dorsey said the bugs were “identified quickly” and he expressed confidence in the employees who are working to remedy the problem. “Our focus on MAP is much more intense and something that we intend to get right,” he said. “We have seen bugs in the past … The most important thing is that we build agility and we can move fast and fix them.”
Ad revenue totaled $702 million, up 8%. The U.S. accounted for more than half of the total, at $385 million. Video advertising is a particularly notable area of growth.