The company blamed technology issues for its lackluster earnings.
This week, shares of Twitter dropped after the company’s third-quarter earnings report fell short of Wall Street expectations. The company blamed the earnings miss on technology problems related to its Mobile Application Promotion (MAP) products.
The MAP products allow advertisers to promote mobile apps on Twitter’s platform. Twitter accidentally used confidential information when it delivered ads to them. And unfortunately, this wasn’t a one-time lapse but a problem that could affect the company well into 2020.
Let’s learn more about what happened to Twitter to the third-quarter and where the company goes from here.
An overview of Twitter’s Q3 earnings
During the third quarter, Twitter’s revenue reached $824 million, which is a 9% increase year over year. However, it fell below Wall Street’s estimates of $874 million. Non-GAAP earnings also fell short on estimates and came in at 5 cents per share, instead of the forecasted 20 cents per share.
Twitter was affected by multiple headwinds during the third quarter, but the biggest issue was with the company’s MAP technology. Bugs in the technology impacted the device’s ability to target ads and share data with its ad partners.
In a letter to shareholders, Twitter explained the steps it was taking to remedy the problem. The company is working on an updated version of MAP but doesn’t know when it will be ready.
However, it wasn’t all bad news for the company. Twitter did see its monetizable daily active usage increase to 145 million, which is up 17% year over year. And the company’s total U.S. user base reached 30 million, which is up four million from a year earlier.
How will this affect Twitter going forward?
During the third quarter, Twitter was affected by other headwinds outside of the technology issues. Revenue is down in part because the company experienced a slow season over the summer months. And the company also saw its revenue in Japan drop by 1%.
Going forward, the company lowered its guidance for the fourth quarter. It expects revenue to fall between $940 million and $1.01 billion, which is below Wall Street’s estimates of $1.06 billion. It also expects its operating income to fall between $130 and $170 million.