Twitter admits it overstated monthly user numbers for 3 years

Herbert Rhodes
October 28, 2017

The retroactive adjustment makes their user growth look better now due to the higher proportion of development, but could conceivably have misled investors who were deceived by the incorrect numbers.

Shares of the social platform have rocketed up almost 15 percent in early morning trading on Thursday, after the company hinted at imminent profits in its third quarter earnings report - despite announcing it had been miscalculating its MAUs by millions.

These statistics were released as part of Twitter's earnings report for the third quarter of 2017. It now claims to have 330 million active users - meaning an uptick of 4 million rather than 2 million.

These results are a much-needed improvement over Twitter's dismal performance last quarter, when it didn't add any new users.

Twitter did however adjust the number of users in the last quarter that it had said was 328m - it now says that was actually 326m, which actually changes reports of zero growth for the quarter back in July to a decline of 2m.

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We discovered that since the fourth quarter of 2014 we had included users of certain third-party applications as Twitter MAUs that should not have been considered MAUs.

Thanks to cost-cutting across the business, Twitter said it could finally turn a bottom-line, unadjusted profit in the fourth quarter.

But the company said it had overstated monthly users for the past three years.

Wall Street rejoiced at Twitter's performance-company stock was up almost 15 percent in morning trading. The company could, at least, be pleased that its data licensing division saw revenue increase to $87 million, an year-on-year increase of 22 percent. The fact that the platform is President Trump's favored communications tool is also likely to have raised Twitter's profile among potential users. The company believes that changes to the platform, making it easier to use, and more exposure from global events, account for the gain in new users.

"We're committed to making Twitter safer, and we continue to improve and leverage our technology to reduce the reach of abusive tweets", Twitter CEO Jack Dorsey wrote in a letter to shareholders.

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