Twitter beats on earnings, says expenses will balloon in 2021

Twitter's stock rose to near-record highs Tuesday after beating Wall Street estimates on top and bottom lines but failing slightly to meet expectations on user growth for the quarter.

Yes, but: Overall, Twitter still posted significant user gains in 2020, which the company attributes to the "global conversation around current events and ongoing product improvements."

• Twitter says it now has 192 million monetizable daily active users (mDAU), up 27% year over year.

By the numbers, per CNBC:

• Earnings per share: 38 cents, adjusted, vs. 31 cents forecast by Refinitiv
• Revenue: $1.29 billion vs. $1.19 billion forecast by Refinitiv
• mDAUs: 192 million vs. 193.5 million expected, according to StreetAccount

The big picture: Twitter posted noticeably strong revenue gains, bringing in over $1 billion in the fourth quarter.

• The company attributed higher revenue to better-than-expected profits. It says improvements to its ad products resulted in a 31% year-over-year increase in total ad revenue.

Of note: Like rivals Facebook and Snapchat, Twitter did warn that it could experience advertising-related headwinds due to upcoming privacy changes being rolled out with Apple's iOS 14 update.

What to watch Analysts will looking to understand whether banning former President Trump, who had been one of Twitter's most popular and prolific users, will impact the tech giant's user growth this upcoming quarter. Twitter says so far it hasn’t.

• Twitter is forecasting that it will grow headcount by more than 20% in 2021, especially in engineering, product, design, and research, which it anticipates will push total costs and expenses to grow by 25% or more in 2021.
• Twitter is exploring new revenue models, such as subscriptions, which would help it drive more revenue from its existing user base.