Twitter says the impact of Apple’s ATT on its revenue in Q4 remained modest

Twitter on Thursday reported lower-than-expected quarterly advertising revenue and user growth but said the impact from Apple’s privacy changes remained modest. 

Still, the company said it made “meaningful progress” in 2021 against its 2023 goals of delivering 315 million monetizable DAU and $7.5 billion in  annual revenue by the end of 2023.

Twitter said its daily user base rose 2.84% in the holiday quarter from its previous quarter to 217 million. The company’s revenue rose to $1.57 billion in the fourth quarter, up 22% from $1.29 billion a year earlier, in line with analyst estimates. 

However, Twitter’s advertising revenue for the holiday quarter rose 22% year over year to $1.41 billion, missing analysts’ estimates of $1.43 billion.

Twitter CFO Ned Segal said in an interview that some 85% of the company’s ad revenue comes from brand ads, which are less affected by Apple’s ATT than direct-response ads. 

Twitter forecasts first-quarter total revenue of $1.17 billion to $1.27 billion. The mid-point of the range is below Wall Street’s average target of $1.26 billion.

Citing ads that seek to drive sales or other consumer action, Segal said Apple changes could impact Twitter in the future as it grows its performance advertising business. He said Twitter is working to mitigate any negative effects from Apple’s changes.

“We’re pleased with the progress we’ve made, but we have more work to do here,” he said.

Twitter also announced a $4 billion stock buyback for the first time since the company announced a $2 billion program in March 2020.

The new buybacks demonstrate Twitter’s “confidence in our execution and our strategy,” said Segal.

“The company certainly seems to be going in a different direction under the leadership of new CEO Parag Agrawal as it takes steps to return cash to shareholders in the form of higher buybacks,” Cohen said.

Facebook owner Meta said last week that Apple’s App Tracking Transparency could decrease the company’s sales in 2022 by about $10 billion. Snap Inc., on the other hand, said its ad business has bounced back faster than expected from the effects of Apple’s ATT, generating $1.3 billion in revenue in Q4 2021.