Twitter Inc. has admitted to incorrectly reporting its single most important metric, monthly active users (MAUs), for nearly three years.
To the social media icon’s credit, this admission wasn’t the result of an investigative journalist poking their nose into the company’s operations but an acknowledgment in its latest quarterly earnings report, released today.
“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,” the company wrote in its Oct. 26 letter to shareholders and accompanying press release. “These third-party applications used Digits, a software development kit of our now-divested Fabric platform, that allowed third-party applications to send authentication messages via SMS through our systems, which did not relate to activity on the Twitter platform.”
The disparities between the reported and actual numbers, which range between 1 million and 2 million users depending on the quarter, were broken down in a chart that Twitter released to accompany the news.
“Due to our data retention policies, we do not have data to reconcile periods prior to the fourth quarter of 2016, but our estimates suggest the prior period adjustments are smaller than those in the fourth quarter of 2016,” the company noted in a section titled “Note about our MAU adjustment”.
Naturally, Twitter was more inclined to emphasize the gains posted in its latest quarter, which included a 14 per cent year-over-year increase in daily active users and a quarterly net loss of $21 million (all figures USD), a significant improvement over the company’s $103 million quarterly loss during the same period last year.
“This quarter we made progress in three key areas of our business: we grew our audience and engagement, made progress on a return to revenue growth, and achieved record profitability,” Twitter CEO Jack Dorsey said in the Oct. 26 press release. “It’s our job to help people stay informed about what’s happening in the world and what people are talking about, and we’re focused on making our service faster, easier to use, and more relevant to more people every day.”
In the same release, Twitter CFO Ned Segal said the company expects to become profitable in the fourth quarter, with expected earnings before interest, tax, depreciation and amortization (EBITDA) to reach between $220 million and $240 million, against capital expenditures of $110 million or less and stock-based compensation expenses between $90 and $100 million.