Twitter disclosed this morning that it has been overstating the number of monthly active users for close to three years. But it appears Wall Street isn’t too bothered by it.
Twitter stock is up 16.5 percent following the company’s latest quarterly earnings report, where it beat expectations for revenue and earnings per share. The company also cut down on expenses, “achieved record profitability,” and boosted fourth quarter projections.
“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,” Jack Dorsey, Twitter’s CEO. “We’re proud that the improvements we’re making to the product continue to bring people back to Twitter on a daily basis. 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.”
Twitter said it had 330 million monthly active users at the end of the quarter, up 4 percent over last year. The company didn’t give a figure for daily active users but said that metric grew by 14 percent over this time last year, the fourth consecutive quarter of double-digit growth.
But littered among the good news for the influential social network was an admission that Twitter “discovered” it had overstated the number of monthly active users dating back to the fourth quarter of 2014. The mistake was related to an app called Digits, which allowed third-party applications to send authentication messages via SMS through Twitter’s systems. The company counted this activity from Digits, which Twitter sold to Google in a package with a couple other assets earlier this year, as part of its usage metrics even though it wasn’t related to the flagship platform.
Twitter’s revised data only goes back to the fourth quarter of last year, but the information shows that the company overstated the monthly active user count by 1 to 2 million per quarter.