By Angela Moon and Munsif Vengattil
NEW YORK (Reuters) - Twitter Inc (NYSE:TWTR) forecast that revenue in the first quarter would be weaker than expected while full-year operating costs would rise, sending shares down more than 10 percent in midday trading on Thursday.
Investors' concerns over the weak forecast overshadowed strong fourth-quarter results for the social media company that included a 24 percent jump in total revenue, helped by growth in its video advertising business.
Monthly active users on the social media platform fell to its lowest in two years and for a third consecutive quarter. Twitter said it would no longer disclose monthly active users, a statistic internet companies have routinely reported over the past decade, and would, instead, provide the number of monetizable daily active users.
Twitter has been emphasizing improving the health of the platform, which includes the removal of thousands of spam and suspicious accounts and allocating resources to comply with new privacy regulations in Europe.
Operating expenses are expected to surge about 20 percent year-on-year in 2019, the company said, due to efforts to improve the health of its platform, exceeding analysts' average estimate of 12 percent.
Some analysts said it was time for Twitter to show the results of efforts to safeguard its platform.
"The street is just about done giving them a break about it," said JJ Kinahan, chief market strategist at TD Ameritrade.
"Twitter needs to now show results, that they can keep those people (bots and suspicious accounts) off the platform and that their enhanced security is working."
Twitter also expects capital expenditure of between $550 million and $600 million in 2019, well above analysts' average estimate of $415 million.
Shares were down more than 10 percent at $30.56 in midday trading.
Expected total revenue for the first quarter of 2019 is between $715 million and $775 million for the first quarter of 2019. The midpoint of that range was below analysts' average estimate of $765 million, according to IBES data from Refinitiv.
NEW METRIC
Monthly active users totaled 321 million in the fourth quarter, in line with analysts' forecasts but down from 330 million a year earlier and 326 million in the third quarter.
But the number of monetizable daily active users - those able to be exposed to ads on a daily basis - rose to 126 million in the fourth quarter from 115 million a year ago and 124 million in the previous quarter.
While directly comparing the number of daily active users with those of Twitter's peers may be difficult as there is no industry standard on how social media platforms measure the metric, Snap Inc (NYSE:SNAP) reported earlier this week that it had 186 million daily active users in the fourth quarter. Facebook (NASDAQ:FB) had more than more than a billion in the same period.
"Twitter’s pivot to mDAUs (monetizable daily active users)helps ad buyers better understand the potential reach for their advertising," said Aaron Goldman, chief marketing officer at 4C Insights.
"As a platform for breaking news and live moments, many users are logging in on a daily basis, and Twitter is acknowledging this pattern by sharing metrics with ad buyers that will allow them to see the bigger picture as it relates to users who are reachable by ads."
Total advertising revenue surged 23 percent to $791 million in the fourth quarter, with more than half coming from video ads by corporate clients.
Overall revenue in the fourth quarter rose to $909 million, handily beating analysts' estimate of $868.2 million.
Revenue from data licensing and other non-advertising businesses rose 35 percent from a year earlier to $117 million.
Excluding some items, Twitter reported quarterly profit of 31 cents a share, beating the average estimate of 25 cents.
