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Earnings Results: Twitter stock swings to a gain after user growth underwhelms but new $4 billion buyback program announced

Shares of Twitter Inc. seesawed into positive territory Thursday, after the social-media company came up shy of user-growth estimates for its latest quarter while largely meeting expectations with its financial results and announcing a new $4 billion buyback program.

The company reported fourth-quarter net income of $182 million, or 21 cents a share, down from $222 million, or 27 cents a share, in the year-earlier quarter. After adjusting for stock-based compensation and other expenses, Twitter TWTR, +0.78% earned 33 cents a share, down from 38 cents a share a year prior and in line with the FactSet consensus.

Twitter’s revenue increased to $1.57 billion from $1.29 billion, while analysts had been modeling $1.58 billion. While the company felt a “modest” impact from Apple Inc.’s AAPL, -0.61% privacy-related changes around ad targeting, it disclosed in its shareholder letter that “product improvements have helped reduce the impact on Twitter.”

The company had 217 million monetizable daily active users (mDAUs) in the fourth quarter, or 6 million more than the 211 million it had in the third quarter. Analysts tracked by FactSet were expecting the company to add 8 million mDAUs in the period.

Twitter shares opened lower, then fell as much as 4.3% in intraday trading, before bouncing to trade up 1.3% in morning trading.

Twitter had 38 million U.S. mDAUs on average and 179 million international mDAUs on average in the fourth quarter. The company saw a 35% bump in daily signups on a year-over-year basis, which Chief Financial Officer Ned Segal said on the earnings call was “a big enough move from what we’ve seen in the past.”

The company expects growth in mDAUs to accelerate both domestically and internationally over the course of 2022.

“These expectations are informed by the data that we see, which has been driven by our work to help people successfully create new accounts and reactivate existing accounts to get more value out of Twitter by finding what they’re looking for faster,” Segal said on Twitter’s earnings call.

The company also announced a new $4 billion share-buyback program. Twitter said that, in conjunction with the new program, it plans to enter into a $2 billion accelerated share repurchase and buy back the remaining $2 billion in shares over time.

“We will continuously evaluate efficient alternatives to using cash on hand to fund the program, including accessing the capital markets, subject to market conditions,” Twitter said in its earnings release.

This new program will replace the prior $2 billion program that was approved in 2020 and had about $819 million remaining.

For the first quarter, Twitter expects total revenue of $1.17 billion to $1.27 billion, while analysts were anticipating $1.26 billion. The company also projects a GAAP operating loss of $175 million to $225 million for the period. The FactSet consensus was for a $23 million operating loss.

Looking at the full year, Twitter expects stock-based compensation expense of $900 million to $925. It also anticipates seeing $900 million to $950 million in capital expenditures.

Twitter’s stock has tumbled 26.8% over the past three months, while the S&P 500 index SPX, -0.35% has slipped 1.8%.

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