Microblogging platform Twitter said it overstated the number of daily active users for three years due to an error caused by its account linking feature.
The feature, launched in March 2019, allowed people to link multiple separate accounts together in order to conveniently switch between accounts.
"An error was made at that time, such that actions taken via the primary account resulted in all linked accounts being counted as mDAU (monetisable daily active users)," Twitter says in its earnings release.
This, according to Twitter, resulted in an overstatement of mDAU from the first quarter of calendar year 2019 through Q4 2021. The social media company says it overstated users by up to 1.9 million in the last quarter of 2021.
Twitter's average daily active users stood at 229 million in the first quarter of 2022, up 15.9% compared to Q1 of the prior year. This includes 39.6 million DAUs in the US.
Net profit of the microblogging service rose to $513 million led by a pre-tax gain of $970 million from the sale of MoPub for $1.05 billion.
Revenues rose 16% year-on-year to $1.2 billion in Q1, a little lower than analyst expectations of $1.23 billion, amid headwinds associated with the war in Ukraine. Advertising revenue stood at $1.11 billion, an increase of 23%.
Costs and expenses jumped 35% year-over-year to $1.33 billion in the quarter, resulting in an operating loss of $128 million compared to an operating income of $52 million in the same period of the previous year.
This comes days after Tesla CEO Elon Musk, also the world's richest person, acquired Twitter in a transaction valued at $44 billion.
As part of the deal, Twitter shareholders will receive $54.20 in cash for each share of Twitter common stock that they own upon closing of the proposed transaction.
The Tesla CEO has secured a financing commitment of $46.5 billion to acquire Twitter. Musk has secured $25.5 billion of fully committed debt and margin loan financing and is providing an approximately $21 billion equity commitment.
The transaction, which has been unanimously approved by the Twitter board of directors, is expected to close in 2022, subject to the approval of Twitter stockholders.
Given its pending acquisition by Elon Musk, Twitter did not provide any forward looking guidance, and withdrew all previously provided goals and outlook.
Musk has been vocal about his plans for Twitter. He wants Twitter to be the "digital town square" where matters vital to the future of humanity are debated. "I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it," Musk said.
Musk, who calls himself a "free speech absolutist", believes for Twitter to deserve public trust, it must be politically neutral, which effectively means upsetting the far right and the far left equally.
He has criticised the company's top lawyer, Vijaya Gadde, for allegedly censoring the Hunter Biden laptop story. "Suspending the Twitter account of a major news organization for publishing a truthful story was obviously incredibly inappropriate," Musk tweeted.
