Product problems and advertising issues weighed on Twitter Inc.’s (NYSE: TWTR) revenue in the third quarter of its fiscal year. The company reported earnings of 17 cents per share on revenue of $823.7 million for the quarter, a year-over-year revenue increase of around 9 percent. Analysts had expected earnings of 20 cents per share on revenue of $874.0 million. The company reported $841 million in revenue in the previous quarter.
The company cited lower-than-expected advertising in July and August as part of the reason for its revenue shortfall. Advertising revenue for the quarter was reported to be $702 million. That was 8 percent higher than in the same quarter a year earlier but missed analysts’ expectations for $756 million in ad revenue. Twitter’s U.S. revenue increased by 10 percent, while its non-U.S. income rose 7 percent.
Part of the problem was a bug Twitter found in its Mobile App Promotion (MAP) product. The product is an ad tool that allows developers to promote their apps through Twitter, but the bug impacted its ability to target ads and share data. Another bug resulted in the improper use of user data until Twitter shut off the affected feature entirely. Twitter estimated that these issues affected its year-over-year revenue growth by at least 3 percentage points.
The company warned shareholders that the issues affected part of the third quarter, but will be felt for the entirety of the fourth quarter. The company now expects to bring in revenue of $940 million to $1.01 billion in the fourth quarter. Analysts had forecast fourth-quarter revenue of $1.06 billion.
Twitter shares dropped 20.8 percent after the company reported its third quarter earnings. Before the earnings report, Twitter shares were up 35 percent in 2019, giving the company a market cap just above $30 billion. Twitter shares hit a 12-month high last month, its second-highest peak since 2015. This drop erases roughly $6 billion from the company’s market cap.