Twitter has this week posted its latest performance report, covering Q4 2019. And there are some good signs in the data, with things looking much better than they did in Twitter's previous update, where it revealed a significant issue with its ad targeting systems that reduced revenue growth.

But there are also some concerns.

We'll start with the positive - on users, Twitter's efforts to improve relevance and discovery appear to be bearing fruit, with the platform adding 21% more monetizable daily active users in the period, taking it to 152 million mDAU.  

mDAU is Twitter's own user, custom metric which it added back in Q4 2018. Monetizable active users only counts users to whom Twitter can show ads, which Twitter says is a more representative metric of its performance.

Many have criticized the mDAU count, as it means Twitter has also stopped providing the regular MAU and DAU counts, limiting comparison to other platforms. But there is logic to the mDAU calculation. Reaching 300 million monthly users doesn't mean much if you're counting people who, say, see tweets embedded on other platforms or similar, surfaces where Twitter's ads can't be shown.

In a business sense, mDAU is probably a more accountable data point, and on this front, Twitter is improving, which, as noted, it's attributed, primarily, to its improved machine-learning models to provide more relevant content in people’s home timelines and notifications.

As you can see here, Twitter's average US mDAU was 31 million in Q4, compared to 27 million in the same period in the previous year and 30 million in Q3. Average international mDAU was 121 million, with Twitter also noting that it saw double-digit increases in mDAU in all of its top 10 markets.

The numbers have emboldened Twitter to push forward with its approach on improving its data models and enhancements through products like Topics and Lists.

As noted by Twitter CFO Ned Segal:

"When you add 26 million people to the service, when more than half of it is directly tied to product improvements you build the confidence to continue to execute against your strategy."

Topics, and improving content discovery more broadly, has been a big focus for Twitter over the last year. Twitter officially launched its option to follow specific topics, as opposed to users, back in November, and now, there are more than 1,700 curated topic listings that can follow on the platform.

It's a good way to showcase the best of what Twitter has to offer, without users having to know who, specifically, they need to follow - but it does also come with an extra level of workload in curating the streams and keeping them free of spam. Which, of course, means adding headcount, a concern highlighted in Twitter's forecasts.

As Twitter notes, over the next year, it plans to increase headcount and expenses by 20%, a significant outlay which will impact forward projections. The engagement results here would suggest that such investment is necessary for ongoing growth, but it is an area of concern for the market, given the indeterminate outcome of such work. 

In terms of other engagement options, Twitter has also touted its continued work on "enhancing the public conversation around events on Twitter with live and on-demand video content, including short videos and highlights, across sports, entertainment, news, and politics".

Twitter's live video strategy has changed several times, and it's unclear exactly where it's headed with it. At one point it was the key thing, now it seems to be a lesser focus, but with a deal in place for Olympics coverage, coming up later in the year, you can expect to see Twitter making a bigger push into live events once again, with a view to seeing what they can get out of the event, particularly given the enhanced focus on events and topical discussion.

In terms of revenue, Twitter brought in $1.01 billion in Q4, an increase of 11% YoY.

Total US revenue was $591 million, an increase of 17%, while total international revenue was $416 million, an increase of 3%.

Japan remains Twitter's second-largest market, and it contributed $139 million, or 14% of Twitter's total revenue in Q4. 

As noted, Twitter is still feeling the impacts of issues with its Mobile Application Promotion (MAP) system, which has reduced its capacity to provide ad targeting. Twitter's MAP system had been incorrectly utilizing user-provided data, and Twitter was forced to revamp the process. Twitter says that these impacts "resulted in four or more points of reduced year-over-year growth in total global revenue in Q4", though moving forward, those impacts will be reduced, which should see improvements on this front.

The total revenue figure actually beat market expectations, however as noted by TechCrunch, the company's net income and EPS were both significantly down YoY. Twitter explained that the variability relates to an income tax benefit last year, which inflated its 2018 result, so the comparison isn't like-for-like. Still, it's another area that spooked some market watchers, with the platform's income still more variable than some would like. 

In terms of specific products, Twitter says that its video ad formats continued to perform well - "primarily driven by strength in Video Website Card and In-Stream Video Ads".

"Total ad engagements increased 29%, resulting primarily from increased impressions driven by audience growth and improved clickthrough rates"

More engaged users equals more ad exposure, which equals more revenue potential. The signs are good, but there are still a few concerns of indeterminate impact, which are cause for some consternation for investors moving forward.

Overall, Twitter looks to be on the right track, with its focus on improved relevance and discovery now driving direct impacts in usage. The business side also looks to be righting itself over time, but the next update will likely be more indicative as to whether Twitter's efforts are truly paying off.