Twitter has released its latest performance report, showing an increase in active users, but a more concerning slow down in ad revenue growth.

First, on users - Twitter says that monetizable daily active users (mDAU) increased 17% year-over-year to 145 million for the quarter.

Twitter's mDAU stat, which it first introduced in its Q4 '18 report, is, it says, a more accurate measure of actual platform performance because it only counts the users to whom Twitter can show ads, as opposed to a more hollow, overall user count.

How you view that comes down to perspective - on one hand, reporting mDAU, as opposed to monthly active or daily active users, should better represent the platform's real reach for advertisers, which is likely a more accountable data point for market analysts. On the other, by creating its own metric, Twitter avoids direct comparison to other platforms, like Facebook and Instagram, which have far higher active user counts.

Even using these stats, Twitter's mDAU number isn't that impressive - 145 million daily actives puts it below Snapchat (210m DAU), Instagram (500m) and of course, Facebook (1.6b). But it's not a direct comparison, because Twitter's sharing 'mDAU' as opposed to 'DAU'. How many of the users on those other platforms are actually 'monetizable', we don't know, which either clarifies of clouds Twitter's performance, depending on how you look at it.

Either way, Twitter is adding engaged users, which, on balance, seems like a good thing.

But that's only half the story of this update - over on the revenue side, Twitter has a problem.

At first look, that's a good result - Twitter is growing its revenue year-over-year, and it's performing better over time.

The problem, however, is that Twitter's revenue growth slowed significantly in Q3 - you can see this better reflected in this chart from Marketing Land.      

That was well below market expectations, and Twitter stock has trended down as a result. 

Twitter says that the problems here relate to "revenue product issues and greater-than-expected seasonality".

On product issues, Twitter says that:

"In Q3 we discovered, and took steps to remediate, bugs that primarily affected our legacy Mobile Application Promotion (MAP) product, impacting our ability to target ads and share data with measurement and ad partners. We also discovered that certain personalization and data settings were not operating as expected. We believe that, in aggregate, these issues reduced year-over-year revenue growth by 3 or more points in Q3."

Remember how, earlier this month, Twitter issued an apology for using personal information which had been provided by users for account security purposes, in order then match those people with more relevant ads? That's part of its faulty MAP targeting system. Twitter has stopped such practices - and in fact, did so back in August, when the problem was first discovered. But that's also left it with fewer options for ad targeting. And it doesn't have a replacement system just yet.   

What's more, Twitter has also warned that without an alternate process, the full impacts of this issue will not be clear until Q4.

As per CNBC:

"Twitter said the issues around MAP and the changed approach to personalization and data settings resulted in three or more points of impact in the third quarter, and that they’ll likely result in 4 or more points of reduced year-of-year-growth for total revenue in the fourth quarter."

That means that Twitter's performance will be slowed by the same in the next report, which is clearly not what the market wants to hear. Long term, this should mean that its a problem which Twitter can correct. But in the immediate term, revenue will be slowed to some degree.

Also, have you noticed more ads in your Twitter feed of late? Twitter recently upped its ad load, potentially in an effort to replace the revenue it's losing as a result of this error.

So, more users, based on mDAU count, and less than expected revenue - though Twitter is still growing on both fronts.

In its further reportage, Twitter's also touted its improvements in platform safety, with its abuse detection systems now removing more tweets before anybody sees them.

"We also continued our work to proactively reduce abuse on Twitter, improving our machine-learning models in Q3 to detect potential policy violations and sending more flagged Tweets to agents for review. This has resulted in Twitter taking down more abusive content, doing so more proactively and faster than before. Of the Tweets taken down for abusive content in Q3, more than 50% of them were removed without a bystander or first-person report, up from 43% in Q2 and 38% in Q1."

This is actually an area where Twitter probably doesn't get enough credit - Twitter has long been known as a hive of trolls and abuse, which users have been calling on the platform to take action against for years. In recent months, Twitter has done so, and it does seem to be having an impact, but the outrage has largely shifted to President Trump and why Twitter won't take down his tweets.

The numbers here show that Twitter is indeed making progress, which is a significant positive. And while reducing abuse may not get as much coverage as outrage over the opposite, it is something that Twitter should be praised for, as it's given this element focus, even to the detriment over overall usage or engagement stats.  

But the market, of course, won't care about that. The bigger question now will be whether Twitter can get its ad revenue performance back on track, with the corrections to its systems set to take effect moving forward.

In this respect, it's a pretty middle-ground update from Jack Dorsey and Co. Tweet engagement is up, revenue is down - but Twitter has attributed that to a key problem which is fixable. Q4, based on this information, looks like it could also be a down report, but Twitter remains on track in key areas, and should be able to maintain its momentum in 2020.