Shares in Twitter Inc. rose slightly in after-hours trading after the microblogging service beat analysts’ predictions for its fourth-quarter earnings but warned of increasing expenses in the year ahead.

For the quarter ended Dec. 31, Twitter reported a profit of $222 million, or 38 cents a share on revenue of $1.29 billion, up 28% from a year ago. Analysts had predicted a profit of 31 cents a share on revenue of $1.18 billion. Advertising revenue came in at $1.15 billion, up 31% over the same quarter in 2019, while ad engagement grew 35%.

Twitter’s growth in the quarter was driven by increased user numbers during the U.S. presidential election. Monetizable daily active users, Twitter’s preferred metric, came in at 192 million, up 27% year over year and up 5 million from the third quarter. The number fell below the 193.5 million predicted by analysts.

For the calendar year, Twitter reported revenue rose 7% from 2019, to $3.72 billion, with a net loss of $1.14 billion, or $1.44 per share.

“TWTR delivered strong Q420 financial results – with advertising revenues showing meaningful acceleration across all regions as both brand and direct response rebounded in the quarter,” Pivotal Research Group analyst Michael Levine wrote in a note to clients. “Overall mDAU was slightly lower than the street expected internationally, but particularly given the continued sequential growth in the U.S. and fears of user growth imploding post the Trump loss, was still a great result.”

For the first quarter of 2021, Twitter predicted revenue of between $940 million and $1.04 billion with a net loss of between $50 million and break event. Twitter did warn that it expected total costs and expenses to grow by 25% or more in the year ahead from an expected increase in headcount of more that 20% and increased capital expenditures, including a final buildout of a new data center.

Chief Executive Officer Jack Dorsey addressed concerns that usage rates may be lower in the first quarter on an earnings call following the boost to user numbers during the presidential election.

“We are a platform that is obviously much larger than any one topic or any one account,” Dorsey said. “80% of our audience is outside the United States and we have more than 50 accounts with over 25 million followers. Conversations on Twitter every day are based on what’s happening in the world and we have proven in the past few years that if we do the work to serve the public conversation, our daily audience grows.”

Dorsey added that the mDAU growth rate through to the end of January “was above the historical average for the last four years” and that Twitter expected to see a 20% increase in mDUA in the first quarter.

Twitter shares rose 3% in after-hours trading.

Image: Shawn Campbell/Flickr