Marketing communications platform Twitter Inc. on Wednesday reached a confidential settlement with investors that sued it in June over its alleged failure to disclose to them that it had been wrongly overstating its user growth rate, even as it publicly boasted of its progress in attracting more users.
Under the terms of the settlement, Twitter will pay $809.5 million in cash, Twitter said.
Twitter disclosed in February that it was under investigation by securities regulators for “previously-announced and ongoing” factors for its growth rate, citing that, in some prior quarters, it had included users who were “primarily passive” in its user count and did not do any actual tweet-tweeting. The overstating of the user base led Twitter to deny stock analyst expectations that it would be able to add monthly active users.
Facebook Inc. had been accused in the settlement papers as well, as it had allegedly made “misleading” statements about user growth back in February.
The New York Times first reported the settlement in a story that cited people briefed on the case.
In announcing the settlement, Twitter’s board unanimously approved it, and said it remains confident in the company’s “leadership” and its “audacious plan to help create a connected world.”
Details of the settlement were still being reviewed by Twitter, but the company will be issued a certificate of satisfaction at the discretion of the presiding judge, after there are settlement proceedings, according to the settlement agreement.