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(NYSE: TWTR) reported Q4 earnings on Thursday. While the company beat analyst expectations, it fell way short on new user activations. The social network had 288 million monthly active users in the quarter, compared to some analyst estimates for 290 million or more. That means Twitter added just four million users during the quarter, or small increase of 1.4% from the previous quarter, its slowest user growth rate to date.

twitter users q4

Twitter’s executives tried the blame game and pin the sluggish growth on an “BUG” in Apple’s iOS 8 update, which is said to have cost Twitter four million users during the quarter. CEO Dick Costolo said the company moved quickly to fix the issue, but it “wasn’t a one size fits all fix.”

It’s hard to value the loss of 4 million new users and it likely would not have made a huge impact on revenue. Still adding in the 4 million lost users due to the claimed “BUG” it would have brought new users for the quarter to 13 million still way short of the 16 million new users added in the previous quarters.

More important than user growth, however, is Twitter’s ability to make money on its users (logged-in or not, on its app or a third party’s). To that end, Twitter’s financial performance was outstanding.

Earnings were double expectations, coming in at $0.12 per share versus expectations of $0.06. Revenue came in at $479 million compared to expectations of $453.1 million.

twitter-revenue-q4

Growing EBITDA

One of the most surprising metrics from Twitter’s fourth-quarter earnings report is the 12-percentage-point increase year over year in EBITDA margin. The company generated $141 million in adjusted EBITDA for the quarter, representing 30% of total revenue. This factor is largely responsible for the significant earnings beat the company posted.

While Twitter typically sees higher than average EBITDA margins in the fourth quarter due to higher ad demand, it expects the trend to continue into 2015. For the first quarter, Twitter guided for revenue of $440 million to $450 million (slightly below analysts’ expectations) and EBITDA of $89 million to $94 million.

Investors should pay close attention to EBITDA margin. The Growing EBITDA margin is a sign that Twitter is generating more revenue than it can invest in its business. Outperming in revenue compared to expectations is the likely reason why EBITDA margin expanded so much. It’s also the reason we’ll like see continued partnerships grow in the near future.