Twitter records revenue rise and surprise user growth
Efforts to improve policing and delete spam accounts attract users and ad revenue
Analysts were cheered that Twitter had turned a corner in terms of monthly user growth and better appealing to advertisers. Photograph: Dado Ruvic/Reuters
Twitter posted better-than-expected quarterly revenue and a surprise rise in monthly active users, showing its efforts to delete spam accounts and better police posts were paying off by attracting more users and ad spending.
Shares surged nearly 10 per cent shortly after the first-quarter earnings announcement in premarket trade.
It was the company’s last quarter of disclosing its monthly active user (MAU) count, and Twitter from now on will only provide its “monetisable” daily active users, a metric it created to measure people exposed to advertising on a daily basis.
Analysts were encouraged by signs Twitter had turned a corner in terms of monthly user growth and better appealing to advertisers, but said that the new user metric could make comparisons between Twitter and social media rivals more difficult.
“It looks like Twitter is on path to sustainable revenue growth and accelerated profit expansion, driven by improvements to the user experience and tools enabling direct response and search advertising,” said analyst Michael Pachter at Wedbush Securities.
“But people are not impressed with a made-up metric and their reluctance to give us actual users. I don’t think the stock can get out of its own way until they come clean and report the same metrics everyone else does.”
The company also forecast revenue for the next quarter largely below analyst estimates, and said that it would need to continue to spend heavily on cleaning up Twitter as well as new ad products and other improvements.
“We are now removing 2.5x more Tweets that share personal information and 38 per cent of abusive Tweets that are taken down every week are being proactively detected by machine learning models,” chief executive Jack Dorsey said in a statement.
The company’s quarterly MAU count rose nine million to reach 330 million from the previous quarter, while analysts on average had expected 318.8 million, which would have been a loss of 2.2 million users, according to IBES data from Refinitiv.
Monetisable daily active users or mDAU rose to 134 million in the first quarter, up 12 per cent from a year ago, Twitter said.
For the first quarter of 2019, Twitter’s revenue rose 18 per cent from a year ago to $787 million, topping Wall Street expectations of $776.1 million.
Revenue was boosted by ad sales that also jumped 18 percent to $679 million. In the United States, ad revenue rose by 26 per cent year-on-year, thanks in part to video ads.
Twitter forecast current quarter revenue largely below Wall Street targets. The company expects revenue of between $770 million and $830 million, compared with $819.5 million estimated by analysts polled by Refinitiv.
Total operating expense including cost of revenue rose by 18 per cent to $693 million from the first quarter a year ago.
The company reiterated that operating expenses would grow about 20 per cent in 2019 to support spending it had outlined earlier this year.
Twitter reported quarterly profit of $191 million, or 25 cents a share, compared with $61 million, or 8 cents per share, a year earlier. Excluding a $124.4 million tax benefit, the company earned 9 cents per share. – Reuters