Twitter shares soar on forecast-beating results
Social media platform swings to a $789m profit
Twitter’s revenue rose 29% to $758 million, ahead of the $700 million analysts had projected. Photograph: Reuters
Twitter shares rose in pre-market trading as the messaging platform beat Wall Street’s expectations for earnings and revenue.
Shares were up as much as 10 per cent before the opening bell, even as the company reported another drop in monthly users in the third quarter amid a push to purge spam and abuse on its service.
Twitter swung to net income of $789 million (€691 million), or $1.02 a share, from a loss of $21 million a year ago. Adjusted for some items, earnings of 21 cents a share beat Wall Street’s forecast of 14 cents, according to S&P Global Market Intelligence.
Revenue rose 29 per cent to $758 million, ahead of the $700 million analysts had projected. Advertising revenue was up 29 per cent to $650 million.
Twitter, like Facebook, has come under pressure to clean up its platform even as it relies on user growth to drive its advertising business. The company has ejected millions of accounts in recent months. While Twitter has acknowledged that it has had to divert resources to cope with the challenge, executives say the cost is necessary to support the health of its platform over the long term.
The number of monthly active users fell to 326 million in the third quarter, down 9 million from the second quarter and below the 330 million analysts polled by FactSet had expected. The user number was down 4 million from the same quarter a year ago.
Factors in decline
Twitter said the decline was due to a number of factors, including “decisions we have made to prioritise the health of the platform”, the impact of new European privacy rules and a technical issue that resulted in fewer notifications sent out.
Daily active users, a metric Twitter has been promoting more recently, rose 9 per cent in the quarter, a slowdown from 11 per cent in the second quarter and 14 per cent a year ago.
Twitter forecast adjusted earnings before interest, tax, depreciation and amortisation of between $320 million and $340 million in the fourth quarter, with an adjusted ebitda margin of 39 per cent to 40 per cent – Copyright The Financial Times Limited 2018