Twitter Inc. soared the most since its market debut in 2013 after it posted the first revenue growth in four quarters, driven by improvements to its app and added video content that are persuading advertisers to boost spending.
Selina Wang of Bloomberg News had the story:
The company topped analysts’ average sales estimates in the fourth quarter and for the first time reported a real profit, a milestone in Chief Executive Officer Jack Dorsey’s turnaround effort. Monthly active users were little changed from the prior quarter at 330 million, a lower-than-projected total that the company attributed in part to stepped-up efforts to reduce spam, malicious activity and fake accounts.
The report adds to positive momentum in recent months for Twitter, which spent the second half of 2017 explaining how Russian-linked accounts — including automated bots — influenced content on its platform around the 2016 U.S. presidential election. Dorsey, who also runs Square Inc., has been working to broaden Twitter from a microblogging site into a destination for users to see “what’s happening now” by striking live-streaming partnerships with news outlets and sports leagues.
After aggressively slashing spending over the past few years, Twitter will invest in products this year that increase audience engagement, which will causes expenses to “more closely align with revenues,” Chief Financial Officer Ned Segal said during a conference call.
Michelle Castillo of CNBC.com reported that active Twitter users also rose 12 percent:
Though monthly active users grew only 4 percent year-over-year, daily active users went up 12 percent. (The company does not elaborate on exactly how many users use its platform each day.) Twitter said MAUs were lower due to a number of reasons including a crackdown on fake accounts and malicious activity, which made up less than 5 percent of its MAUs. It also said Q4 was traditionally a weak season for the company, and noted a change to Safari’s third-party app integration impacting about 2 million MAUs.
Twitter said total revenue increased 2 percent from a year earlier, and advertising revenue increased 7 percent year over year. It emphasized that 2018 will be an investment year, with the company putting money back into improving “information quality” by removing malicious content, spam, fake accounts as well as making it easier to identify credible accounts. It also will put money toward driving engagement and growing its sales team.
Despite hitting profitability, Twitter will soon have to navigate its future business without Chief Operating Officer Anthony Noto. The executive announced in January he would be taking over as CEO of finance startup SoFi beginning March 1.
Hayley Tsukayama of The Washington Post wrote about why Twitter is now profitable:
In the long-term, analysts said, it will be hard for Twitter to make significant gains against its competitors. Even with changes afoot at Facebook, which is struggling to balance how sponsored content and personal posts on its news feed, Twitter’s place in the ad market is unlikely to change soon.
There’s no indication that Twitter benefited from changes to Facebook’s algorithm, said Brian Wieser, an analyst from Pivotal Research who downgraded Twitter to a “sell” rating Thursday despite the strong quarter.
Twitter’s earnings follow better-than-expected earnings from Snapchat’s parent company Snap, which announced strong growth for users and revenue. The two companies have been competing fiercely for ad dollars.
