Coverage: Twitter earnings exceed expectations

It seems that the questions about Twitter have been answered, at least for this quarter. The social media site posted its second straight quarter of profit.

Inc had the details in this story by Jeremy Quittner:

Twitter reported revenue of $312 million for the second quarter, ended June 30, an increase of 124 percent compared to the same quarter a year earlier. However, the company also reported a net loss of $145 million, nearly a quadrupling of the $42 million net loss it reported in the same quarter a year earlier.

Monthly active users increased 12 percent quarter over quarter to 271 million, compared to a 6 percent increase in the first quarter, and a four percent increase in the fourth quarter 2013.

In the second quarter, advertising sales, which makes up the majority of Twitter’s revenues, increased 129 percent to $277 million year over year, with mobile ads comprising 81 percent of the total, Twitter reported. Meanwhile advertising per 1,000 timeline views, the company’s metric for gauging ad sales, doubled to $1.60 compared to the second quarter in 2013.

Twitter’s first quarter financials disappointed investors and analysts this spring due to the flatness of its new user growth. It posted a loss of $132 million in the first quarter, compared to a loss of $27 million in the same quarter a year earlier.

Yoree Koh’s story in The Wall Street Journal said that Twitter quieted the doubters:

Twitter Inc. on Tuesday quieted its doubters, at least for now, over its ability to jump-start shrinking user growth in the shadow of larger rival Facebook Inc.

The San Francisco social-media company posted strong results across the board in the second quarter, reversing its fortunes from three months earlier, when it sparked concerns that its popularity had peaked. Shares surged 29% after hours to $49.62, topping their first-day closing price of $44.90.

Most important to investors, Twitter showed signs its growing pains may be easing. The company reported its second straight quarter of accelerating user growth, adding 16 million, or 6.3%, more users world-wide in the quarter who logged in at least once a month.

“We made progress on multiple fronts across the business, and our financial performance was truly exceptional,” said Chief Executive Dick Costolo on a call with analysts.

Like Facebook, Twitter is reaping the benefits of consumers’ shift to mobile—and the advertising dollars that follow. The company’s revenue more than doubled to $312.2 million as it rolled out new types of mobile ads, which now make up about 81% of total ad sales.

The New York Times reporter Vindu Goel said that the World Cup was a particular bright spot for the social media site:

The World Cup had a second winner: Twitter.

The social networking company reported strong growth in the second quarter, driven in part by heavy use of the service by soccer fans around the world during the monthlong tournament, which spanned June and July.

Twitter’s results far exceeded Wall Street’s expectations, and the company’s shares rose about 29 percent in after-hours trading.

“During the World Cup, we delivered the kind of events experience that I’ve wanted to see from us for some time,” Dick Costolo, Twitter’s chief executive, said in a conference call with analysts. The service was tailored to each game and each country’s fans, giving a more personalized experience than new users have typically encountered in the past.

Revenue soared 124 percent during the quarter and the average number of people using the microblogging service in its June quarter was up 6 percent from its March quarter.

Victor Luckerson’s story in Time pointed out that many had already decided that Twitter wasn’t going to be profitable:

Pundits have been writing Twitter’s eulogy for months as its user growth slowed in the last year and the company has regularly posted losses. But the latest report shows that Twitter’s plan to make its platform more user-friendly may be paying off. Features such as a more Facebook-like profile pages and a mute button that lets users remove certain users’ tweets from their timelines are aimed at making Twitter novices feel less overwhelmed by the deluge of messages.

The World Cup, which became the most tweeted-about sporting event in Twitter history, was also likely a big boost for the social network during the quarter. Twitter organized conversations around individual matches, featured real-time score updates and attached countries’ flags to hashtags representing each team. “We made progress on multiple fronts across the business and our financial performance was truly exceptional,” CEO Dick Costolo said in a conference call with investors.

A negative point for the quarter were timeline views. At 640 per monthly active user, they were down 7% year-over-year. In the U.S., views are also down from the first quarter. Twitter regularly attributes these drops to changes in its interface that make it easier for users to see interesting tweets without scrolling through a deluge of messages. Also, some of the content on Twitter’s specially curated World Cup pages didn’t count toward the metric.

Twitter’s future is looking bright these days as revenue increases and more people turn to the site to share information. Two quarters of positive results are likely to make investors feel better about prospects, but it’s really not a long-term track record of growth. But it’s a start.