Twitter surprises with revenue turnaround, shares surge

February 9, 2018

NEW YORK (DNA): Twitter Inc on Thursday delivered its first quarterly profit and an unexpected return to revenue growth helped by expansion outside the United States, pushing shares in the social network to more than two-year highs.

Overall revenue rose 2 percent in the fourth quarter from a year earlier, handily beating analyst estimates that called for a fourth straight quarter of declines.

Twitter’s previous inability to turn a profit or log consistent revenue growth had confounded investors given its uitous media presence and popularity among celebrities, athletes, and politicians such as US President Donald Trump.

Revenue from outside the US rose 17 percent, making up for an 8 percent decline in US sales. Revenue from Japan rose 34 percent to $106 million, with Chief Financial Officer Ned Segal saying Chinese exporters were strong advertisers abroad.

Shares closed 12.1 percent higher at $30.18 after hitting a high of $35.00. Twitter was founded in 2006 and went public in 2013 at $26 a share. which has doubled the number of characters allowed per tweet and made other changes to attract users — said the number of daily active users (DAUs) rose 12 percent.

“Advertisers want eyeballs, so anything Twitter can do to maximize the number of people accessing the platform daily for a good chunk of time allows for better ROI,” or return on investment, analyst Erna Alfred Liousas of Forrester Research said.

Monthly active users (MAUs) grew more slowly — up 4 percent from a year earlier to 330 million. That was flat from the third quarter, which the company blamed in part on seasonal weakness and its purge of fake and spam accounts.

Twitter said revenue was helped by using data to make the targeting of ads more individualized, a process known as machine learning. That raised clickthrough rates — or the ratio of number of users who click on a specific ad to those who view it.

The company also cited higher video ad sales and redesigned ad formats as helping to grow revenue. “They are showing the right tweets to the right people at the right time, and as you do that, not only do you drive consumers to use Twitter more, but you attract more and more advertisers to want to be on the platform,” analyst Richard Greenfield of BTIG Research said.

Overall revenue was $731.6 million, beating Wall Street’s target of $686.1 million, according to Thomson Reuters. The company reported $87 million in data licensing and other non-advertising revenue, up 10 percent from a year earlier. Ad revenue rose 1 percent to $644 million.

Twitter reported a net profit of $91.1 million (12 cents per share) compared to a loss of $167.re) a year earlier. Adjusted profit was 19 cents per share, topping analyst expectations of 14 cents per share.