Twitter is attracting new users at a faster rate, suggesting its long-running efforts to tackle abuse and make its app easier to use are paying off.
In its second-quarter results, Twitter posted a 14 per cent year-on-year increase in its revenue-generating audience.
Average monetisable daily active users – a relatively new metric that has now become Twitter’s standard way of reporting its audience – rose from 122 million a year ago to 139 million in the three months to June.
That includes increases of 12 per cent in the US and 15 per cent in the rest of the world, exceeding Wall Street’s forecasts overall.
Momentum
That momentum helped to drive better than expected revenues of $841.4 million (€756.3 million), up 18 per cent year on year. Its US business showed particular improvements, growing sales by 24 per cent.
Jack Dorsey, Twitter’s chief executive, said in a statement on Friday that tackling abuse “remains our top priority”.
“Our focus was on ensuring that our rules, and how we enforce them, are easy to understand. We also continued our work to proactively identify and address malicious behaviour,” he said.
Net income jumped from $100.1 million (€90 million)a year ago to $1.1 billion (€988 million), thanks largely to a $1 billion (€898 million) income tax benefit. However, costs and expenses jumped by 21 per cent year on year to $766 million (€688 million), as it hikes its spending on what it calls the “health” of interactions on the service.
Twitter's stock rose by about 4 per cent in pre-market trading. Its improving results follow similarly strong showings from rivals Facebook and Snap earlier this week.
Despite Facebook’s regulatory challenges, its advertising business grew faster than expected in its second quarter, while Snapchat is attracting new users again at a faster clip after a sluggish 2018.
Twitter’s shares have already risen by almost a third so far this year, valuing the San Francisco-based company at more than $29 billion (€26 billion) as of Thursday’s close. The stock’s biggest driver in 2019 has been its first-quarter earnings report in April, which also beat Wall Street forecasts.
However, some more cautious analysts fear too much of its recent performance has been driven by users watching and responding to US president Donald Trump, who is a prolific user of the short-messaging platform. The run-up to the 2020 US election could be a new traffic driver, but it could also present new challenges as social media companies grapple with disinformation, bullying and other online abuses.
Revenues
For the third quarter, ending in September, Twitter said on Friday it expected revenues to be between $815-875 million (€732-786 million), compared with Wall Street’s current consensus of around $869 million (€781 million).
Last month, Twitter acquired a machine-learning start-up, Fabula AI, to help it detect network manipulation and make sure users see more interesting, relevant tweets.
Twitter is also looking to broaden its appeal in other areas such as sports. Earlier this week, Twitter announced it would expand its live video coverage of next year’s Olympics in Tokyo, thanks to a new deal with NBCUniversal, which holds broadcast rights to the games.
Jasmine Enberg, analyst at research group eMarketer, said the latest user growth “shows that Twitter users are sticking with the platform, and that should resonate with advertisers”. However, she added that Twitter had faced “negative user feedback” over a redesign of its website earlier this month, which could dent continued improvements. – Copyright The Financial Times Limited 2019
