Twitter revised down its user numbers for the second quarter from 328m to 326m © AFP
Shares in Twitter rose as much as 12 per cent in pre-market trading on Thursday after the messaging platform grew its userbase and beat expectations on revenue and earnings, raising hopes that it could reach profitability by the end of the year.
But Twitter was forced to go back and recalculate its monthly active user numbers, after it mistakenly included users of a service for third-party apps. The reduction worked out at about 1m to 2m users in each quarter. The most recent number reported for the second quarter was revised down from 328m to 326m.
Twitter forecast adjusted earnings before interest, tax, depreciation and amortisation at the top end of their guidance at $240m, which would make it profitable in the fourth quarter. The company made a net loss of $21m, narrowing from $103m in the same period the year before. Non-GAAP earnings per share were 10 cents, higher than the consensus forecast for 7 cents, and the 9 cents generated for the same period last year.
The San Francisco-based company reported revenue of $590m, compared with the average analyst estimate of $586.7m, on the back of sales of video and direct-response advertisements such as mobile app installs. Twitter’s top 100 advertisers globally spent 23 per cent more in the quarter, tempted by lower prices, better targeting and new advertising products.
The company also benefited from a significant increase in revenue generated by its data business. However, revenue still declined for the third consecutive quarter.
Jack Dorsey, co-founder and chief executive, said the company was proud of its efforts to bring people back to Twitter every day.
“It’s our job to help people stay informed about what’s happening in the world and what people are talking about, and we’re focused on making our service faster, easier to use, and more relevant to more people every day,” he said.
Investors have long worried that Twitter will not be able to grow its userbase, despite Mr Dorsey’s return to the company with a promise of a product turnround to make it more accessible to the masses.
Twitter said monthly average users were 330m, up from 326m in the last quarter and rising 4 per cent quarter on quarter. Daily active users grew 14 per cent year on year, the fourth consecutive quarter of double-digit growth; Twitter does not report the exact figures, only saying they make up less than half of the monthly figures.
Facebook, which reports earnings next week, has more than 2bn monthly active users, while Snap, the owner of Snapchat, only reports daily active users, at 173m.
Twitter has come under pressure from the US Congress during the quarter to investigate whether Russian actors used the platform to try to influence the 2016 US election. Alongside rivals Facebook and Google, Twitter is due to appear before a hearing next week.
The messaging platform announced on Tuesday that it would bring in measures to make advertising more transparent. Designed to better monitor adverts on political issues, it would mean that all marketers have their adverts published on a central site.
Twitter has also been taking action to improve how it tackles cyber bullying, hate speech and harassment on the platform, publishing a calendar that details its plans to update rules on violent groups, hateful imagery and unwanted sexual advances.
Shares in Twitter, which have fallen 5 per cent in the past year, rose more than 10.2 per cent to $17.14 in pre-market trading.