Monday 18 June 2018

Twitter shares soar as ad boost delivers first quarterly profit

Twitter said in a shareholder letter it had stepped up efforts to reduce spam and automated and fake accounts
Twitter said in a shareholder letter it had stepped up efforts to reduce spam and automated and fake accounts

David Ingram and Pushkala Aripaka

Twitter shares surged 25pc even before markets opened yesterday after the social network reported its first quarterly profit and better-than-expected revenue, helped by ads that better targeted users and sales growth outside the United States.

Investors shrugged off zero growth in Twitter users from a quarter earlier, which the company blamed in part on seasonal weakness and its purge of fake and spam accounts.

Twitter, headed by CEO and co-founder Jack Dorsey, said in a shareholder letter it had stepped up efforts to reduce spam and automated and fake accounts.

Shares traded at $33.70 pre-market and were set to open at their highest level since July 2015.

Twitter's previous inability to turn a profit had confounded investors given the company's ubiquitous presence in the media and popularity among celebrities, athletes and politicians such as US President Donald Trump.

In October Twitter had signalled it could turn a quarterly profit as it slashed expenses. Revenue and adjusted fourth-quarter profit both topped analysts' targets.

"The revenue number was up year-over-year for the first time in several quarters, which is a good sign," analyst Michael Pachter of Wedbush Securities said, adding that flat growth in monthly users was a warning sign.

Overall revenue rose 2pc year-over-year to $731.6m (€595m), the first increase since the fourth quarter of 2016, beating Wall Street's target of $686.1m, according to Thomson Reuters I/B/E/S.

US revenue fell 8pc from a year earlier, but sales elsewhere rose 17pc. Revenue from Japan was a particular strength, rising 34pc to $106m. Twitter said that revenue was helped by better ad targeting that raised clickthrough rates, or the likelihood users click on ads, and higher video ad sales.

The company also continued a push to grow its non-advertising revenue. It reported $87m in data licensing and other revenue, up 10pc from a year earlier, outpacing advertising revenue which rose 1pc to $644m.

Twitter reported a net profit of $91.1m, or 12 cents per share, compared to a loss of $167.1m, or 23 cents per share, a year earlier.

The company said it expects "to be GAAP profitable for the full year 2018," referring to generally accepted accounting principles.

Twitter reported 330 million monthly active users for the quarter, a 4pc increase from a year earlier but flat from the third quarter. (Reuters)

Irish Independent

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