Date
13 November 2018
Twitter said overall revenue rose 2 percent in the fourth quarter from a year earlier, handily beating analyst estimates. Photo: Bloomberg
Twitter said overall revenue rose 2 percent in the fourth quarter from a year earlier, handily beating analyst estimates. Photo: Bloomberg

Twitter shares surge on revenue turnaround surprise

Twitter Inc. delivered its first quarterly profit and an unexpected return to revenue growth, helped by expansion outside the United States, Reuters reports.

The results pushed the shares in the social network to more than two-year highs on Thursday.

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, the news agency said.

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 US$106 million.

Chief financial officer Ned Segal said Chinese exporters were strong advertisers abroad.

Shares closed 12.1 percent higher at US$30.18 after hitting a high of US$35.00. Twitter was founded in 2006 and went public in 2013 at US$26 a share.

Twitter, which has doubled the number of characters allowed per tweet and made other changes to attract users, said the number of daily active users rose 12 percent.

Monthly active users 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.

The company 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 users who click on a specific ad to the number that view it.

The company also cited higher video ad sales and redesigned ad formats as helping to grow revenue.

In the past year, chief executive Jack Dorsey focused on tweaking the product he co-founded to attract users, including by trying to limit user harassment.

Twitter also struck deals with media companies for live news and entertainment shows.

The company reported a net profit of US$91.1 million, or 12 cents per share, compared with a loss of US$167.1 million, or 23 cents per share, a year earlier.

It said it expects to be “GAAP profitable for the full year 2018”, referring to generally accepted accounting principles.

But analysts were split on what lies ahead for the company.

James Cakmak, of Monness, Crespi, Hardt & Co., said in a client note that Twitter needs to attract more new users, adding that it is trading at a “lofty premium” given expected earnings. 

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RC/CG

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