Twitter posts better-than-expected second-quarter revenue, sees increase in daily users

Twitter Inc (NYSE:TWTR) shares rose on Friday as the social media group posted better-than-expected second-quarter revenue and revealed an increase in daily users who see advertisements on its site.

However, the company said its third-quarter revenue would be below consensus estimates, adding that growth would underperform the first two quarters, partly due to the ending of some older advertising formats.

Twitter reported a second-quarter profit of $1.1 billion, or $1.43 per share, compared with $100 million, or 13 cents per share, a year earlier, boosted by an income tax benefit of over $1 billion related to corporate restructuring.

The group’s quarterly revenue rose by 18% year-on-year to $841 million, beating analysts’ forecasts of $829 million, as total advertising revenue rose by 21% to $727 million.

However, it forecast total revenue for the third quarter to be between $815 million and $875 million., below current consensus expectations for about $869.3 million.

User calculations switched to daily

The group reported a rise in monthly active users in the first quarter, fueling speculation that it was returning to growth after a period of decline, but has since changed the way it calculates.

In the second quarter, Twitter switched from reporting monthly active users (MAU) to using monetizable daily active usage (mDAU) – a metric it created to measure only those users exposed on a daily basis to advertising on its site and excluding those who access Twitter via aggregating sites like TweetDeck.

The company said mDAU in the second quarter was 139 million, above analyst expectations for 135 million.

The number of users on Twitter has been in focus since the social media platform started deleting millions of spam or fake accounts that had been promoting hate speech or spreading political misinformation, contributing to a decline in monthly users throughout 2018.

In a statement with the second quarter numbers, Twitter’s Chief Executive Officer Jack Dorsey said the platform saw an 18% drop in reports of spam or suspicious behavior.

In New York trading on Friday, Twitter shares were 9% higher at $41.58.

Story by ProactiveInvestors