Twitter tops estimates on revenue, user count jumps to 134 mn; shares surge

Twitter Inc. topped first-quarter sales projections and reported strong user growth, bolstered by changes to its social-media service that are drawing a wider audience of consumers and advertisers. The shares surged.

The San Francisco-based company reported $787 million in revenue, an 18 per cent increase from the year-earlier period. Analysts, on average, estimated $775 million, according to data compiled by Bloomberg. The microblogging site also posted an increase in monetizable daily active users to 134 million, beating analyst predictions for about 128.4 million. That compares with 126 million in the fourth quarter.

Twitter shifted focus to daily users for the first time in the December quarter, arguing that it’s a more meaningful metric than monthly visitors because the company aims to drive people to the service every day. Chief Executive Officer Jack Dorsey has been escalating efforts to rid the site of toxic content amid heightened concerns that social media companies have failed to curb the exploitation of personal data, election meddling and hateful posts. Having long been criticized for relying on users to report abuse, the company recently said some 38 per cent of abusive content is now being found through technology and flagged for human review, up from none last year.

“We are taking a more proactive approach to reducing abuse and its effects on Twitter,” Dorsey said Tuesday in a statement. “We are reducing the burden on victims and, where possible, taking action before abuse is reported."

Twitter rose as much as 10 per cent to $37.99 in premarket trading in New York.

Monthly active users were 330 million in the first quarter, Twitter said. That was up from 321 million in the previous quarter, but marked a decline from the 336 million in the year-earlier period. That number has been decreasing year over year for several quarters, and Twitter told investors in 2018 that the metric would likely continue to drop for some time as it removes spam and suspicious accounts. Twitter said this is the last time that it will disclose monthly active users.

The company said it expects second-quarter revenue to be $770 million to $830 million - a wide forecast range with a midpoint of $800 million, lower than analysts’ average sales estimate of $819.2 million.

Twitter, which has a history of being slow to make changes to its service, has recently increased the pace of new product introductions. Last month it opened access to its prototype app, called twttr, to test new ideas and get feedback. The company is also rolling out a Snapchat-like camera feature that lets users post videos or photos in a swipe. The prototype app and iterations are part of the company’s efforts to make Twitter easier to use and feel more like a chat service, with fluid conversations.

Twitter’s stock is up 20 per cent so far this year, outperforming the broader market but lagging behind social media peers. Facebook has climbed more than 38 percent in 2019, while Snap Inc. has more than doubled.

"The nervousness is that a lot of social media companies are facing regulatory pressure and investors don’t quite know how to think about how that might translate into the longer-term," said James Cordwell, an analyst at Atlantic Equities. "Investors are very cognizant of the investments we’ve seen at Facebook to try and get ahead of its regulatory issues, and I think people are not quite sure what that means for Twitter."

Net income in the first quarter rose to $190.8 million, or 25 cents a share, from $61 million, or 8 cents, a year earlier. Profit excluding certain items was 37 cents a share, compared with the average analyst estimate of 15 cents. In last year’s first quarter, revenue was $665 million.
 

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