Twitter Inc Q1 Profit, Earnings Beat Estimates

by Ike Obudulu Posted on April 23rd, 2019

Micro-blogging site Twitter Inc. (TWTR) on Tuesday reported a surge in its first-quarter profit. Both earnings and revenues beat analysts’ estimates, sending shares up by 6 percent in the pre-market trading.

Average monthly active users or MAU were 330 million in the first-quarter, down from 336 million in the previous year, but up from 321 million in the prior quarter.

Average monetizable daily active users or mDAU were 134 million in the first-quarter, an increase from 120 million last year, and also up from 126 million in the preceding quarter.

This quarter marked the last in which the company will report the MAU metric. Instead, it will only report mDAU metric, saying it would better reflect its audience.

Twitter’s first-quarter earnings rose to $190.80 million or $0.25 per share from $61.00 million or $0.08 per share last year.

Excluding the impact of a tax benefit of $124 million related to the establishment of a deferred tax asset for corporate structuring for certain geographies, earnings were $66.38 million or $0.09 per share for the latest-quarter.

Adjusted earnings per share were $0.37 compared to $0.16 last year. Analysts polled by Thomson Reuters expected the company to report earnings of $0.15 per share for the quarter. Analysts’ estimates typically exclude special items.

Revenue for the period stood at $787 million, an increase of 18% year-over-year or 20% on a constant currency basis. Revenue, excluding foreign exchange effect, for the latest-quarter was $798 million. Analysts expected revenue of $775.23 million.

Advertising revenue totaled $679 million, an increase of 18% year-over-year or 20% on a constant currency basis.

For the second-quarter, the company expects operating income of $35 million – $70 million, and total revenue of $770 million – $830 million.

Twitter shares surge

Shares in Twitter, TWTR, have surged more than 17% after the firm reported rising numbers of users and higher revenues, days after its chief executive promised to improve how it tackles online abuse.

The company’s revenue rose to $787m (£605m) in the first quarter, up 18% from a year earlier.

The number of daily active users rose 11% to 134 million.

The results prompted criticism from US President Donald Trump, who accused the platform of political “discrimination”.

The firm’s founder, Jack Dorsey, has said he regrets that Twitter’s design encourages “outrage”.

He told a TED conference in Vancouver last week that he was ready to make changes to the way the site operates to try to make it more conversational and to discourage abuse and misinformation.

Social media companies are coming under increased pressure to police the content of their sites more closely, following scandals over mental health, user privacy, hate speech and political campaigning.

Announcing Twitter’s latest results, Mr Dorsey said: “We are taking a more proactive approach to reducing abuse and its effects on Twitter.”

The firm was trying to reduce the burden on victims by using artificial intelligence to spot abusive tweets and to take them down before they were reported, he said.

“We’re also continuing our work to make Twitter more conversational via the launch of our public prototype app (twttr), with the end goal of making conversation on Twitter feel faster, more fluid and more fun,” said Mr Dorsey.

Hindsight

Last week at the TED conference, Mr Dorsey said the firm might demote likes and follows, adding that in hindsight he would not have designed the platform to highlight these.

“We’ve seen harassment, manipulation, misinformation which are dynamics we did not expect 13 years ago when we founded the company,” he told TED curator Chris Anderson.

Over the course of last year the platform’s monthly users fell from 336 million to 321 million, which Twitter said was due to a purge of abusive and fake accounts.

But in the most recent quarter monthly users rose again to 330 million.

Trump criticism

On Tuesday, President Trump, who often uses Twitter to make policy announcements, said he agreed with comments that “The best thing ever to happen to Twitter is Donald Trump”.

But he added: “They don’t treat me well as a Republican. Very discriminatory,” and called for “more, and fairer” social media companies.

Twitter said in response: “We enforce the Twitter rules dispassionately and equally for all users, regardless of their background or political affiliation. We are constantly working to improve our systems and will continue to be transparent in our efforts.”

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