LDN - Business

Twitter trounces estimates as growth moves overseas

[April 25, 2018] By David Ingram and Munsif Vengattil

(Reuters) - Twitter Inc reported its second profitable quarter on Wednesday and topped Wall Street estimates for revenue and monthly active users, as advertisers in Asia and other markets outside the United States embraced its video ads.

Daily active users (DAU) grew 10 percent year-over-year while overall monthly user numbers rose 3 percent to 336 million, just above a forecast of 334 million, sending the company's shares as much as 10 percent higher.

U.S. President Donald Trump has kept the San Francisco-based service in the headlines domestically but growth has been faster abroad as Twitter has tried to grow its user base and ad business.

International sales accounted for 48 percent of revenue, growing 53 percent year-over-year, compared with 2 percent in the United States. Total revenue rose 21 percent.

Twitter said it added 5 million people outside the United States and 1 million people inside its home market, compared with the fourth quarter, with the company pointing to strong growth in Asia.

"DAU continued its double digit (growth) against tougher numbers from a year ago meaning they are not just benefiting from easy year ago results but rather benefiting based on their initiatives," said Chaim Siegel, analyst at Elazar Advisors.

Known for short messages, Twitter has paid to develop live shows and broadcast live events, using videos to get people to spend more time on the service and to sell video ads to marketers. Videos accounted for more than half of ad revenue in the quarter.

The social media sector is under intense pressure, however, from lawmakers around the globe for inflaming political debates, allowing abusive language and failing to safeguard personal data.

While there have been few signs that users have abandoned social media, companies like Twitter and Facebook face the prospect of costs rising as lawmakers seek new regulations to avoid abuse and misuse of their sites.

Twitter said it expected to increase its workforce by 10 percent to 15 percent in 2018 as it hires to improve the "health" of discussions on Twitter and meet other priorities.

[to top of second column]

People holding mobile phones are silhouetted against a backdrop projected with the Twitter logo in this illustration picture taken in Warsaw, Poland, September 27, 2013. REUTERS/Kacper Pempel/File Photo - RC1BBCB80150

Revenue growth for the remainder of 2018 will be similar to the slower rates of 2016, the company said, adding that second-half growth would face difficult comparisons to a strong performance in late 2017.

Up to Tuesday's close, Twitter shares had risen 26.9 percent this year, compared with a 1.5 percent decline in the S&P 500 Index <.SPX>.

The fourth quarter of last year was Twitter's first profitable one, and the company reiterated that it expects to be profitable for the full year in 2018.

First-quarter expenses not including stock-based compensation rose 10 percent. Twitter, however, has been cutting stock-based compensation, and total expenses were flat as a result. The company said it saw a $21 million tax benefit from December's U.S. tax overhaul.

Total revenue rose to $664.9 million, beating analysts' expectations of $607.6 million, according to Thomson Reuters I/B/E/S. Ad revenue was $575 million, beating expectations of $523.1 million.

Twitter swung to a net profit of $61 million, or 8 cents per share, in the first quarter, from a loss of $61.6 million, or 9 cents per share, a year earlier.

Excluding items, the company earned 16 cents per share.

Analysts on average had expected 12 cents per share.

(Reporting by David Ingram in San Francisco and Munsif Vengattil in Bengaluru; Editing by Peter Henderson and Lisa Shumaker)

Back to top