Twitter easily beat Wall Street’s revenue and profit estimates, sending its shares soaring 17% at one stage, as higher ad sales offset a drop in monthly users as the site removed accounts suspected of abuse.
Quarterly advertising revenue jumped 29% to $650m from a year earlier, boosted by ad sales on broadcasts from media companies including Live Nation Entertainment, Major League Baseball, and Major League Soccer.
That contributed to a similar jump in overall revenue from a year earlier to $758m, beating analysts’ average estimate of $702.6m, according to Refinitiv data. It played down a larger-than-expected decline in monthly active users, saying it was focusing on removing accounts used for disinformation, hate speech, and other abuse to solidify a base of high-quality users who are attractive to advertisers.
Twitter has deleted millions of suspicious accounts after it and other social media services were used in misinformation campaigns attempting to influence voters in the 2016 US presidential race and other elections. Last week it disclosed it had removed some 10 million tweets.
Twitter said in a conference call that the cleanup effort, which it launched in March and calls a “health” initiative, will allow it to grow revenue faster than users for a sustained period.
“Health ultimately is a growth factor for the service, and we do believe that’s important not just for the overall experience, but in terms of making Twitter long-term enduring as well,” chief executive Jack Dorsey said during the call.
Monthly active users fell to 326 million in the third quarter, below the average analyst forecast of 331.5 million, according to FactSet. Twitter said it expects them to fall below 326 million in the current quarter, missing the average forecast of 333.4 million.
While Twitter shares tumbled 19% after a similar decline last quarter, the company’s better-than-expected third-quarter revenue and profit eased worries.
"If they are getting rid of bots, fake accounts and fighting hate speech, then it’s actually good for the health of the platform overall,” said Pivotal Research Group analyst Brian Wieser.
“That is certainly more appealing to advertisers,” he said.
“Twitter continues to ‘do a lot with a little.’ User growth is lacklustre, but the company is eking out more from current users,” said Jim Cridlin at WPP’s Mindshare media buying agency.
- Reuters
