Twitter Fourth-Quarter Earnings and Revenue Beat Expectations

Jack Dorsey - Getty - H 2017
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Twitter's Jack Dorsey

The social media company, led by CEO Jack Dorsey, saw its stock rise 22 percent in pre-market trading on news of its first-ever profitable quarter.

Twitter outperformed during the fourth quarter on news of its first quarterly profit.

The San Francisco-based social media company, led by CEO Jack Dorsey, on Thursday before the opening bell reported a rise in quarterly revenues and flat monthly active usage but beat expectations on earnings.

Twitter reported adjusted earnings of 19 cents per share, against a year-earlier 16 cents in EPS, on overall revenue at $731.6 million, up 2 percent from $717.2 million in fiscal 2016. That beat an analyst forecast polled by Bloomberg of 14 cents in earnings per share during the latest quarter, and $686.4 million in revenue.

Twitter also swung to net earnings of $91.1 million in the fourth quarter, compared to a year-earlier loss of $167.1 million. That marked the company's first-ever profitable quarter. Advertising revenue increased 1 percent to $644 million.

Stock in Twitter rose at one point by $5.92, or 22 percent, to $32.83 in pre-market trading on its reversing fortunes, after rising sharply in market action on Wednesday. Twitter saw its daily active user growth, a key metric for any social media company, rise by 12 percent.

"We're investing to make 2018 a year of growth," Dorsey told analysts during a morning call. He added the higher ad revenue was due to a "larger engaged audience."

The social messaging app has been trying to improve its user experience and keep people more engaged. To that end, the social media giant is also testing doubling its character limit, from 140 characters to 280, a move meant to explore whether people are able to better express themselves on the platform when they aren't limited by space.

The company's number of total monthly users, at 330 million for the quarter, was flat quarter-over-quarter and up 4 percent year-over-year. Analysts expected 3 million more monthly active users during the fourth quarter to get to 333 million.

The flat monthly user base was due in part to Twitter working to improve its "information quality," or helping users "detect malicious manipulation" of content, Dorsey told analysts. The social media platform has also worked to eliminate computerized bots on its platforms.

Twitter in late 2017 promised to crack down on hate speech and sexual harassment on its platform as it responded to criticism it was not doing enough to protect its users. The social media platform is also under scrutiny from congressional investigators into how Russian agents used Twitter (as well as Facebook and Google) to influence last year's U.S. election.

Feb. 8, 8:15 a.m. Updated with comments by senior Twitter execs during a morning analyst call.