Twitter Stock Surges as Daily Users Rise to 139 Million

Getty Images

The social media company, led by CEO Jack Dorsey, reported second-quarter earnings, with financials beating Wall Street expectations.

Social media giant Twitter on Friday posted higher second-quarter earnings and user growth, with financials beating analysts' expectations. The stock rose more than 5 percent before the market open on the news.

The San Francisco-based social media company, led by CEO Jack Dorsey, reported adjusted earnings of 20 cents per share, compared with the Wall Street consensus of 18 cents, according to Factset.

Quarterly revenue of $841 million, up 18 percent from a year-earlier $711 million. That beat the consensus estimate of $829 million. U.S. revenue was up 24 percent to $455 million, with international revenue at $386 million, up 12 percent.

Total advertising revenue was up 21 percent to $727 million as the company continues to face off with Snapchat and Facebook in the war for online advertising. Twitter reported total ad engagement rose 20 percent year-over-year.

Twitter saw its daily active user (DAU) base, a new metric for the social media company, rise to 139 million users from 134 million in the first quarter and 122 million at the end of the second quarter of 2018. Analysts forecast 135 million users for the latest quarter. Twitter is no longer reporting monthly active users as a metric.

Shares in the company were up 5.9 percent at $40.35 in pre-market trading on the New York Stock Exchange.

Twitter is increasing its use of technology, especially AI and machine learning, to block online trolls and eliminate fake users on the social media site.

Dorsey in a statement that accompanied the latest financial results said efforts to curtail malicious activity on the Twitter site had resulted in an 18 percent drop in "reports of spammy or suspicious behavior across all our Twitter detail pages, which show the replies to any given Tweet on our service."

Dorsey on an analyst call said efforts to make Twitter a safe space for users will continue to drive user growth, while remaining a key long-term focus for the company. "We do believe that health is a long-term growth vector for us ... Our focus, our execution and how we see results and learn from results have been really excellent over the last two years, and I only expect that to continue and quicken," he said.

The Twitter boss also addressed Russia's infamous troll farm and other nefarious efforts to manipulate the social media site to impact the upcoming 2020 U.S. presidential election. Dorsey said Twitter was "identifying forms of manipulation, increasing transparency around ad purchases and targeting and we continue to challenge suspicious log-ins."

eMarketer senior analyst Jasmine Enberg, reacting to the latest financial results, said advertisers will cheer the improved engagement of users. “The strong growth in monetizable daily active users shows that Twitter users are sticking with the platform, and that should resonate with advertisers," she said. "Next quarter’s earnings will show whether Twitter can keep up the growth momentum amidst negative user feedback over the website redesign rolled out in July." 

The digital platform also faces increasing scrutiny from global politicians and authorities ahead of possible regulation of social media platforms.

July 26 5:30 a.m. Updated with comments by senior Twitter execs made during an analyst call following the release of the company's second-quarter results.