Twitter Stock Surges as Earnings, User Base Grow

Jack Dorsey - Getty - H 2017
Getty Images

The social media company reported higher first-quarter earnings and user growth, with financials beating Wall Street expectations, driving its stock higher.

Twitter shares surged before the Tuesday stock market open after the social media giant posted higher first-quarter earnings and user growth, with financials beating analysts' expectations.

The San Francisco-based social media company, led by CEO Jack Dorsey, reported adjusted earnings of 37 cents per share, compared with the Wall Street consensus of 15 cents. As Twitter turned in its sixth profitable quarter in a row, shares in the company were up by $2.71, or nearly 8 percent, to $37.10 in pre-market trading on the New York Stock Exchange.

Quarterly revenue of $787 million was up 18 percent, beating the consensus estimate for the messaging service of about $775 million. Total U.S. revenue rose 25 percent to $432 million, with international revenue at $355 million, up 11 percent.

The better-than-expected earnings were also attributed to lower expenses, Twitter reported. And total advertising revenue was up 18 percent to $679 million as the company continues to face rivals Snapchat and Facebook in the war for online advertising.

Twitter saw its daily active user (DAU) base, a new metric for the social media company introduced for the second time, expand to 134 million users, up 11 percent from the year-ago period. Twitter had 126 million monthly DAU in the fourth quarter of 2018, and analysts had forecast 130 million users for the latest financial quarter. 

Twitter reported 330 million monthly active users, down 6 million from the first quarter of 2018. It has said it would discontinue reporting this metric after this quarter. A consensus estimate had forecast 318 monthly active users, stripping out SMS users, for the latest quarter.

"Twitter ended its reporting of monthly active users (MAU) on a high note, with its MAUs rising quarter-over-quarter for the first time since at least the first quarter of 2018,” Jasmine Enberg, senior analyst at eMarketer, said about the earnings. "Twitter’s decision to share only monetizable daily active users (mDAUs) going forward is in keeping with its value proposition to advertisers – a committed though not very large user base when compared with other social platforms."

Twitter has been trying to improve its user experience and keep people more engaged. "Improvements in the first quarter emphasized proactive detection of rule violations and physical, or off-platform, safety – including making it easier to report tweets that share personal information, helping us remove 2.5 times more of this content since launch," the company said in a shareholders letter that outlined its latest financial results.

Dorsey told analysts during a morning call that his company is increasing its use of technology, especially AI and machine learning, to block "abuse and harassment" on the social media site. "We're taking a bunch of the burden away from the victims of abuse," he said.

During the call, Dorsey also expanded on a shift at the social messaging app to where users can more quickly and easily follow topics and events, rather than the accounts of individuals. "The goal is for more people to participate in the conversation around interests," he told analysts.

And Dorsey argued Twitter is working with global politicians and authorities to introduce regulation of social media platforms like his own. "We're completely open to regulation where it makes sense," he told analysts.

5:45 a.m. Updated with comments to Twitter CEO Jack Dorsey made during an analyst call.

6:45 a.m. An earlier version of this story incorrectly called Twitter a "140-character messaging service," but the social media platform has increased the character limit for messages. The Hollywood Reporter regrets the error.