Twitter delivered the first profitable quarter in its nearly 12-year history — although it failed to increase its total monthly user base in the period. The social network’s financial results handily beat Wall Street expectations.Twitter Posts Q4 As The First Profitable Quarter. Twitter posted fourth quarter revenue of $732 million, up 2% year-over-year and reversing the trend of declining top-line numbers over the past few quarters.
Twitter’s previous inability to turn a profit had confounded investors given the company’s ubiquitous presence in the media and popularity among celebrities, athletes and politicians such as U.S. President Donald Trump.
What does the report suggest?
In Q4, quarterly GAAP (generally accepted accounting principles) net income was $91 million, versus a net loss of $167 million in the year-earlier period. Adjusted earning per share were 19 cents. Wall Street expected revenue of $687 million and EPS of 14 cents. Twitter shares rocketed up more than 25% in pre-market trading — hitting a two-year high. The company had previously said it “will likely” turn a profit in Q4 on a GAAP basis.
The report adds to positive momentum in recent months for Twitter, which spent the second half of 2017 explaining how Russian-linked accounts—including automated bots—influenced content on its platform around the 2016 U.S. presidential election. Dorsey, who also runs Square Inc., has been working to broaden Twitter from a micro-blogging site into a destination for users to see “what’s happening now” by striking live-streaming partnerships with news outlets and sports leagues.
Twitter did report that its daily active user base grew by 12 percent, its fifth straight quarter of double-digit growth. The caveat there is that Twitter doesn’t say how big that user base actually is, so it’s tough to put the growth numbers into perspective.
Can Twitter get more out of it?
Twitter shares were up 47 % over the past 12 months as of Wednesday’s close, outpacing a 17 % rise in the S&P 500 Index.
The social media sector is trying to cope with a regulatory backlash in Europe and the United States over privacy, addiction to the medium, hate speech and alleged abuse of social media by Russia to sway foreign elections.
Twitter in January said it had expanded notifications to about 1.4 million people exposed to content generated by a suspected Russian propaganda service during the 2016 U.S. elections. Moscow denies meddling