Though it missed activity estimates, Twitter has finally reported the first profitable quarter since the microblogging firm went public five years ago. In last year’s fourth quarter the social media firm made a profit of $91 million compared to a loss of $167 million in the fourth quarter of 2016.
Twitter also posted revenue growth during the quarter as figures rose to $732 million compared to the $717 million generated in a similar period last year. According to the chief financial officer of Twitter, Ned Segal, the 7% year-over-year growth in revenues was as a result of better sales execution, enhanced return for advertises, an improvement in the portfolio of revenue products and strong engagement growth. This included an improvement in the company’s flagship app as well as more video advertising opportunities.
Monthly active users
Despite recording a quarterly profit for the first time since its IPO, the number of monthly active users on Twitter was flat vis-à-vis the third quarter of this year. Year-over-year Twitter recorded a growth in monthly active users of 4%. According to the microblogging platform part of the reason for the modest figures with regards to monthly active users was the fact that the company is cracking down on fake accounts as well as bad actors in a bid to curb spam.
The growth rate in the number of daily active users was 12% year-over-year and this was the fifth quarter in a row that Twitter recorded double-digit growth in the metric. Other revenue sources such as data licensing also saw a growth rate of 10% year-over-year. In absolute terms Twitter generated approximately $87 million from its ‘other revenue’ sources.
Some analysts, such as Pivotal Research’s Brian Wieser, welcomed the results with measured optimism. According to Wieser the results were in line with the longer-term expectations of the Twitter advertising platform and with time the company’s growth rate will catch up with the with the rest of the industry.
Just last month the chief operating officer of Twitter, Anthony Noto, indicated that he was departing to take up the position of chief executive officer at fintech firm Social Finance. Noto has been credited with the financial turnaround of the microblogging platform in last 12 months or so. The chief executive officer of Twitter, Jack Dorsey, however said the firm had no immediate plans of replacing Noto. At the moment the vice president of operations and global revenue at Twitter, Matt Derella, will head the ad sales efforts of the social media giant.
Among the issues seen as having an impact on the popularity of the social media platform, Twitter has disclosed that more work needs to be done with regards to communicating or educating its users on content-policing policies. Last year in November a clearer of the said policies were published.
Twitter is also cracking down on content that is considered ‘hateful’. Besides threats of violence made directly, the microblogging firm is also fighting content deemed to condone or glorify such acts. In the future accounts which are determined to have originally posted content that featured nonconsensual nudity will also be permanently suspended.
Twitter’s first quarterly profit comes in the wake of stock brokerage firm TD Ameritrade launching a bot on the social media platform which will allow traders to browse educational content, get market updates as well as conduct trades via direct messages.
“We recognized that Twitter has a rich, organic community of investors and traders. Investors are consuming news on Twitter, influencers are very active, and what they say tends to move the market — the speed of information is so critical to decision making,” Sunayna Tuteja, TD Ameritrade’s innovation and emerging technology director said.
According to Tuteja a lot of investors were active users of Twitter and it was therefore a natural move to have a TD Ameritrade trading feature added on the microblogging platform.