Twitter profit soars as user base shrinks; stocks take a hit

Twitter on Thursday reported a sharp rise in quarterly profits, lifted by gains in advertising, but its shares took a hit on a declining user base and a move to a new audience measure.

The short-messaging platform said it posted a $255 million profit in the final three months of 2018, compared with $91 million a year earlier, as revenues rose 24 percent to $909 million.

But Twitter’s base of monthly active users declined to 321 million — a drop of 9 million from a year earlier and 5 million from the prior quarter. Twitter said it would stop using the monthly user base measure and instead report “monetizable” daily active users in the U.S. and worldwide, a better reflection of the audience viewing ads.

Using that measure, Twitter showed a base of 126 million worldwide, up 9 percent over the year. That included 27 million in the United States and 99 million internationally.This measure, Twitter said, is not “comparable to current disclosures from other companies, many of whom share a more expansive metric that includes people who are not seeing ads.”

Chief executive Jack Dorsey said the results were “proof that our long-term strategy is working. We enter this year confident that we will continue to deliver strong performance by focusing on making Twitter a healthier and more conversational service,” he added. Twitter shares sputtered and then fell sharply after the report, dropping as much as 8 percent in pre-market trade.

Jasmine Enberg of the research firm eMarketer said the results were nonetheless positive. “Twitter’s Q4 earnings prove that the company is still able to grow its revenues without increasing its user base,” she said. “The falloff in monthly active users is likely a continuation of Twitter’s efforts to remove questionable accounts.”

Twitter, which has struggled to keep up with fast-growing rivals like Facebook and Instagram, said it changed the measure for its user base to reflect “our goal of delivering value to people on Twitter every day and monetizing that usage.” The platform has a strong following among celebrities, journalists and politicians but has failed so far to gain mass appeal.

Twitter, like other social networks, has been working to weed out fraudulent accounts that are used for abuse, harassment and political influence campaigns. Dorsey said the efforts aim at “promoting healthy conversation” on Twitter and added: “We think it is a growth vector over the long term, and it’s the right thing to do for people on Twitter and in the world.” A tweet by the company emphasized this point, saying: “We will cont. our efforts to remove spammy + suspicious accts. from our service + to prevent their creation in service of a healthier public conversation.”

Source: https://www.japantimes.co.jp/news/2019/02/08/business/twitter-profit-soars-user-base-shrinks-stocks-take-hit/#.XFzpLVwzbDc

Source: https://www.japantimes.co.jp/news/2019/02/08/business/twitter-profit-soars-user-base-shrinks-stocks-take-hit/#.XFzpLVwzbDc