Twitter says it may become profitable for the first time next quarter

Reuters
New Delhi, Delhi, India Published: Oct 27, 2017, 06:32 AM(IST)

Shares of Twitter soared more than 18 percent to $20.31 in afternoon trading. The company also said user growth resumed in the third quarter after stalling in the prior three months. Photograph:( Reuters )

Twitter Inc said on Thursday it may become profitable for the first time next quarter after slashing expenses over the past year and ramping up deals to sell its data to other companies, which could help to break its reliance on advertising for revenue.

Shares of Twitter soared more than 18 percent to $20.31 in afternoon trading. The company also said user growth resumed in the third quarter after stalling in the prior three months. 

Twitter has never had a profitable quarter based on generally accepted accounting principles (GAAP), but said it "will likely be GAAP profitable" in the fourth quarter if it hits the high end of its estimates. 

The social media company has struggled to convert its appeal among celebrities and public figures such as U.S. President Donald Trump to attract users and advertisers amid fierce competition from Facebook Inc and Snap Inc's Snapchat. It has worked in recent months to sign live-streaming deals and make other changes to improve user experience. 

Revenue from data licensing and other sources in the third quarter was $87 million, Twitter said, up 22 percent from a year earlier. That helped cushion an 8 percent decrease in advertising revenue.

Twitter said it signed a "significant number" of enterprise deals in the third quarter, which would help stabilise its revenue flow. It did not name the companies it had inked deals with. 

Twitter reported quarterly revenue of $590 million, down 4 percent from a year earlier, attributing much of the decrease to a previously announced decision to wind down its TellApart advertising product. 

Analysts on average had expected revenue of $587 million, according to Thomson Reuters I/B/E/S. 

San Francisco-based Twitter also disclosed that it had discovered an error in how it had measured its user base since 2014 and revised its estimates downward, but said the difference amounted to less than 1 percent.
The company reported 330 million monthly active users in the quarter ended on Sept. 30, up 4 million from a quarter earlier, helped by email and push notifications. 

In the United States, where growth had stalled earlier this year, the number of users rose to 69 million from 68 million.

Analysts on average expected 330.4 million monthly active users worldwide and 69 million in the United States, according to financial data and analytics firm FactSet. 

 

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