Twitter's push to reduce abuse pays off with revenue jump

Agencia EFE New York, NY, USA Feb 08, 2019, 01.02 PM(IST)

File photo. Photograph:( Reuters )

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The company also for the first time disclosed its number of daily users: 126 million, a figure Twitter said was up 1.6 per cent from the previous quarter. 

The United States social media company Twitter reported a record quarterly revenue and its first full year of profitability Thursday, signs the company's efforts to promote healthy discourse on the platform appear to be paying off, according to a report from the Dow Jones Newswires made available to EFE. 

The company also for the first time disclosed its number of daily users: 126 million, a figure Twitter said was up 1.6 per cent from the previous quarter. 

The figure makes it easier to compare Twitter with its social-media peers Facebook and Snap, which have 1.52 billion and 186 million daily users, respectively. 

Twitter said it measures its number of daily users differently than other companies because it counts only users who can view ads. 

Revenue rose 24 per cent to $908.8 million in the fourth quarter, typically the heaviest spending period for advertisers, up from $731.6 million a year earlier. Those results topped analysts' projections of $867 million, according to FactSet. 

Even so, Twitter's stock slid nearly 11 per cent in morning trading as investors homed in on the company's declining numbers of monthly users and its revenue forecast for the current quarter. 

Twitter said its number of monthly users, the metric it has released for years, fell 1.5 per cent to 321 million from three months ago. Twitter has struggled for years with little to no momentum in building up its user base. It plans to stop disclosing monthly users after the current quarter. 

Chief Executive Jack Dorsey said last year the company's priority was to reduce the amount of abuse that occurs on the platform. Although those efforts sometimes result in closing the accounts of bad actors, other users tend to spend more time on Twitter when there is less harassment. Marketers also say they are in favour of the changes because they don't like advertising alongside negative content. 

Dorsey told analysts Thursday that the company needs to keep up efforts to minimize bad behaviour, something he sees as a growth initiative. 

"We have to make Twitter more conversational," he said. 

Twitter projected a sequential decline in revenue in the first quarter to between $715 million and $775 million. While that would be up from $665 million a year earlier, the range's midpoint of $745 million sits below the $764.93 million analysts had pencilled, according to Refinitiv. 

Doing away with the monthly user number could suggest Twitter doesn't like the trends it is seeing in that area, raising questions about how it will grow daily users from a shrinking pool, said Colin Sebastian, an analyst at R.W. Baird. 

He also pointed to higher expenses Twitter is facing in 2019 as it combats abuse, adds new features and digests its growing headcount. Twitter, which grew its employee number about 16 per cent last year, said it expects operating expenses up about 20 per cent in 2019. 

Those costs could weigh on margins, Sebastian said. 

Twitter's profit in the fourth quarter increased to $255.3 million, or 33 cents a share, from $91.1 million, or 12 cents a share, a year earlier, added the Dow Jones report supplied to EFE. 

Robust spending in the online advertising industry also drove both Facebook's record quarterly profit and Snap's record quarterly revenue.