Twitter beats revenue targets with ad improvements, shares jump 5%

TwitterInc on Thursday reported higherrevenuegrowth than Wall Street hadexpected, as the social media platform rolled outadtargetingimprovementsto help brands reach potential customers.

SharesofTwitterrose5%to $73 in trading after the bell.

Since the start of the year,Twitterhas raced to introduce products in new areas like audio-only chat rooms and newsletter publishing in an effort to turn around years of business stagnation and reach its goal of doubling annualrevenueby 2023.

Add WION as a Preferred Source

Advertisingrevenuetotalled $1.05 billion, up 87% from the year-ago quarter, and beat Wall Street estimates of $909.9 million.

Twitterhas worked to improve the effectiveness of itsads, introducing 2,500 new topic categories during the quarter to help users find content they're interested in, all of which provides moreadtargeting data back toTwitter, the company said on a conference call with analysts.

"We get great signal about what people are most interested in, where they are or the places they care about," saidTwitterChief Financial Officer Ned Segal during the call.

Thoseimprovements, along with higher demand fromadvertisers seeking to reach consumers as countries reopen from pandemic restrictions, helped propeladrevenue,Twittersaid.

The strong results from bothTwitterand its tech peer Snap Inc, which reported quarterlyrevenuegrowth of 116% on Thursday, shows "that the overall digitaladmarket is on fire right now, with the reopening further strengtheningadvertisers' budgets," said Ygal Arounian, a research analyst at Wedbush Securities.

Twitterreported 206 million monetisable daily active users (mDAU), its term for users who are servedadvertising, for the second quarter ended June 30, matching analysttargetsof 205.9 million users, according to IBES data from Refinitiv.

Its U.S. user base declined by 1 million over three months from the previous quarter due to a lighter news cycle in the United States,Twittersaid, with total users worldwide in line with Wall Streettargets.

Totalrevenue, which also includesrevenuethe company earns from data licensing, rose 74% year-over-year to $1.19 billion, beating analyst estimates of $1.07 billion.

Future Investments

The San Francisco-based company now expects headcount and total costs and expenses to grow at least 30% for the full year, up from its previous guidance of 25%, as it invests in its engineering and product teams.

Chief Executive Jack Dorsey, a longtime proponent of bitcoin, said during the earnings call the digital currency "is a big part" ofTwitter's future and could be used for ecommerce transactions on the platform or to tip popular content creators.

Twitteradded that new privacy controls that Apple Inc implemented in April, which are designed to limit digitaladvertisers from tracking iPhone users without their consent, hada lower-than-expected impact onrevenuein the second quarter.

The full impact of Apple's changes have yet to be seen, and some concerns still linger, Arounian said.

Twitterforecast third quarter totalrevenueto be between $1.22 billion to $1.3 billion, roughly in line with or slightly aheadof consensus analyst estimates of $1.17 billion.

On anadjusted basis,Twitterearned 20 cents per share during the second quarter, well above the estimate of 7 cents.