NEW YORK (Reuters) – Shares in Twitter Inc. jumped 13 percent on Tuesday after the social media company reported quarterly revenue above analyst estimates, which executives said was the result of the weeding of spam and abusive posts, and targeted ads better.
New ad formats, the partnerships with content providers, such as the AMERICAN National Basketball Association and the efforts to patrol the illegal content to help Twitter better compete for advertising dollars, executives said.
Social media companies are under pressure about privacy concerns and the political influence of the activity. Twitter has removed thousands of spam and suspicious accounts, that the blame for consecutive declines in monthly active users in the past quarters.
Twitter executives said they saw opportunities for the sale of ads that will earn revenue when users visit websites, or download apps, citing success with the major brands, such as Walt Disney Co. The company is looking to grow its sales team in 2019, to better serve large advertisers.
“Something where you see a mix of performance and brand is the Star Trek ad that Disney is now running, where I click through to ensure that I would be notified when more information was available about the next Star Wars,” Twitter Chief Financial Officer, Ned Segal told analysts.
Twitter said: “pre-roll ads, or promotional messages that play before the videos are also growing.
The company said its monthly active users (MAU) grew by 9 million to 330 million euro of the previous quarter, much better than Wall Street’s average estimate that it would lose 2.2 million users, according to the IBES data of Refinitiv. Still, MAUs were 6 million from a year earlier.
It was Twitter the last quarter of the publication of MAUs.
From now on it will only be “monetizable” daily active users (mDAUs), made to measure of people exposed to advertising, and exclude people who tweet using text messages, or aggregate of sites such as TweetDeck.
For the first quarter, Twitter said mDAUs increased to 134 million, an increase of 12 percent compared to a year ago.
Analysts were encouraged by signs the company had found a way to sustainably grow users and revenue, but said that the new way of measuring the users could make comparisons with rivals such as Facebook Inc. more difficult.
“People are not impressed with a composed metric and their unwillingness to give us actual users,” said analyst Michael Pachter at Wedbush Securities. “I don’t think the stock can get out of its own way to clean them, and report the same data everyone else does.”
FORECAST LARGELY BELOW WALL STREET
For the first quarter, Twitter’s revenue increased by 18 percent to $787 million from the quarter a year earlier, topping analyst estimates of $776.1 million.
But Twitter is also the forecast of the revenues for the second quarter largely below analyst estimates, and said it would continue to spend heavily on clean-up of Twitter and new ad products.
Ad revenue jumped 18 percent to $679 million. In the United States, the advertising revenues increased by 26 percent.
The total operating expenses (including the cost of sales increased by 18 percent compared to the first quarter a year ago. The company stressed that the operational costs increase by about 20% in 2019.
FILE PHOTO: A 3D-printed logo of Twitter is seen in this photo illustration created in Zenica, Bosnia and Herzegovina on 26 January 2016. REUTERS/dado Ruvic/Image/File Photo
Twitter reported quarterly earnings of $191 million, or 25 cents per share, compared with $61 million, or 8 cents per share, a year earlier. With the exception of a $124.4 million tax benefit, the company earned 9 cents per share.
The results appeared to catch the attention of the AMERICAN President Donald Trump, who called for the creation of “more, more, and more honourable is” social media companies, repeating his claim that Twitter is biased against the Republicans, without the presentation of evidence.
“We maintain the Twitter Rules dispassionately and equally for all users, regardless of their background or political belief,” a Twitter representative said. “We are constantly working to improve our systems and will remain, transparent in our efforts.”
Reporting by Angela Moon; Writing by Meredith Mazzilli; Editing by Lisa Shumaker, Bernard Orr