Investors Respond Positively As Twitter Beats Estimates

Twitter’s earnings report surprised investors after they turned out to be better than expected. This came on the back of a set of disappointing results that have been recorded in the last couple of quarters. The surprising results saw the shares of the microblogging platform appreciate by over 10%.

Revenue for the first quarter came it at $548 million which was an 8% decline year over year. It was however better than what analysts had estimated – $512 million. Last year in a similar quarter, revenue for the microblogging company experienced 36% growth. There was a decline this year of 13% year-over-year and this is attributable to a slowing advertising business in the United States.

Lower net loss

Compared to the first quarter of 2016, Twitter’s net loss in this year’s quarter was lower. Last year the figure was $80 million or approximately 12 cents per share against $62 million this year or 9 cents per share. When certain expenses were excluded, Twitter claimed it would have made profits of $82 million which would have amounted to 11 cents a share. Analysts had estimated a profit of about 1 cent a share when viewed on that basis. At that profit level, it means that Twitter’s monetization rate per user is about half what Facebook makes on average from each of its members.

User growth

Twitter also experienced growth in the number of users as the number of monthly active users rose year-over-year by 6% to reach a figure of 328 million. The previous quarter’s growth in monthly active users was 4%. In terms of hard numbers, the number of new users that Twitter added last quarter was 9 million. This also managed to beat the expectations of analyst and it also turned out to be the best user growth rate in the last two years.

“We’re delivering on our goal to build a service that people love to use, every day, and we’re encouraged by the audience growth momentum we saw in the first quarter,” wrote Twitter’s chief executive officer, Jack Dorsey, in a note to investors.

Trump effect

Anthony Noto, the chief operating officer and the chief finance officer of Twitter told investors and analysts in a conference call that the user growth was comprised of new users as well as old inactive users who had resumed activity in order to follow politics and news in the United States more closely. This seemed to suggest that the election of Donald Trump as the U.S. president has been a boon for Twitter.

 

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