Twitter pulls more revenue from declining user base

Twitter Inc.'s revenues continued to grow as the company was able to capture more revenue from a declining user base for the second consecutive quarter due to the forgery of fake accounts.

Twitter

tWTR, + 16.99%

The sock climbed about 16% Thursday early in the session.

Sales grew 29% to $ 758 million in the third quarter from the same quarter last year, well above analysts' expectations of $ 701 million. The bulk of Twitter's sales come from advertising, which has continued to grow because of the company's efforts to clean up its platform and the value that advertisers are giving to the conversations they have with customers on the market. platform, among other things, said General Manager Jack Dorsey. on the conference call on earnings.

"The feeling is really positive," Dorsey said. "We attach great importance to our goal. And it's definitely our super talk power, but also the focus on health and improving health in public conversation. "

Twitter posted a profit, posting net income of $ 789 million, or $ 1.02 per share, after losses of $ 21 million in the prior quarter. The profits were boosted by a $ 702 tax benefit. Without this, among other adjustments, Twitter reported an adjusted profit of 21 cents per share, ahead of FactSet's earnings consensus of 14 cents.

As in the second quarter, the monthly number of users of the company has continued to decline as a result of Twitter's efforts to eliminate false accounts or malicious accounts, as well as the general data protection rule in Europe. Leaders said that several product changes and a bug affecting notifications had also contributed to the larger-than-expected decline of nine million users, for a total of 356 million users monthly.

Callers said despite a reduction in the number of monthly users, the company was able to generate more revenue from its existing base, in part because everyday site users are more involved. .

"For the third consecutive quarter, we have achieved higher revenue growth than our audience, as we continue to offer enhanced formats, increased relevance to a broader and more engaged audience, and better results. to advertisers, "said chief financial officer Ned Segal told analysts.

BTIG analyst Rich Greenfield reiterated his view Thursday that investors should focus less on the monthly number of users of the company and more on the daily users. Twitter does not disclose the precise number of daily users but has indicated that it has increased by 9% compared to 14% the previous year. This is partly due to the fact that fewer daily users access the platform via a web browser, and that these people have less value for the company.

Segal said that two million people who were not on the service for a month or more consult Twitter every day, and one-third of those were not on the platform before. "We are looking into this and see a lot of opportunities to help them find what they are looking for faster, so that they stay longer and come back more often," he said.

Twitter's projected adjusted earnings before interest, taxes, depreciation and amortization are between $ 320 million and $ 340 million. Leaders also said that they expect a further 1% drop in monthly active users, citing the same reasons for the decline in the second and third quarters.

Twitter stocks have increased in the last 12 months, at Wednesday's close, while the S & P 500 index

SPX, + 1.54%

increased by 4%.