Shares jump more than 6 percent after company posts impressive user and financial growth
It looks like the changes Twitter has implemented are starting to pay off, with the social platform reporting 8 million new daily users, while surpassing Wall Street revenue and earnings estimates, when it shared its first quarter financials early on Tuesday morning.
Twitter posted earnings of 37 cents per share, compared to analyst estimates of 15 cents per share, while also reporting $787 million in quarterly revenue — an 18% year-over-year increase and better than the $775.2 million analysts had projected.
Perhaps more importantly to investors, Twitter showed impressive quarterly user growth. The company now has 134 million “mDAU,” or what Twitter calls monetizable daily active users, after closing 2018 with 126 million mDAU. The company defines mDAU as: “Twitter users who log in and access Twitter on any given day through Twitter.com or our Twitter applications that are able to show ads.” The 134 million mDAU represented an 11% year-over-year increase.
The company had 330 million monthly active users — an increase of 9 million MAUs from the previous quarter, but down from the 336 million MAUs the company had at the same time last year. This will be the last time Twitter reports monthly users, the company said; it’ll now lean on reporting mDAU, a metric it first introduced during Q4.
Wall Street seemed impressed with Twitter’s user growth and financial performance, with shares of the company increasing more than 6 percent to about $36.50 a share in pre-market trading.
The company — after stressing for the last year a new focus on the “health of conversation” on the app — pointed to adjustments it’s made to curb harassment as a driving force behind its strong quarter.
“We are taking an even more proactive approach to reducing abuse on Twitter and its effects in 2019,” Twitter said in its letter to shareholders. “Improvements in Q1 emphasized proactive detection of rule violations and physical, or off-platform, safety — including making it easier to report Tweets that share personal information, helping us remove 2.5 times more of this content since launch.”
CEO Jack Dorsey spent much of the early part of 2019 on a media tour, discussing several key issues facing Twitter, including its inconsistent rules enforcement and what the company is doing to combat harassment. Many of the questions went largely unanswered.
“I will say that we don’t feel great about the state that we’re in,” Dorsey said on The Bill Simmons Podcast earlier this year. “Our entire harassment and abuse framework is dependent upon people reporting harassment and abuse, and it’s completely unfair that the victim of the abuse and harassment has to report it themselves.”
Twitter has taken several recent steps to become more proactive in handling what the company calls “abusive” tweets. Last week, Twitter said there has been a 300% increase in the amount of “abusive accounts” that are banned within the first 24 hours of their infraction compared to the same time last year. Another 38% of “abusive content” is “surfaced proactively” to Twitter’s review team, allowing the company to act quicker in taking action, the company said. Twitter will also be testing a new feature that allows users to hide replies they don’t like.
Twitter on Tuesday reported substantial revenue growth in the U.S. in particular, with revenue hitting $432 million, or an increase of 25% year-over-year. The company added 1 million mDAU during the quarter in the U.S., closing Q1 with 28 million domestic daily users.
Looking ahead, the company said the “health” of conversation remains its “top priority,” with Twitter saying it wants users to “feel safe participating in the conversation on Twitter.”
Twitter projected it’ll make between $770 million and $830 million in Q2 revenue — a slight dip from what analysts projections of between $784 million and $855 million.
Twitter will hold a call at 8 a.m. ET to discuss its earnings.