Twitter Posts First-Ever Profit as Q4 Ad Sales Grow 7 Percent

Daily Active Users increase 12 percent from prior year

Twitter's logo on the New York Stock Exchange
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It took a while, but Twitter just posted its first-ever GAAP profit.

The social media company saw its fourth-quart 2017 ad sales grow 7 percent over the three month period. All told, Q4 revenue increased 2 percent to $732 million, which bested media analysts’ consensus forecast of $686 million.

Net income for the quarter was a rounded $141 million, which results in 19 cents of earnings per diluted share. That latter figure tops Wall Street’s expectations by a nickel per share, according to a Yahoo Finance compilation.

Twitter’s Daily Active Users (DAUs) grew 12 percent year over year for the three-month period. That matched Q2 2017’s growth, but was down from Q3’s 14 percent increase. Despite the healthy bump in DAUs, the platform’s overall user base remained at about 330 million — the same as the quarter prior.

Shares of TWTR stock closed down one penny per share on Wednesday. Once this profit was announced early on Thursday, shares shot up 25 percent pre-market.

“Q4 was a strong finish to the year,” said Jack Dorsey, Twitter CEO. “We returned to revenue growth, achieved our goal of GAAP profitability, increased our shipping cadence, and reached five consecutive quarters of double digit DAU growth. I’m proud of the steady progress we made in 2017, and confident in our path ahead.”

Twitter rolled out its updated 280-character limit during the fourth quarter, aiming to boost engagement and time spent on the app.

“We’re pleased with our performance in 2017 and our return to revenue growth in the fourth quarter,” added Ned Segal, Twitter CFO. “Total revenue in the fourth quarter increased 2 percent year-over-year, and owned-and-operated advertising revenue increased 7 percent year-over-year, driven by continued strong engagement growth, improvements in our revenue products, improved return for advertisers, and better sales execution. We achieved record GAAP [Generally Accepted Accounting Principles] net margins and our long-term target adjusted EBITDA [Earnings Before Interest Taxes Depreciation and Amortization] margin range in the quarter, reflecting our continued prioritization and disciplined execution.”