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Twitter Surprises Analysts With First Quarter User Growth And Revenues

Twitter Surprises Analysts With First Quarter User Growth And Revenues
Following a year of stagnant growth in the number of users, one of the largest social media companies Twitter surprised analysts by reporting an increase in the average monthly user number for the first-quarter and further surprised analysts by reporting better than expected revenues.
According to IBES data from Refinitiv, the analysts were expecting on an average of 318.8 million monthly active user (MAU) for the first quarter which would have been a drop of 2.2 million users from the previous quarter. But the company reported an increase of MAU of 9 per cent quarter-on-quarter to reach a total of 330 million MAU.
The company however announced that it would stop disclosing MAUs from next quarter. Twitter has been trying to enhance the content quality of its platform through the identification and removal of thousands of spam and suspicious accounts.
Starting next quarter, Twitter instead of MAU, the platform would disclose only the number of "monetizable" daily active users which is a metric hat was created by the company that measures only those users who are exposed to advertising on a daily basis.
Twitter said that compared to a year ago, there was a 12 per cent increase in the monetizable daily active users or mDAU reaching 134 million in the first quarter. In terms of first quarter 2019 revenue too for the first quarter, Twitter also beat Wall Street expectations of $776.1 million as it reported an 18 per cent year on year rise at $787 million.
The driver for the increase in revenues was ad sales which also increased by 18 per cent year on year to reach $679 million. Revenues from ads did very well in the United States with a 26 per cent growth primarily driven by video ad formats that continued to show strength in 2019.
However, the company’s expectations for the revenues of the current quarter were lower than the expectations of the Wall Street. According to estimates by analysts polled by Refinitiv, Twitter was expected to generate revenues of $819.5 million but while the company said it expected current quarter revenues to be between $770 million and $830 million.
The company also expects to incur more expenses because of its efforts of increasing the platform to reduce abusive user content and behaviour.
"We are now removing 2.5x more Tweets that share personal information and 38 percent of abusive Tweets that are taken down every week are being proactively detected by machine learning models," Chief Executive Officer Jack Dorsey said in a statement.
The company reported a total operating expense, including cost of revenue, of $693 million, which was 18 per cent more compared to the number in the same period a year ago. Twitter reported quarterly profit of $191 million, or 25 cents a share, compared with $61 million, or 8 cents per share, a year earlier.
The company earned 9 cents per share, excluding a $124.4 million tax benefit,

Christopher J. Mitchell

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