Twitter Delivers Second Consecutive Profitable Quarter

Twitter (NYSE: TWTRappears to be making a slow turnaround this year. It recently reported its quarterly performance that outpaced market expectations and delivered its second consecutive profitable quarter. The market is also impressed with some of the content-related moves that the company is making.

Twitter’s Financials

For the first quarter of the year, Twitter’s revenue grew 21% over the year to $665 million, ahead of the market’s projections of $605 million. Clearly, Twitter’s monetization efforts are finally paying off. This was its best quarterly revenue growth in the last two years. Adjusted earnings of $0.21 was also better than the market’s forecast earnings of $0.16 per share. The stock surged 5% post result announcement driven by the better than expected performance.

During the quarter, Twitter’s total advertising revenues grew an impressive 21% to $575 million. Ad engagements grew 69%, while cost per ad engagement fell 28%. Twitter continues to push forward its video advertising and claims that video ads accounted for more than half of its ad revenues. International markets are driving Twitter’s growth as ad revenue in these markets grew 51% over the year. Data licensing revenues for the company grew 20% to bring in the remaining $90 million revenues for the quarter.

Among operating metrics, Twitter ended the quarter with 336 million monthly active users compared with 335 million as expected by the market. It added 6 million users over the previous quarter. Twitter now has 267 million MAUs in the international markets. Its engagement ratios are also improving, as it recorded a 10% growth in the daily active users.

For the current quarter, Twitter expects revenues of $645-$716 million, which was also significantly ahead of the Street’s estimates of $636.5 million.

Twitter’s Product Enhancements

During the quarter, Twitter continued to improve user experience and drive user engagement through several new products. Earlier this year, it launched Bookmarks –  an easier way to allow users to save Tweets; and video timestamps that will allow users to share videos within a live video. The changes will make it easier for users to follow topics and interests more easily.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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