Twitter Focuses On Improving Platform

Social media stocks have had a rough time this year amid rising concerns surrounding fake news. More recently, the stocks were in question as the President accused internet and social media firms of political bias and censorship. Despite the issues, Twitter’s (NYSE: TWTR) stock has managed to deliver a turnaround this year. But the battle is far from over as its management continues to grapple with the problems of uncontrollable fake news.

Twitter’s Financials

For the second quarter of the year, Twitter’s revenue grew 24% over the year to $710.5 million, ahead of the market’s projections of $708.5 million. Twitter posted a profit for the third consecutive quarter. Net income came in at $134 million, translating to an EPS of $0.13. The market was looking for an EPS of $0.16.

During the quarter, Twitter’s total advertising revenues grew 23% to $601 million. Within the segment, owned and operated (O&O) revenues grew 29% to $564 million and non-O&O advertising revenues fell 30% to $37 million. Data licensing revenues grew 29% to $109 million.

Among operating metrics, monthly active users grew 9 million to 335 million. But during the quarter, Twitter had conducted a massive cleanup of fake accounts and deleted over 7.7 million accounts. Sequentially, the number of users were down a million. The market was looking for 338.5 million users. Daily active users for Twitter grew 11% over the year, marking this the seventh consecutive quarter to report double-digit growth.

For the current quarter, Twitter expects an adjusted EBITDA of $215-$235 million.

Twitter’s User Engagement Focus

Twitter is focused on improving its overall health and recently announced that it would drive towards improving profitability while investing “in the business, achieving strong revenue growth, and introducing product updates that make Twitter both healthier and easier to use.” It is choosing long-term health of the platform over short-term metrics. Twitter realizes that it will be a while before the cleanup is complete. Till recently, Twitter was only focused on addressing “surface-level symptoms”. But now, it is focusing on addressing the root causes.

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