Twitter has posted its second profitable quarter in a row, beating Wall Street estimates for revenue and monthly active users, as advertisers in Asia and other markets outside the United States embraced its video ads.
Revenue from the latest quarter was up 21% year over year, and the company expects to be profitable for 2018.
Daily active users (DAU) grew 10% year-over-year while overall monthly user numbers rose 3% to 336 million, just above a forecast of 334 million, sending the company’s shares as much as 10 percent higher.
The company credited making it easier for people to follow topics, interests and events on Twitter as part of the reason why it was able to attract more users.
“We made meaningful progress in our ongoing safety and information quality work in Q1, and we are continuing to invest in improving the quality of content and the overall health of the conversation on Twitter,” the company said in a letter to shareholders.
US President Donald Trump has kept the San Francisco-based service in the headlines domestically but growth has been faster abroad as Twitter has tried to grow its user base and ad business.
International sales accounted for 48% of revenue, growing 53% year-over-year, compared with 2% in the United States. Total revenue rose 21%.
Twitter said it added 5 million people outside the United States and 1 million people inside its home market, compared with the fourth quarter, with the company pointing to strong growth in Asia.
Analysts expected Twitter to be profitable due to increasing advertising revenue, especially due to digital advertising budgets increasing as marketers shift money over from television. The company also showed huge growth in international ad revenue, especially from China and Japan.
Known for its (recently expanded) short messages, Twitter has paid to develop live shows and broadcast live events, using videos to get people to spend more time on the service and to sell video ads to marketers.
ideos accounted for more than half of ad revenue in the quarter.
The social media sector is under intense pressure, however, from lawmakers around the globe for inflaming political debates, allowing abusive language and failing to safeguard personal data.
Industry comment
Yuval Ben-Itzhak, CEO of Socialbakers, said: “Twitter’s Q1 results show that it is still an attractive platform for advertisers and for users. Over the last months Twitter has launched some exciting new features, such as the introduction of 280-character tweets and Threads, which have made tweets more expressive. This was a huge step forward for marketers, giving them more room to personalise their message and drive targeted engagement within specific audiences.
“Twitter has also been working hard to incorporate more diverse video ad options and the hard work is paying dividends. To keep moving ahead, Twitter needs to keep focusing on innovating, and bring features that are beneficial to both marketers and users alike.”
Ian Woolley, Chief Revenue Officer at Ensighten, said: “With a just a month to go until GDPR is enforceable, it is no surprise to see the big digital players go public clearly communicating the changes their consumers will see. There are ripple effects for the heavily interconnected marketing ecosystem, but one thing remains constant: Every brand needs to have a robust and relevant consent and personalisation strategy for their site to be compliant, or else they are very much as risk in uncertain waters.
“GDPR enforces a legal requirement on companies to explicitly communicate the processes and parameters for using customer data, as such Twitter’s update makes its privacy policy clearer, simplifying the legalistic and technical language. Users will also be able to download the information they have shared on Twitter, nodding at GDPR’s ‘right to know’. If consumers do ask to download their information, the question as to what companies need to prepare must have been answered in order to make the access requests in the allowed time. Companies need to make sure they are investing in the right marketing technology infrastructure to enable them to enforce user consent and keep building trust.
“In the GDPR world, it’s critically important for brands to understand that consumer trust is the new currency. With Twitter making their communications clearer and giving consumers the capability to download their information they are helping customers work towards controlling and accessing to what is rightfully theirs – and should build greater brand affinity.”
Aaron Goldman, CMO, 4C Insights, said: “Twitter’s Q1 earnings remain strong following a solid Q4 performance in which the business turned a profit for the very first time. Reflecting on the tent pole events in Q1 that promote engagement across TV and Twitter – the Winter Games, the Super Bowl, Oscars, Grammys and Brits – it’s not surprising that the company’s performance was so positive. We saw steady growth for brands using 4C to manage their Twitter campaigns in Q1 with spend going up and cost per click going down, which advertisers are getting savvier with their optimisations. We expect the strong results to continue as Twitter innovates to deliver an experience that keeps audiences engaged with updates like threading tweets and new offerings like Video Website Cards.”
Nick Fletcher, Vice President, Rakuten Marketing, said: “We knew Twitter would be moving from strength to strength this quarter. Marketers are becoming more aware of the scale of their audiences at an international level and Twitter has become synonymous as the hub of conversation around major global events. This brand awareness piece is part of an increasingly complex ecosystem of social platforms which serve brands to different extents and for different purposes. While a high end fashion brand might still plough its advertising budget towards Instagram’s buy buttons, there’s no end to the potential for fast-moving consumer goods brands on Twitter, and recent moves such as doubling the character limit demonstrate the platform’s savviness to the fact.”
Joe Rohrlich, General Manager of EMEA at Bazaarvoice, said:“Twitter has been busy cleaning its ecosystem and it seems the hard work has paid off. In the virtuous position of now being one of the most trusted social platforms, active user figures put Twitter at an advantage in driving further adspend growth in Q2. The area of real interest for brands and retailers should be user generated content. Twitter has done a fantastic job of incorporating more video-oriented content, which brands and retailers can use to build trust and authenticity around products. Given 50% of shopping is now conducted via mobile, the platform can push conversions skywards with further ecommerce integration.”
