clock menu more-arrow no yes

Filed under:

Twitter rebounds from earnings slump with strong user growth and unexpected profit

New, 12 comments

Revenue was expected to double, but investors only care about user growth

Twitter has had a rough time during its early life as a public company. Its stock had sunk to about half its peak value after two quarters of disappointing numbers about slowing user growth and engagement. The company's advertising business has more than doubled its revenue year over year, but so far has not been able to turn a steady profit. Over the last three months it went through a big internal shakeup that saw numerous high level executives depart. This quarter the company was hoping to demonstrate it was back on track.

The results were encouraging for investors. Over the last three months Twitter's active user base grew to 271 million, adding 16 million new accounts. The company's users were also more engaged, with total timeline views up 15 percent compared to last year. Mobile users make up 78 percent of Twitter's userbase, totaling 211 million. Analysts expected the company to show a bump in new users and engagement for this quarter driven by the immense World Cup activity on Twitter, and warned that a big jump was not necessarily evidence of a turnaround.

Along with the user metrics the company has been sharing since it filed for its IPO, Twitter was reportedly set to unveil a new group of metrics that would demonstrate its "true" reach, expanding beyond just the timeline views of active users. For example tweets are routinely embedded in online articles and featured on television as part of breaking news coverage.

The company reported $312 million in revenue for the quarter, with adjusted earning totaling two cents a share, one cent better than analysts had predicted. It was forecast to lose one cent a share versus 12 cents a share this same time last year, with revenue projected to double to $284.3 million from $139.3 million in the second quarter of 2013. The profits were bolstered by advertising revenue per thousand timeline views, which Twitter says was up 100 percent over last year.

For next quarter, Twitter expects to once again be ahead of analyst expectations, with revenue predicted to be between $330 and $340 million.