Twitter is soaring after beating Wall Street expectations — but it's lost millions of users

GettyTwitter CEO Jack Dorsey.
  • Twitter reported its third-quarter earnings Thursday before the opening bell.
  • Twitter reported earnings of $US0.21 a share on revenue of $US758.1 million.
  • But Twitter did suffer steep declines in monthly active users, which fell by 4 million year-on-year to 326 million.
  • Follow Twitter’s share price in real time here.

Twitter was soaring Thursday after beating Wall Street estimates on revenue and profit for the third quarter of 2018.

Twitter’s share price was up more than 10% in premarket trading as investors took courage from the firm’s 29% year-on-year revenue rise.

But it’s a mixed picture. Wall Street will also be looking at Twitter’s steep declines in user numbers.

Here are the key numbers:

  • Revenue: $US758.1 million, up 29% year-on-year and beating average analyst estimates of $US702.57 million
  • Earnings per share: $US0.21 on a diluted basis, compared with an average prediction of $US0.14
  • Monthly active users: Down by 4 million year-on-year to 326 million

Twitter’s drop in monthly active users was even more pronounced compared with the second quarter, when it had 335 million users.

Twitter blamed the fall on European’s new privacy regulation, the company’s efforts to stamp out toxic conversations involving misogyny and racism, decisions not to move to paid carrier relationships in some markets, and tweaks to the platform meant to reduce automated use. It also blamed a “technical issue” that reduced how many notifications people received.

Twitter said it had seen a 20% reduction from the previous quarter in “successful sign-ups” from automated, spammy, or malicious accounts.

The company doesn’t disclose daily active users but says this is a more important metric than monthly active users. Daily active users grew 9% over the quarter, which the company said was slower than expected because of its efforts to combat spam.

“We’re achieving meaningful progress in our efforts to make Twitter a healthier and valuable everyday service,” Twitter CEO Jack Dorsey said in a statement.

“We’re doing a better job detecting and removing spammy and suspicious accounts at sign-up. We’re also continuing to introduce improvements that make it easier for people to follow events, topics, and interests on Twitter, like adding support for US TV shows in our new event infrastructure.

“This quarter’s strong results prove we can prioritise the long-term health of Twitter while growing the number of people who participate in public conversation.”

Twitter warned that investors could expect a similar sequential decline in user numbers in the final three months of 2018.

Here’s the outlook for the final quarter:

  • Adjusted EBITDA: $US320 million to $US340 million
  • Capital expenditures: $US60 million to $US85 million
  • Stock-based compensation: $US85 million to $US90 million

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