Twitter reported its first ever year-over-year decline in revenue for its first quarter earnings on Wednesday, but still managed to beat analysts’ expectations across the board and boost its shares more than 10% in pre-market trading.
The company beat expectations of $US0.01 EPS with $US0.11 EPS and $US512 million in revenue with $US548 million. It also blew past user growth estimates of 2.3 million by adding 9 million more monthly actives.
Here are the key numbers from Twitter’s Q1 earnings:
- Earnings per share (adjusted): $US0.11 vs. $US0.01 expected, down from $US0.15 in the year-ago period.
- Revenue: $US548 million vs. $US512 million expected, down from $US595 million in the year-ago period.
- Monthly active users: 328 million, up 9 million from the previous quarter.
In its letter to shareholders, Twitter attributed its higher-than-expected user growth to recent moves toward simplifying its product, like its new Explore tab, and squashing abusive behaviour with new moderation and reporting tools.
Still, the company said it expects revenue growth to continue to “meaningfully lag audience growth in 2017.”
“We believe, however, that executing on our plan and growing our audience should result in positive revenue growth over the long term,” Twitter wrote.
Shares of Twitter immediately surged over 10% in pre-market trading on Wednesday.
The DAU growth story
Twitter executives heavily touted the company’s daily active user growth in a conference call with analysts on Wednesday, noting that growth was up 14% from the previous quarter.
But Twitter has yet to disclose its actual daily user number like Snapchat and Facebook have, which suggests that growth may not yet be impressive enough to please investors. A 14% increase means that Twitter’s DAUs growth is outpacing its monthly user growth.
Twitter COO Anthony Noto said that the company benefited from “resurrected users” following “more political accounts in Q1.” During Twitter’s previous fourth earnings call, Noto said that President Trump had “broadened the awareness of how the platform can be used.”
CEO Jack Dorsey also attempted to assuage concerns about spam activity on Twitter by saying that less than 5% of accounts on the platform are spam bots. He said that recent changes to the timeline, like using algorithms to show more relevant tweets, were the most important factors behind boosted user engagement.