Twitter says it might flip first-ever revenue, shares surge

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(Reuters) – Twitter Inc (TWTR.N) stated on Thursday it could turn out to be worthwhile for the primary time subsequent quarter after slashing bills over the previous 12 months and ramping up offers to promote its information to different firms, which might assist to interrupt its reliance on promoting for income.

Shares of Twitter soared greater than 18 p.c to $20.31 in afternoon buying and selling. The corporate additionally stated person progress resumed within the third quarter after stalling within the prior three months.

Twitter has by no means had a worthwhile quarter based mostly on usually accepted accounting rules (GAAP), however stated it “will seemingly be GAAP worthwhile” within the fourth quarter if it hits the excessive finish of its estimates.

The social media firm has struggled to transform its enchantment amongst celebrities and public figures comparable to U.S. President Donald Trump to draw customers and advertisers amid fierce competitors from Fb Inc (FB.O) and Snap Inc’s (SNAP.N) Snapchat. It has labored in current months to signal live-streaming offers and make different adjustments to enhance person expertise.

Income from information licensing and different sources within the third quarter was $87 million, Twitter stated, up 22 p.c from a 12 months earlier. That helped cushion an eight p.c lower in promoting income.

Twitter stated it signed a “vital quantity” of enterprise offers within the third quarter, which might assist stabilize its income move. It didn’t identify the businesses it had inked offers with.

Twitter reported quarterly income of $590 million, down four p.c from a 12 months earlier, attributing a lot of the lower to a beforehand introduced choice to wind down its TellApart promoting product.

Analysts on common had anticipated income of $587 million, based on Thomson Reuters I/B/E/S.

San Francisco-based Twitter additionally disclosed that it had found an error in the way it had measured its person base since 2014 and revised its estimates downward, however stated the distinction amounted to lower than 1 p.c.

The corporate reported 330 million month-to-month lively customers within the quarter ended on Sept. 30, up four million from 1 / 4 earlier, helped by e-mail and push notifications.

In the USA, the place progress had stalled earlier this 12 months, the variety of customers rose to 69 million from 68 million.

Analysts on common anticipated 330.four million month-to-month lively customers worldwide and 69 million in the USA, based on monetary information and analytics agency FactSet.

Twitter stated that in previous estimates it had wrongly counted individuals who logged into functions related to the corporate’s Cloth software program platform, which Twitter bought this 12 months to Alphabet Inc’s (GOOGL.O) Google.

In contrast to Fb, Twitter doesn’t disclose day by day lively customers, however says that quantity is lower than half the month-to-month determine.

The decline in quarterly income was the third since Twitter’s debut as a public firm in 2013 and raised considerations about progress amongst some analysts.

FILE PHOTO: The Twitter emblem is displayed on a display screen on the ground of the New York Inventory Trade (NYSE) in New York Metropolis, U.S., September 28, 2016. REUTERS/Brendan McDermid/File Photograph

“Sure, they grew four million MAU sequentially, which is sweet sufficient for the inventory to remain at present ranges, however income progress stays an issue,” stated Michael Pachter, managing director, fairness analysis at Wedbush Securities.

“It’s nice that they’re controlling bills and producing EBITDA progress, however buyers need to see sooner MAU progress and a few income progress,” Pachter stated.

Twitter Chief Government Jack Dorsey stated on a convention name that the corporate was making an attempt out methods to draw and interact extra customers.

“We’re enjoying quite a bit with higher matching individuals with their pursuits and with subjects they care about. That is an space of experimentation,” he stated.

Additionally on Thursday, Twitter stated it banned ads from accounts owned by Russian media shops Russia Right now and Sputnik, citing allegations by U.S. intelligence businesses that the shops tried to intervene with the 2016 U.S. election.

The corporate has been underneath scrutiny from U.S. lawmakers as a part of a broad investigation into Russian affect within the 2016 election.

COST CUTS, SMALLER LOSS

Twitter’s internet loss narrowed to $21 million, or three cents per share, from $103 million, or 15 cents per share, a 12 months earlier. Excluding gadgets, the corporate earned 10 cents per share.

Analysts anticipated a revenue of 6 cents per share, based on Thomson Reuters I/B/E/S.

Twitter minimize bills by 16 p.c from a 12 months earlier. Inventory-based compensation declined 36 p.c, however Twitter stated the cuts had been broad-based, overlaying gross sales and advertising and analysis and improvement.

Bills would selectively improve transferring ahead, the corporate stated.

Chief Working Officer Anthony Noto instructed analysts that Twitter was nonetheless within the early phases of exploring a product round its TweetDeck interface.

“We’ve solely completed idea exams,” he stated.

The corporate has stepped up efforts to maintain individuals hooked by way of live-streaming offers, together with for live shows, skilled golf and information applications.

Twitter final month started testing tweets so long as 280 characters, double the present cap, and has introduced plans to toughen its guidelines on on-line sexual harassment.

As much as Wednesday’s shut, Twitter’s inventory had risen 5.2 p.c this 12 months, in contrast with a 30.four p.c achieve within the S&P 500 data know-how index .SPLRCT.

Reporting by David Ingram in San Francisco and Pushkala A in Bengaluru; Modifying by Bernard Orr and Meredith Mazzilli

Our Requirements:The Thomson Reuters Belief Rules.

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