Twitter says it could finally turn profitable
NEW YORK: Twitter Inc said on Thursday it may become profitable for the first time next quarter after slashing expenses over the past year and diversifying its advertising-heavy revenue by ramping up deals to sell its data to other companies.
Shares of Twitter jumped more than 11% to a three-month high of $19.62.
Twitter has never had a profitable quarter based on generally accepted accounting principles (GAAP), but said it “will likely be GAAP profitable” in the fourth quarter if it hits the high end of its estimates.
Revenue from data licensing and other sources in the third quarter was $87 million, Twitter said, up 22% from a year earlier. That helped cushion an 8% decrease in advertising revenue
Twitter said it signed a “significant number” of enterprise deals in the third quarter, which would help stabilise its revenue flow.
Twitter reported quarterly revenue of $590 million, down 4% from a year earlier, attributing much of the fall to a previously announced decision to wind down its TellApart advertising product. Analysts on average had expected revenue of $587 million, according to Thomson Reuters.
Twitter also disclosed that it had discovered an error in how it had measured its user base since 2014 and revised its estimates downward, but said the difference amounted to less than 1%.
The company reported 330 million monthly active users in the quarter ended on September 30, up 4 million from a quarter earlier, helped by email and push notifications. In the US, where growth had stalled earlier this year, the number of users rose to 69 million from 68 million.
Analysts on average expected 330.4 million monthly active users worldwide and 69 million in the US, according to financial data and analytics firm FactSet.
Twitter said that in past estimates it had wrongly counted people who logged into applications associated with the company’s Fabric software platform, which Twitter sold this year to Google. Unlike Facebook, Twitter does not disclose daily active users, but says that number is less than half the monthly figure.