Would you believe it, Twitter posts its first ever profit

Now this is not something many people were expecting, but the ugly duckling of the social media giants posted its first ever profit in the last quarter.

Over the course of the last three months Twitter reported revenues of  $732 million, a 2% year-on-year increase, while profit stood at $91 million. We’ve said it before, but we’ll say it again as it is not something we expected to write, this is Twitter’s first ever quarter of profitability.

Advertising revenue totalled $644 million for the quarter, an increase of 1% year-over-year, while data licensing and other revenue was $87 million, up 10%. US advertising revenues shrunk 8%, though international was up 17% year-on-year. Total ad engagements were up 75% year-over-year which has been put down to engagement growth, improved products, better ad relevance to the user.

“Q4 was a strong finish to the year,” said Twitter CEO Jack Dorsey. This comment alone is a possible early entrant to understatement of the year.

“We returned to revenue growth, achieved our goal of GAAP profitability, increased our shipping cadence, and reached five consecutive quarters of double digit DAU growth. I’m proud of the steady progress we made in 2017, and confident in our path ahead.”

The final quarter also saw the team introduce a new Promoted Tweet composer that simplified the process of creating new Promoted Tweets. Advertisers who had access to this feature created 26% more Promoted Tweets and launched 13% more campaigns, spending 23% more on Twitter. Alongside this product, launched a new agency resource centre for mid-sized digital agencies and  Twitter Promote Mode (TPM), a subscription advertising service for small businesses to help them reach more people without the work of having to create ads or manage campaigns.

In short, the team made it easier for advertisers to spend money. A simple idea, but the best ones are. If this is the solution, you have to wonder how difficult the team were making it for advertisers to part with their cash over the last 11 years.

At the time of writing, Twitter share price was up an impressive 19%, though it should be worth noting overnight trading took the price higher. Nailing down a reason for the impressive performance is tricky, though the team has been purging fake accounts which could explain the greater faith advertisers are having in the platform.

Considering the rise of fake news and abuse over the social media, all platform owners are attempting to create a more attractive environment for both consumers and advertisers. Another area to consider is the engagement of users. While the total number of users was flat, engagement was up year-on-year for both daily and monthly active users, 12% and 4% year-on-year increases respectively. Both of these factors will offer greater confidence to advertisers to part with cash.

Over the next couple of months there will be a few new changes to the platform as well. The main aim will be to improve core ad offerings through better performance and measurement, including ad platform improvements, self-serve measurement studies, and third-party accreditation. The team will also explore  new channels of demand, such as online video, and introducing new ways to buy ads on Twitter, including alpha testing of programmatic buying. Data and enterprise solutions revenue are two other areas where the team foresee more success.

Perhaps this is a corner turned for Twitter, we’ll see. Profitability will certainly be welcomed over the next three months, but the team could use with a couple of ideas on how to increase the total number of users if it wants to make a real dent on the connected economy. Increasing the number of characters to 280 per tweet is a good start, but there will need to be more ideas like this in the pipeline.

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