Twitter revenue surges in fourth quarter

A Twitter sign on the facade of the New York Stock Exchange. Twitter profit beat expectations. AP

Twitter reported a better than expected 24 per cent increase in fourth-quarter revenue on Thursday, helped by growth in its video advertising business.

The social media company posted a decline in monthly active users, due in part to its campaign of deleting millions of abusive accounts after facing criticism it was being used as a platform for political influence operations and hate speech.

Overall revenue rose to $909 million in the quarter, beating Wall Street's average estimate of $868.2m.

Total advertising revenue rose 23 per cent to $791 million. More than half that revenue came from video ads placed by corporate clients.

Revenue from data licensing and other non-advertising businesses rose 35 per cent from a year earlier to $117 million.

Twitter reported quarterly profit, excluding some items, of 31 cents per share, Reuters said. Analysts had expected 25 cents, on average, according to IBES data from Refinitiv.

Twitter’s financial health improved after years of losses. The short-messaging platform said it posted a $255m profit in the final three months of 2018, compared with $91m a year earlier, AFP reported.

The company in 2018 marked its first full year of profitability under generally accepted accounted principles, according to Bloomberg. The company’s shares increased 35 per cent in the past 12 months through Wednesday’s close, as investors grew optimistic about Twitter’s ability to attract more advertisers to the service, which has benefited from new formats like video.

The results prove “our long-term strategy is working,” Chief Executive Officer Jack Dorsey said in the statement. “We enter this year confident that we will continue to deliver strong performance by focusing on making Twitter a healthier and more conversational service.”

The number of average daily active users exposed to Twitter ads, a new figure disclosed by the company, rose to 126 million in the fourth quarter from 115 million a year ago and 124 million in the previous quarter.

Monthly active users totalled 321 million. That was in line with analysts' forecasts, but down from 330 million a year earlier and 326 million in the third quarter. Twitter said that after the current quarter it would stop disclosing monthly active users, a statistic that has become standard among internet companies over the past decade.

For the current quarter, Twitter said it expected total revenue to be between $715m and $775m. Analysts are expecting about $765m, on average.

Twitter said it expects operating expenses to rise about 20 per cent year-on-year in 2019 due to efforts to improve its service, above analysts' average estimate of 12 per cent.

It expects capital expenditures to be between $550m and $600m, well above analysts' average estimate of $415m for 2019.

Twitter is a small part of the digital advertising market that’s dominated by Facebook and Google. Its share of total worldwide digital ad spending is estimated to drop to 0.8 per cent in 2019 from 0.9 per cent in 2018, according to EMarketer.

The company increased global headcount by 16 per cent in 2018, ending the year with more than 3,900 employees.

Jasmine Enberg of the research firm eMarketer said the earnings were nonetheless positive.

"Twitter's Q4 earnings prove that the company is still able to grow its revenues without increasing its user base," she said.

"The falloff in monthly active users is likely a continuation of Twitter's efforts to remove questionable accounts."