Twitter reported its second straight profitable quarter — and the second profitable quarter in company history — early Wednesday morning when the company shared first-quarter earnings, which were better than expected.
Twitter turned a profit again last quarter, and added more new users than Wall Street expected
All of Twitter’s key numbers were up last quarter, and now so is the stock.
Photo by Michael Cohen/Getty Images for The New York Times
Twitter reported profits of 16 cents per share on revenue of $665 million for the quarter, including a profit of $61 million. In Q4, Twitter made $91 million, and its stock soared even though it failed to grow revenue year over year and didn’t add any new users.
That’s not the case this time around. Twitter also added six million new users, more than the five million projected, and revenue growth was 21 percent year over year.
Basically, everything was better than expected. Analysts were looking for profits of 12 cents per share on revenue of $605 million, according to FactSet. Twitter stock is up around 6 percent in early-hours trading.
Update: Twitter stock is now down almost 4 percent, a few hours after the end of its earnings call. It might be tied to this statement from the company’s earnings letter (which was echoed on the call with analysts): “Total revenue for the remainder of 2018 will resemble the sequential growth rates for total revenue in 2016.”
Twitter’s sequential revenue growth in Q2 and Q3 2016 was just 1 percent and 2 percent respectively. That’s not a very good forecast for the rest of this year.
Turning a profit is big for Twitter, even if it’s a small profit. That’s because the company has spent years battling slow, and at times nonexistent, user growth that hampered the stock.
But Twitter’s story shouldn’t be about growth — at least not right now. It should be about value, and the company’s ability to make money from the users it does have. If it can do that, investors should have a good reason to stick around.
Twitter’s daily active users also grew 10 percent year over year, a growth metric the company like to point to instead of its total user base. The problem is we still don’t know how many DAUs Twitter actually has, which makes that 10 percent growth hard to put into perspective.
This article originally appeared on Recode.net.
See More:
