Is Twitter finally finding out how to make a profit? Not quite

27 Apr 2017

Twitter stock market ticker. Image: dennizn/Shutterstock

Twitter’s finances continue to be scrutinised by investors and the tech sector alike, but its latest earnings report shows there is a silver lining to an otherwise dark cloud.

With rivals such as Instagram and Snapchat rapidly outpacing it in the social media stakes, Twitter has been trying everything it can to grow its numbers substantially and make it a better place for advertisers to spend their budgets.

This was seen earlier this month with the launch of Twitter Lite, a new 1MB service for the developing world that is accessed through browsers.

Where it has improved

Despite the fact that CEO Jack Dorsey said the service will “endure forever”, its last earnings report painted a different picture.

This time around, Twitter has reported losses, but better than expected for the company believed to be seeking a buyer.

In the first three months of the year, Twitter saw its net losses fall to $61.6m from the $79.7m it experienced at the same time last year. It also earned $548m in revenues, versus the $511.9m that was expected by market analysts.

The best news for Twitter is that its number of active users grew by 14pc in this time, to a total of 328m people. This amounted to 7m more users than predicted and a growth of 9m on the previous quarter.

The report also showed that the number of people actively using it on a monthly basis grew by 6pc.

Shareholders happier

It wasn’t all good news though as financially, the area where the company expects to generate the vast majority of its revenue – advertising – showed a slump of 7.8pc, which Dorsey described as “revenue headwinds”.

“We believe that executing on our plan and growing our audience should result in positive revenue growth over the long term,” Dorsey said.

“We continue to expect revenue growth to meaningfully lag audience growth in 2017.”

He added that Twitter’s rolling out of new features to help crack down on problems such as trolling will help further its position in the crowded online social business.

This appears to have convinced investors as, following the earnings report, Twitter stock shot up by 11pc. This is the largest hike experienced since October last year, when speculation was rife that it was on the brink of being sold.

Twitter stock market ticker. Image: dennizn/Shutterstock

Colm Gorey was a senior journalist with Silicon Republic