Twitter records fourth straight profitable quarter; business is improving
After a decade of losses, it finally seems like Twitter's business is stabilizing. On Thursday, the social media giant reported its fourth straight profitable quarter - a sign that its finances were stabilizing despite recent losses in monthly active users (MAUs). Investors too were impressed, and the report saw Twitter's stock climb 13% in pre-market trading. Here are the details.
On Thursday, Twitter announced its earnings for Q3 2018. The company's net income came to $789mn, of which a "one-time release of deferred tax asset valuation allowance" accounted for $683mn. Taking that out, the company's net income for Q3 2018 came to $106mn - its largest quarterly profit ever. If anything, it's a sign that Twitter's somewhat unstable business has started to stabilize.
Over the last four quarters i.e. from Q4 2017 to Q3 2018, Twitter recorded consistent profits of $91mn, $61mn, $100mn, and $106mn, respectively, taking its net profit in this period to $358mn. Notably, the profits came despite the social media giant witnessing a significant dip in MAUs. For comparison, in the four quarters prior to this, Twitter had lost a total of $367mn.
Over the last two quarters i.e. Q2 and Q3 2018, Twitter lost a total of 10 million monthly active users (MAUs), losing 9 million of those in Q3. However, the company had prepared Wall Street for this decline, saying that its MAUs would come down owing to a crackdown against spamming accounts, and owing to stricter privacy laws enacted by the European Union (EU).
"We're achieving meaningful progress in our efforts to make Twitter a healthier and valuable everyday service. We're doing a better job detecting and removing spammy and suspicious accounts at sign-up," Twitter CEO Jack Dorsey said, explaining the decline in MAUs.
However, in terms of daily active users (DAUs), Twitter registered a 9% growth over the same quarter last year. While Twitter has not revealed the exact number of users, the social media company's DAUs have shown consistent year-on-year growth for over two years, according to data. Of course, the company has touted this growth as a sign of improvement.
"This quarter's strong results prove we can prioritize the long-term health of Twitter while growing the number of people who participate in public conversation," added Dorsey, implying that Twitter's business was proceeding according to plan.
