NEW YORK (Reuters) – Twitter Inc posted sales and earnings before Wall Street estimates on Thursday, as higher ad sales offset a decline in monthly users to boost its shares by nearly 12 percent before the opening bell.
People holding cell phones are silhouetted against a background taken in with the Twitter logo in this illustration picture taken in Warsaw on September 27, 2013. REUTERS / Kacper Pempel / Illustration / File-Foto
Quarterly ad revenue increased 29 percent year over year to $ 650 million. This was supported by advertisers' interest in broadcasts by media companies such as Live Nation Entertainment, Major League Baseball and Major League Soccer.
This resulted in a similar increase in total revenues from one year ago to $ 758 million, which, according to Refinitiv data, equates to an average analyst estimate of $ 702.6 million. The company reported an adjusted profit of 21 cents per share, well above the average forecast of 14 cents.
However, in the third quarter, the second quarter decline, Twitter saw an unexpectedly sharp decline in monthly active users and predicted that the value would fall again in the fourth quarter.
He drew the attention of users to efforts to cleanse the site of suspicious users, including accounts used in political-intervention missions, and the response to new privacy policies in the European Union.
The number of monthly active users dropped to 326 million in the third quarter, which is below the average analyst forecast of 331.5 million, according to FactSet. Twitter said it expects to fall below 326 million in the current quarter, missing the average forecast of 333.4 million.
Twitter fights for its reputation by cutting and blocking fake users, but the number of hits undermines belief in the ability to grow. Recent business progress has focused on getting current users to click on more ads, which helps Twitter earn a profit.
Analysts warn that Twitter needs to halt the decline in user growth to compete better with rivals such as Google of Alphabet Inc and Facebook Inc. Investors look out for monthly user data as they are a key indicator of future revenue Most of this comes from ad sales.
The use of Twitter has been stagnating for more than a year and analysts fear growth may have peaked.
These concerns were somewhat outweighed by increased ad sales through video, suggesting that the company is successfully trying to generate more money from each user.
Investors are trying to understand the financial implications of Twitter in order to clean up its platform by deleting accounts used for fraud, hate speech and voting interests.
Twitter removed millions of suspicious accounts this year, including those owned by Alex Jones and his conspiracy site, Infowars.
"We're doing a better job of detecting and removing spammy and suspicious accounts at sign-up," Chief Executive Jack Dorsey said in a statement.
Twitter said its daily active users were up 9 percent from a year earlier, weaker than an 11 percent advance in the previous quarter and the slowest growth rate in two years. The company does not announce the total number of daily users.
Twitter shares fell 19 percent when the company reported quarterly results on July 27. Since then, the stock has fallen 36 percent, compared to a 6.4 percent decline in the S & P 500.
Of the 40 analysts surveyed by FactSet, 10 have a buy rating for the stock while 24 have a hold rating. Six have a sales rating. The average price is $ 32.91, about 16 percent higher than on Tuesday at $ 27.54.
Reporting by Angela Moon and Munsif Vengattil; Cut by Jim Finkle and Patrick Graham