Earnings

Targeted Ads Drive Twitter Earnings Beat

Twitter beat out analyst estimates to deliver its first quarterly profit and an unexpected return to revenue growth.

According to Reuters, revenue rose 2 percent in the fourth quarter from the previous year, thanks to an expansion outside the United States. International profits increased by 17 percent, while revenue from Japan rose 34 percent to $106 million. CFO Ned Segal said Chinese exporters were strong advertisers overseas.

In comparison, there was an 8 percent decline in U.S. sales for the social networking site.

Analysts had predicted a fourth straight quarter of declines before the numbers were released on Thursday. The news sent shares 12.1 percent higher at $30.18 after hitting a high of $35.

“Advertisers want eyeballs, so anything Twitter can do to maximize the number of people accessing the platform daily for a good chunk of time allows for better ROI,” said analyst Erna Alfred Liousas of Forrester Research.

The use of data to individualize the targeting of ads – which, as a result, raises click-through rates – was also cited as a reason for the boost in revenue. Higher video ad sales and redesigned ad formats also played a factor.

“They are showing the right tweets to the right people at the right time, and as you do that, not only do you drive consumers to use Twitter more, but you attract more and more advertisers to want to be on the platform,” said analyst Richard Greenfield of BTIG Research.

Overall revenue came in at $731.6 million, more than Wall Street’s target of $686.1 million. The company reported $87 million in data licensing and other non-advertising revenue, an increase of 10 percent from the year before. Ad revenue rose 1 percent to $644 million.

The company said it expects to be “GAAP profitable for the full year 2018.”

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