Twitter’s revenue growth continued in the first quarter of 2018, with its investments in personalized content and video advertising helping the social media company to beat analyst estimates.
Total ad engagements increased 69 percent year over year, thanks to “increased aggregate demand, the continuing mix shift toward video ad impressions and improved” click-through rates, Twitter said in its earnings statement. “Our machine learning efforts continue to benefit advertisers as we continue to refine our targeting and ad-matching capabilities.”
Twitter on Wednesday reported a 21 percent year-over-year revenue gain for the first quarter of 2018, to $664.8 million. That stands as the largest sales increase for Twitter in two years, topping consensus expectations of approximately $605 million. Advertising sales hit $575 million, also a 21 percent increase year over year.
U.S. revenue increased 2 percent, while international sales jumped 53 percent. “Video in Japan continues to be an area of strength,” said Ned Segal, Twitter’s chief financial officer, during a conference call on Wednesday (April 25) with financial analysts. “Our video and agency partnerships in the U.K. contributed to the strength this quarter, (as did) our performance ads in China. Brazil and the Middle East were also areas of strength.”
Twitter reported that it has 336 million average monthly active users, a 3 percent increase year over year. In the U.S., that user base stands at 69 million, essentially unchanged from a year ago. Twitter blamed changes to Safari’s third-party app integration and the social media company’s ongoing efforts to expunge fake and malicious accounts for depressing user growth — a trend that appears likely to continue, the company said.
The number of daily average users, however, grew 10 percent year over year, and Twitter said that figure will face less volatility than the monthly numbers.
“We continued our work to make it easier for people to follow topics, interests and events on Twitter with new curated timelines of tweets around breaking news and sports events at the top of the home timeline and launched new product features, including video timestamps and bookmarks, to help people discover and discuss what’s happening,” said Twitter CEO Jack Dorsey during the post-earnings-release call.
Twitter executives said they would continue to focus on security and data privacy throughout 2018. “That will continue to be an area of investment for us,” Segal said. He did not break down how many security-focused employees Twitter plans to hire but predicted that the company will increase its total head count by as much as 15 percent this year.
But the company cautioned that it will have a tough time maintaining its recent earnings success.
Non-GAAP net income reached $123 million in the first quarter, up 132 percent year over year. In the fourth quarter of 2018, Twitter delivered its first quarterly profit, which also contradicted analyst expectations that the social media provider would again post a loss. Earnings per share in the first quarter stood at $0.16. That beat analyst expectations of $0.12 per share, according to a Thomson Reuters survey.
Investors, though, had a more complicated view, with Twitter’s shares falling after the company released its first quarter report on Wednesday morning. The “broad-based” recovery that Twitter has enjoyed since the second half of 2017 appears likely to level out, the company wrote in a shareholder letter on Wednesday.
“We continue to believe that our sequential growth rates for total revenue for the remainder of 2018 will resemble the sequential growth rates for total revenue in 2016,” Twitter said.